Dollar Extends Post-CPI Rally as Gold Breaks Below $4,000

Overview

The dollar’s post-CPI rally has extended. The Dollar Index briefly topped 103, its highest level in about 19 months, as markets lock in a December Fed hike and bets on a 50 bp move climb above 10%. Gold has broken below $4,000, USDJPY is pressing toward 160, and EURUSD and GBPUSD sit at multi-week lows. Wall Street bucked the trend on Wednesday, with the S&P 500 up 1.31% on renewed AI enthusiasm.

Today’s Calendar

US bond markets reopen today after the Veterans Day holiday, so Treasury yields can reprice in full for the first time since CPI.

Gold (XAUUSD)

Gold has broken below the psychological $4,000 level and trades near $3,990 after falling about 1.1% on Wednesday. A firmer dollar and rising Fed hike bets continue to weigh, though a small technical bounce is under way in Asian trade. (Amillex)

Fundamentals

• Headwind: a December Fed hike is priced at roughly 80%, with growing talk of 50 bp; US yields reprice in full today as bond markets reopen.

• Headwind: the Dollar Index is at its highest since April 2025.

• Support: steady central-bank buying and renewed Middle East supply risks may cushion deeper falls.

Technicals

• Gold has fallen about $160 from Monday’s $4,150 high and is now below every major moving average.

• The $4,000–4,012 zone has flipped from support to resistance.

Scenarios

• Bearish (base case): a break below $3,950 opens the yearly low at $3,870, especially on strong US jobless claims or a hot PPI on Friday.

• Bullish: a recovery above $4,012 would signal a false break and target $4,042.

Crude Oil (Brent / WTI)

Oil staged a modest recovery on Wednesday, with Brent up about 1.4% to settle near $92.76 and WTI up 0.6% to $86.53. Hopes for a quick end to the Iran conflict faded as attacks on shipping in the Strait of Hormuz continued.

Fundamentals

• Bullish: continued Hormuz shipping attacks and Iran’s nuclear stance are rebuilding some of the risk premium.

• Bearish: the broader de-escalation narrative and a strong dollar cap rallies; Brent remains roughly 20% below its late-October high.

• China extended some tariff suspensions for two months, and Trump–Xi talks at APEC on November 18–19 could affect the demand outlook.

• EIA inventory data, delayed by the holiday, is due today.

Technicals

• The trend is still down, but $90 has held as a floor for two sessions.

• Brent is testing first resistance around $93.50; WTI faces $87–88, with support at $85 and $84.

Scenarios

• Bullish: further Gulf shipping incidents could lift Brent through $93.50 toward $95.

• Bearish: credible diplomatic progress or a large inventory build could push Brent back toward $90.

EURUSD

EURUSD has slipped to around 1.1095, breaking below the 1.1115 floor of the range it held since mid-October. The pair fell about 0.8% on Wednesday as the dollar extended its post-CPI rally.

Fundamentals

• The Fed–ECB policy gap is widening: the Fed is set to hike in December from 3.75–4.00%, while the ECB deposit rate is 2.50%.

• Eurozone inflation of 4.0% and hawkish ECB comments have not been enough to offset dollar strength.

• Friday’s updated Eurozone Q3 GDP and US PPI are the next catalysts.

Technicals

• The range break turns the medium-term structure more clearly bearish.

• The old 1.1113–1.1115 floor now acts as resistance; only a recovery above it would neutralise the breakdown.

Scenarios

• Bearish (base case): a break below 1.1056 targets 1.1030, then the 1.1000 psychological level.

• Bullish: a close back above 1.1115 would mark a false break and reopen 1.1166.

USDJPY

USDJPY trades around 159.60–159.80, having gained about 0.7% on Wednesday. The pair is now within striking distance of 160, where the risk of Japanese verbal or actual intervention rises sharply.

Fundamentals

• The US–Japan rate gap keeps widening as markets price a December Fed hike, while the BoJ holds at 1.25%.

• US bond markets reopen today, so a jump in Treasury yields could push the pair through 160.

• Intervention warnings from Tokyo are the main downside risk and could trigger sharp, sudden drops.

Technicals

• The uptrend from September’s 152.90 low is intact, and 159.11 has flipped from resistance to support.

• Upside is increasingly crowded near 160, so the risk-reward for new longs is poor.

Scenarios

• Bullish (base case): a break above 160 is possible on strong US data, but gains may be short-lived if officials step in.

• Bearish: intervention or a slip below 159.11 could trigger a fast pullback toward 158.00.

GBPUSD

GBPUSD trades near 1.3270, its lowest since mid-October, after falling two sessions in a row from just under 1.3450. The pair has dropped in four of the five sessions since the BoE hike, and today’s UK GDP is its main domestic test.

Fundamentals

• UK Q3 GDP is expected at +0.7% q/q, up from +0.5%; a beat would support the case for another BoE hike.

• BoE member Greene said wage growth is too high and proactive tightening is appropriate, keeping a December move in play after the 8–1 vote to hike to 4.00%.

• The dollar side still dominates: a December Fed hike is close to fully priced.

Technicals

• The pair has reached yesterday’s 1.3269 downside target and is testing the 1.3240 support.

• 1.3300 is the first level bulls need to reclaim to ease pressure.

Scenarios

• Bearish (base case): soft UK GDP and a break below 1.3240 open the October low at 1.3138.

• Bullish: a strong GDP beat and a move above 1.3300 could trigger short covering toward 1.3348.

Conclusion

The dollar remains firmly in control two days after the hot CPI, with the Dollar Index above 103 and gold, EURUSD and GBPUSD all through key support. USDJPY is the pair to watch for sudden reversals as it nears 160. Today brings UK GDP, US jobless claims and the first full session of Treasury trading since CPI, ahead of Friday’s PPI, the last major inflation test before the Fed’s December 8–9 meeting. Oil is moving on its own geopolitical track, with Hormuz headlines driving short-term swings.