Fed Tightening Bets Strengthen Dollar (11.12.2026)

The US dollar remained firm as elevated inflation and hawkish Federal Reserve commentary reinforced expectations for further interest rate increases. 

Gold slipped below $4,000, while silver traded under $52 as markets priced a high probability of a December Fed hike, with some policymakers supporting more aggressive tightening. Meanwhile, the euro struggled near 1.1080 despite signals of a potential ECB rate increase, while sterling stabilized around 1.3275 ahead of UK GDP data. The yen weakened toward 159.5 per dollar, raising intervention concerns even as stronger Japanese producer inflation supported expectations for Bank of Japan tightening.

EUR/USD Edges Up to 1.1080

EUR/USD edged slightly higher around 1.1080 during Thursday's early Asian session, though expectations for aggressive Federal Reserve tightening continue to cap gains. Following elevated US inflation readings, markets price in an 87% probability of a rate increase at the December 8 to 9 meeting, with odds for a 50-basis-point move climbing to 12.7%. In Europe, ECB Chief Economist Lane noted policy depends on energy price pass-through, while President Lagarde confirmed a December hike remains under consideration, though Rabobank anticipates reluctance toward further tightening afterward.

The first resistance is positioned at 1.1130 while the support starts from 1.1050.

Gold Holds Below $4,000 Level

Gold held below $4,000 per ounce on Thursday following two consecutive sessions of declines, pressured by a stronger US dollar. Elevated US inflation readings and increasingly hawkish Federal Reserve rhetoric continue to fuel expectations for aggressive monetary tightening. Fed Governor Christopher Waller noted a 50-basis-point increase in December may be required, while Dallas Fed President Lorie Logan endorsed at least two additional quarter-point hikes to curb persistent price pressures. Markets now price in a 91% probability of a December move, with attention shifting to upcoming jobless claims, existing home sales, and producer inflation data.

First resistance is seen at $4020, with initial support near $3940.

Yen Nears 159.5 Intervention Zone

The Japanese yen traded near the key 159.5 per dollar threshold on Thursday after two consecutive sessions of losses, reaching a two-month low and heightening intervention risks. Japan's top currency diplomat, Atsushi Mimura, reminded traders of this summer's joint US-Japan currency intervention. The decline stems from broad dollar strength fueled by hot US inflation and hawkish Federal Reserve rhetoric. Meanwhile, Japan's October producer prices climbed 7.1%, topping the 6.5% forecast and reinforcing expectations for Bank of Japan interest rate increases next month.

First resistance is seen at 160.40, with initial support near 159.00.

GBP/USD Stabilizes Near 1.3275

GBP/USD stabilized around 1.3275 during Thursday's early Asian session as markets remained cautious ahead of today's UK third-quarter GDP release, where Société Générale projects 0.7% quarterly expansion. Meanwhile, sterling finds underlying support from Bank of England policymaker Megan Greene's remarks calling for proactive monetary tightening to prevent elevated wage growth from becoming entrenched.

From a technical view, resistance stands near 1.3300, with support around 1.3200.

Silver Holds Below $52 Level

Silver traded below $52 an ounce on Thursday, holding on to recent losses as a stronger US dollar weighed on the metal. The dollar was lifted by hotter US inflation data and increasingly hawkish Fed comments, which reinforced expectations of further rate hikes. Fed Governor Christopher Waller said a 50-basis-point hike in December may be needed, while Dallas Fed President Lorie Logan backed at least two more 25-basis-point increases to tackle persistent inflation. Markets now see about a 91% chance of a hike next month and are also pricing in further moves in January and possibly April.

From a technical view, resistance stands near $53.10, while support is located around $50.80.