Inflation Risks Return as Oil Prices Climb (10.21.2026)

Rising oil prices renewed inflation concerns as uncertainty surrounding the US-Iran conflict and continued disruptions in the Strait of Hormuz reinforced expectations for further monetary tightening. 

Gold declined toward $4,100 for a fourth consecutive session, while silver slipped to $57.5. The euro remained under pressure near 1.1225 amid French fiscal instability and expectations for another Federal Reserve rate hike in December. Meanwhile, sterling climbed toward 1.336, reaching a one-month high as stronger UK employment and wage data supported Bank of England tightening expectations. The yen held near 158.2 as investors assessed Japanese export figures and the outlook for BoJ policy.

EUR/USD Soft Near 1.1225

EUR/USD started Wednesday on a weak note around 1.1225. Unrest in France and fiscal concerns continued to weigh on the single currency, with the French-German 10-year yield spread holding near 150 basis points, signaling sustained regional risk sentiment. Although Germany's October ZEW current conditions index exceeded forecasts, the expectations index dropped to 28.1, highlighting a sluggish recovery. Meanwhile, elevated market expectations for another Federal Reserve rate increase in December continue to underpin the dollar. Technical indicators remain bearish while price action stays below the key 1.1250 moving averages.

The first resistance is positioned at 1.1260 while the support starts from 1.1180.

Gold Slipped Toward $4,100

Gold slipped toward $4,100 per ounce on Wednesday, recording its fourth consecutive daily decline as rising crude oil prices heightened inflation concerns and reinforced expectations of continued interest rate hikes. Energy prices resumed their upward trajectory after diplomatic officials dismissed reports that an agreement ending the US-Iran conflict was imminent, despite ongoing negotiations. Escalating geopolitical instability across the Middle East and Eastern Europe, paired with frequent tanker strikes in the Strait of Hormuz, continues to amplify global supply interruption risks.

First resistance is seen at $4155, with initial support near $4080.

Yen Keeps Flat Near 158.2

The Japanese yen remained steady around 158.2 per dollar on Wednesday as market participants analyzed economic data indicating September exports grew at their slowest pace since April. Despite missing forecasts, export volumes expanded for the 13th consecutive month, driven by solid global demand for semiconductor equipment and artificial intelligence technology. Regarding monetary policy, the Bank of Japan is broadly anticipated to maintain current interest rates at its upcoming decision next week before implementing a rate hike in December.

First resistance is seen at 158.60, with initial support near 157.80.

Sterling Hits One-Month High

Sterling rose toward $1.336, reaching its highest level in nearly a month as strong UK employment figures rasied expectations of a Bank of England rate increase next month. The unemployment rate unexpectedly fell to 4.7% in the three months to August, marking its lowest point since July 2025. Meanwhile, regular wage growth accelerated to 3.7%, slightly surpassing consensus forecasts and adding to underlying inflationary pressures.

From a technical view, resistance stands near 1.3400, with support around 1.3320.

Silver Eases Toward $57.5

Silver slipped toward $57.5 per ounce on Wednesday, relinquishing a portion of its recent gains as climbing oil prices renewed inflation concerns and increased expectations for higher interest rates. Crude markets rebounded after diplomatic officials denied reports that a settlement in the US-Iran conflict was near, despite ongoing discussions. Escalating geopolitical friction across Eastern Europe and the Middle East, along with persistent tanker targeting in the Strait of Hormuz, continues to heighten risk premiums surrounding global energy supplies.

From a technical view, resistance stands near $58.20, while support is located around $57.00.