Dollar Eases After Its Best Day in Six Months as Traders Brace for Tuesday’s CPI Test

The US dollar took a breather on Monday, November 9, easing 0.3 per cent to 101.88 on the dollar index after its biggest single-day gain in nearly six months. Friday’s surge of almost 0.8 per cent had been powered by a much stronger than expected October jobs report — 165,000 new jobs against roughly 65,000 forecast — and by a rout in artificial intelligence stocks that sent investors hunting for safety. Monday’s pullback was modest — the greenback stayed close to its Friday highs.

What changed on Monday was the mood, not the data. AI jitters eased as technology shares steadied, and Brent crude fell 1.3 per cent after President Donald Trump downplayed the likelihood of renewed strikes on Iran. With risk appetite returning, Friday’s safe-haven bid faded. The euro rose 0.4 per cent to $1.1187, sterling gained 0.5 per cent to $1.3411, the dollar eased 0.3 per cent to 157.99 yen, and the Australian and New Zealand dollars rallied — the Aussie by 0.5 per cent to $0.6899 and the kiwi by 1 per cent to $0.5602, despite weekend elections in New Zealand that were too close to call.

Strategists cautioned against reading too much into either day. “We think the dollar rally requires the risk-off mood to persist this week. Otherwise, there is some moderate correction risk, as Friday’s move looked a bit too stretched relative to short-term market drivers,” Francesco Pesole, FX strategist at ING, told Reuters, adding that the macro backdrop should stop the dollar falling back to last week’s lows. For readers learning how data moves currencies, our forex section explains why a strong payrolls report is usually the most powerful single release for the dollar.

The real test comes on Tuesday, when October’s US consumer price index lands at 8:30 a.m. Eastern Time. A Reuters poll expects a monthly rise of 0.3 per cent, with the annual rate seen ticking up to 3.9 per cent from 3.7 per cent, and core inflation — which strips out food and energy — at about 0.2 per cent on the month. A hot number would all but lock in a December 9 rate rise — futures imply around 81 per cent odds, per the CME FedWatch tool, up from about 71 per cent a week earlier. A soft number could unwind that pricing fast. Fed officials Bowman, Goolsbee and Barkin speak on Monday, and their tone will be parsed for any hint of hesitation.

Unusually, the dollar’s rival central banks may be tightening too. The European Central Bank held rates on October 29, but President Christine Lagarde left a December increase in play, with incoming data to decide — eurozone inflation topped 4 per cent in September, driven almost entirely by energy costs. The Bank of England has already moved, raising Bank Rate to 4.00 per cent on November 5 in an 8-1 vote. That turns EUR/USD into less of a one-way dollar story and more of a contest over which central bank blinks first.

What to watch next: technically, the dollar index faces resistance at 102.259, then 102.488, with support at 101.891; a two-hour close above 102.259 would favour renewed upside, while below 101.891 the near-term bias turns bearish. For EUR/USD the pivot is 1.11632, resistance 1.11996, support 1.11310 and 1.11023 — the latter near last week’s trough of 1.1105, the weakest since May 2025. Beyond CPI, the calendar brings UK GDP on Thursday and US producer prices on Friday. With volatility this high, position sizing matters more than direction — our forex tools include calculators for sizing trades on fast-moving pairs. (Not financial advice.)