What to Know
- The US Dollar Index printed a bullish weekly signal and recorded its highest weekly close since March 2025.
- US Average Hourly Earnings increased at a slightly faster rate than expected, while Non-Farm Payrolls came in at 165,000 and the unemployment rate fell to 4.1%.
- Traders priced roughly an 80% probability of a Federal Reserve rate increase in December after the stronger US employment figures.
- The Bank of England raised Bank Rate by 0.25% to 4%, while the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85%.
- The NASDAQ 100 Index fell approximately 6.4% on Thursday and ended the week down 4.9%, while the S&P 500 lost 2.7% over the week.
- The S&P 500 moved close to its 200-day simple moving average around 7,300 before closing Friday near 7,378.
- EUR/USD remains pressured below the 1.1300 area, while AUD/USD is approaching a pivotal long-term low near 0.6833.
- WTI crude oil dropped to key support at $87.68 before bouncing, with a break lower potentially opening the way toward the $80.00 area.
- The coming week brings fewer major data releases, but US CPI is the central event, followed by US PPI and UK GDP.
Dollar Bulls Regain Control as Risk Appetite Weakens
The US dollar enters the new trading week with renewed momentum after a turbulent stretch across currencies, equities and energy markets. The greenback benefited from a combination of stronger US labour data, elevated interest-rate expectations and demand for defensive liquidity as stocks sold off sharply. The US Dollar Index produced a bullish pin candlestick on the weekly chart, rejected the prior week’s softer tone and delivered its highest weekly close since March 2025.
That move matters because it reinforces the idea that the dollar remains supported by both technical structure and macro fundamentals. Price action is still contained within a long-term bullish trend, with the index moving inside an ascending channel. A key support level at 101.39 has continued to hold, giving dollar bulls a clear area to defend. If the index pushes to fresh highs after closing close to a 19-month high, many technical traders would likely treat that as another bullish confirmation.
The fundamental case for dollar strength hardened after US labour-market figures showed payroll growth of 165,000, above expectations, and the unemployment rate unexpectedly edging down to 4.1%. Average Hourly Earnings also increased at a slightly faster rate than expected. Together, those figures suggested the US economy is still running hot enough to keep pressure on the Federal Reserve. Market participants moved to price roughly an 80% probability of a December rate increase, limiting hopes that easier policy would quickly offset the sell-off in risk assets.
Central Banks Keep Inflation in Focus
Central-bank decisions added to the sense that borrowing costs may stay elevated for longer. The Bank of England raised Bank Rate by 0.25% to 4%, a move that was expected, but the hawkish dissent in favour of additional tightening gave the decision a firmer tone. The Reserve Bank of Australia also lifted its cash rate by 25 basis points to 4.85%, though the split vote and softer guidance on future tightening gave the Australian decision a more dovish interpretation.
That divergence helps explain the recent pressure on AUD/USD. While a rate increase would normally offer support to the Australian dollar, the softer forward guidance and dovish dissent reduced expectations for further tightening. Slower Chinese growth also remains an external headwind for the Australian currency. Against a stronger US dollar, those factors combined to make the Australian dollar last week’s weakest major currency.
New Zealand also added uncertainty to the broader macro picture. Labour-market data showed unemployment rising to an 11-year high of 5.7%, alongside falling employment and subdued wage growth. At the same time, a closely contested parliamentary election left the composition of the next government unresolved, with coalition negotiations potentially taking weeks and results not due until 27th November. That weakness contrasted with the stronger US jobs report and underscored the divergence now shaping currency markets.
EUR/USD Pressured Below 1.1300
EUR/USD remains one of the clearest expressions of dollar strength. The pair fell over the week by 0.17% after previously being identified by some market participants as attractive on the short side below 1.1300. Price action printed a bearish pin bar with a significant upper wick, showing that sellers continue to emerge near the 1.1300 round-number resistance area. The pair also closed very near its weekly low, another bearish technical signal.
The broader trend continues to favour the downside. EUR/USD recently made a new 17-month low, and although bearish momentum has slowed compared with the unusually strong moves seen earlier, the long-term structure remains weak. The euro also faces pressure from concerns over French and Eurozone debt, energy-market uncertainty and geopolitical risks involving Russia. With the US dollar at its strongest weekly close in well over a year, the technical and fundamental backdrop remains challenging for euro bulls.
For many technical traders, the 1.1300 area remains the key dividing line. A daily close above that level would weaken the immediate bearish case, but a move above resistance followed by renewed selling could also create another short-side setup. If sellers force a break toward fresh long-term lows, EUR/USD could remain one of the main vehicles for expressing a pro-dollar view.
AUD/USD Near a Pivotal Long-Term Zone
AUD/USD also reflects the widening gap between a resilient US economy and a more cautious Australian policy outlook. The pair broke below several former support levels and closed close to the low of the weekly range. The next key area is around the 10-month low at 0.6833, which could become pivotal. A sustained break below that zone would likely be viewed as technically significant, while a firm hold could allow the area to develop again as a longer-term base.
The pair’s outlook depends heavily on whether US data continue to support further Federal Reserve tightening. Stronger-than-expected October payroll growth and unemployment falling to 4.1% reinforced expectations of another Fed hike, while the Australian dollar struggled after the Reserve Bank of Australia softened its language on future tightening. That imbalance leaves the bias vulnerable to further downside unless risk appetite recovers or Australian data begin to challenge the dovish interpretation.
