US Dollar Slides as Lower-than-Expected Inflation Spurs
European market indices rose at the end of Tuesday’s trading session after US inflation data for October came in lower than expected. The European Stoxx 600 index ended the session up by 1.4%, with all sectors and major markets in the region mostly in positive territory. Retail sector stocks rose by 3.1%, leading the gains, while oil and gas stocks fell by 0.2%.
Data revealed a slowdown in annual inflation in the United States during October, recording 3.2% compared to expectations of 3.3% and a decrease from September’s inflation, which stood at 3.7%. On a monthly basis, inflation came in at zero, compared to 0.4% in September, which was better than expectations, indicating a milder deceleration, registering 0.1%.
The dollar declined and reached its lowest levels in two months on Tuesday after consumer price data in the United States showed signs of slowing inflation in October. This increases the likelihood of the Federal Reserve refraining from raising interest rates.
With reduced chances of another interest rate hike, the dollar is now trading below its pivot point at $103.95.
| Resistance level | Support level |
| 105.05 | 103.30 |
| 106.20 | 102.60 |
| 106.80 | 101.50 |
Gold prices surged higher after the release of US inflation data, which prompted the Federal Reserve to consider ending its tightening policy.
The spot price of gold rose to $1,966 per ounce. Futures contracts for gold settled higher at $1,971.
| Resistance level | Support level |
| 1973 | 1946 |
| 1985 | 1931 |
| 2000 | 1919 |
U.S. indices closed mixed on Monday as investors awaited U.S. inflation data, which will play a crucial role in shaping the monetary policy direction of the Federal Reserve and the duration of elevated interest rates.
The Dow Jones index rose by approximately 0.2%, or 55 points, marking its highest close in about two months, primarily supported by Boeing’s stock. Meanwhile, the S&P 500 edged down by around 0.1%, and the Nasdaq declined by 0.22% from its two-month highs, weighed down by losses in Apple and Microsoft shares.
The US indices closed with sharp gains on Tuesday, driven by an increased appetite for risk following inflation data that was lower than expected. These data bolstered the likelihood of an end to interest rate hikes.
The Dow Jones Industrial Average rose by approximately 1.4%, equivalent to 490 points, reaching its highest level in two months. Additionally, the S&P 500 index jumped by 1.9%, marking its highest daily gains in over six months.
| Resistance level | Support level |
| 35140 | 34520 |
| 35370 | 34130 |
| 35760 | 33900 |
Oil prices did not witness significant changes on Tuesday, relinquishing their early gains amid indications of easing tensions in the Middle East and uncertainty regarding US oil inventories. US President Joe Biden stated that daily discussions are taking place to ensure the release of hostages held by Hamas, expressing confidence that this will be achieved.
Futures contracts for West Texas Intermediate (WTI) crude oil is trading around their pivot point.
| Resistance level | Support level |
| 79.35 | 77.40 |
| 80.50 | 76.60 |
| 81.30 | 75.45 |
This article provides real-time market analysis from contributing analysts. Please note that any views expressed in this article do not constitute operational advice. It is important to assess your risk tolerance and make independent trading decisions. STARTRADER holds no responsibility for any trading consequences that may arise from relying on the views expressed in this article.
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