Stocks Slide as AI Concerns Hit Sentiment
Equity markets endured a severe reversal as politics, interest rates and concerns about AI-linked valuations collided. US stocks initially found relief after Democrats took control of both Houses of Congress, but the rally quickly gave way to heavy selling as investors focused on the possibility of tighter restrictions or pauses on AI data-center construction. Such restrictions could undermine growth assumptions for chipmakers and other AI beneficiaries, particularly at a time when high borrowing costs are already raising questions about the profitability of large AI investments.
The NASDAQ 100 Index plunged approximately 6.4% on Thursday and ended the week down 4.9%. The index is now more than 10% below its recent record high and is trading below its 200-day simple moving average. It is also down approximately 15% from its recent all-time high, placing it close to bear-market territory under many definitions. The concentration of AI-related companies in the NASDAQ 100 explains why the index performed worse than the broader market.
The S&P 500 also came under pressure, losing 2.7% over the week. Thursday was the worst day for the US stock market in 19 months, with the index falling 4.4% on that day alone. The S&P 500 moved close to its 200-day simple moving average around 7,300 before closing Friday near 7,378. Some chart watchers see the 200-day average as potential support, but the bearish inside pin bar on Friday and the close near the low suggest caution remains warranted.
WTI Crude Oil Tests Important Support
WTI crude oil fell sharply as geopolitical expectations shifted. The US Congressional election result, with Democrats taking both chambers, may make it harder for President Trump to resume major military action against Iran. At the same time, communications involving Iran and the possibility of a deal to end the war were presented in a more constructive light by Vice President JD Vance and other political figures. Some Republicans also began linking the Iran war to the election defeat.
The energy-market impact was immediate. WTI crude oil dropped to the important support level at $87.68 before bouncing modestly. That level has been watched for months and remains technically significant. A retest could produce another short-term bounce, but a decisive bearish break below $87.68 could open a quick move toward the $80.00 area. For crude traders, the central variable remains escalation risk. A larger attack that triggers Iranian retaliation against Gulf production, export infrastructure or shipping through the Strait of Hormuz would likely support crude and refined-fuel prices. A credible agreement that reduces supply threats would likely remove part of the geopolitical risk premium.
Inflation Data Could Set the Next Market Direction
The coming week has fewer high-impact releases than the previous one, but US CPI stands out as the dominant event. US PPI and UK GDP are also on the calendar. Because the dollar’s latest advance is closely tied to expectations for another Federal Reserve rate increase, inflation data could either validate the current move or trigger a reassessment. A firm inflation reading would likely reinforce the view that policy must stay tight, while softer data could reduce the urgency of another hike.
Volatility rose last week, with 41% of notable currency pairs and crosses moving by more than 1% in value. The next week’s volatility is expected to be similar or lower, though US CPI could still generate a sharp move. Wednesday is also a public holiday in the USA, Canada and France, which could affect liquidity conditions. Against that backdrop, the strongest market themes remain dollar demand, pressure on risk assets, weakness in EUR/USD and AUD/USD, and a crucial support test for WTI crude oil.
Frequently Asked Questions (FAQs)
Why is the US dollar gaining?
The US dollar is gaining because stronger US labour data, including payroll growth of 165,000 and unemployment falling to 4.1%, strengthened expectations for another Federal Reserve rate increase. Defensive flows from falling stock markets also supported demand for the dollar.
What is the key level for EUR/USD?
The key level for EUR/USD is 1.1300. Sellers have repeatedly appeared near that area, and some technical traders remain bearish while the pair trades below it. A daily close above 1.1300 would weaken the immediate bearish setup.
Why is AUD/USD under pressure?
AUD/USD is under pressure because the Reserve Bank of Australia’s 25 basis-point rate increase to 4.85% came with softer guidance and dovish dissent, while strong US data supported expectations for further Federal Reserve tightening.
What level matters for AUD/USD now?
The 0.6833 area matters because it marks a 10-month low and could act as a pivotal long-term zone. A sustained break below it would be bearish, while a hold could turn the area into support again.
Why did US stocks fall so sharply?
US stocks fell as investors worried that Democratic control of both Houses of Congress could lead to tighter restrictions or pauses on AI data-center construction. High borrowing costs and doubts about AI investment returns amplified the selling.
How much did the NASDAQ 100 fall?
The NASDAQ 100 fell approximately 6.4% on Thursday and finished the week down 4.9%. It is also down approximately 15% from its recent all-time high and is trading below its 200-day simple moving average.
What is the key support level for WTI crude oil?
The key support level for WTI crude oil is $87.68. A break below that level could be technically significant and may open the way toward the $80.00 area, while another hold could produce a bounce.
What is the most important data release this week?
US CPI is the most important scheduled release this week because inflation data will influence expectations for Federal Reserve policy. US PPI and UK GDP are also important, but CPI is likely to drive the strongest market reaction.
What is the main risk for markets now?
The main risk is that strong US data and persistent inflation keep interest-rate expectations elevated while equity markets remain under pressure. Geopolitical developments affecting oil supply also remain a major source of uncertainty.