US Markets
SPX was down 0.01% yesterday, and at the time of writing, the SPX futures are up 0.11%, pushing SPX to 7,816. Meanwhile, NDX was down 0.29%, closing at 30,559, as the tech rout spread across Asia, after Chinese memory company CXMT said it is making rapid progress and closing the technological gap.
All eyes are on today’s US inflation report at 16:30 GST, the biggest test for markets this week. Higher energy costs are expected to push headline inflation up 0.6% on the month to 3.6% annually, while core inflation, which strips out food and energy, is forecast at a more modest 0.2% (2.5% annually). Markets currently price about a 22% chance of a Fed hike this month. That is lower than last week, after New York Fed President John Williams said one more hike this year may be appropriate but none looks necessary in 2027. Earnings season continues today with Bank of America and Morgan Stanley, after JPMorgan, Citi, and Wells Fargo reported record lending income yesterday. TSMC follows on Thursday.
Yesterday, SPX movement was muted, down 0.01%. This is because the S&P 500 is supported by positive dealer gamma, a positioning regime that has helped suppress market volatility. Volatility term structure shows limited near-term fear, with higher volatility priced into later expirations as investors approach additional economic reports, the Fed meeting, and November’s midterm elections. Options models identify 7,700 as the key downside risk level and 7,825 as near-term resistance. Whether CPI pushes the index outside this range could matter more for traders than the inflation number itself.
The S&P 500 faces immediate resistance at 7,850, the record high set on 6 October. On the four-hour chart, the index has been pushing higher since Friday, trying to retest this level but so far failing to break through. On the downside, the Fibonacci retracement drawn from the 5 October low to the 6 October high puts first support at 7,776 (the 50% level). A break below this would expose 7,759, the 61.8% retracement, which we see as the key level for the near-term uptrend. On the upside, a sustained break above 7,850 would open the way toward 7,875, the 100% trend-based Fibonacci extension measured from the 5 October low, the 6 October high and the subsequent 7,730 low.
US Dollar Index
The U.S. Dollar Index trades near 102.12, easing from recent highs. Rate fundamentals are increasingly driving the rally. The Fed’s hawkish repricing has pushed two-year Treasury yields higher since early September. This suggests the greenback is shifting from a trade driven mainly by macro risk toward one driven by policy divergence, leaving its next directional move dependent on whether that hawkish repricing holds.
Meanwhile, ECB President Christine Lagarde said higher energy prices have not yet generated broader second-round inflation effects, while stressing that policymakers must remain alert to early signs. The ECB has already raised rates twice this year, and investors expect another increase in December. Governing Council member Pierre Wunsch has also said that a further hike will probably be needed.
Today’s U.S. CPI report is the main market catalyst. Higher-than-expected inflation could reinforce expectations of tighter Fed policy and strengthen the dollar, while softer data could weaken it. Hawkish comments from BOJ Governor Kazuo Ueda could also support the yen and place downward pressure on the dollar, although expectations that the BOJ will avoid another immediate rate increase may limit the reaction.
DXY pulled back after failing to break decisively above 102.60. Initial resistance stands at 102.32, followed by 102.60 , while support is located near 101.95 and 101.75. A daily close above 102.60–102.61 could confirm a breakout and open the way toward 103.00, followed by the 103.50 area.
EUR/USD trades near 1.120–1.121 after rebounding from the 1.1152–1.1157 region and testing the descending trendline from the October 1 high. On the four-hour chart, the structure appears to be forming a falling wedge, a pattern that can precede a bullish reversal. A decisive four-hour close above 1.1220–1.1230 would provide stronger confirmation of a wedge breakout and could open the way toward 1.1270–1.1276, followed by 1.1300–1.1303. A rejection from the descending trendline would keep the broader bearish structure intact and put 1.1150–1.1160 back in focus, followed by 1.1100.
Gold & Silver
Gold closed the previous session 0.25% lower and is trading broadly flat at $4,158/oz in today’s morning session as traders remain cautious ahead of the US Consumer Price Index report due later today. The data will be closely monitored for clues on the Federal Reserve’s monetary policy outlook, with a stronger-than-expected inflation reading potentially reinforcing expectations of further interest rate hikes. Markets are currently pricing in a 22% probability of a rate hike in October and an 88% probability of an increase in December, according to the CME FedWatch Tool. Higher interest rates typically weigh on gold by increasing the opportunity cost of holding the non-yielding metal. Traders will also be awaiting Fed Chair Kevin Warsh’s speech on Friday for further insight into the central bank’s policy direction.
Meanwhile, geopolitical tensions in the Middle East continue to support oil prices and complicate the inflation outlook. An administrative building belonging to Saudi Aramco in Dhahran was attacked amid escalating hostilities between Saudi Arabia and Yemen’s Iran-backed Houthis, raising concerns over regional energy infrastructure and oil supply. The resulting rise in crude prices is adding to inflationary pressures and strengthening expectations of tighter monetary policy, potentially limiting gold’s upside despite its traditional safe haven appeal. With US inflation data and the Federal Reserve’s policy signals likely to dictate near-term direction, gold remains vulnerable to further downside if inflation proves persistent and markets increase their expectations of rate hikes.
Technically, the intraday outlook for Gold remains bearish, with immediate resistance placed at $4,200, corresponding to the previous session’s high. A failure to break above this level could keep selling pressure intact, with the next resistance at $4,221. On the downside, immediate support stands at $4,110, followed by the next support at $4,064. Silver is trading 0.78% lower at $58.76/oz at the time of writing. Immediate support is placed at $56.83, while resistance stands at $61.61.
Crude Oil
Oil edged higher yesterday as more attacks on infrastructure continued. The recent attack on Saudi Aramco’s headquarters added to a flare-up in the Middle East conflict, increasing uncertainty over a recovery in Persian Gulf energy flows.
Brent is trading near $107 on Tuesday, while WTI advanced toward $95. Iran-backed Houthis launched missile and drone strikes across Saudi Arabia, targeting several cities along with Aramco’s office complex in the east of the kingdom. The latest strikes added to an escalation of Iranian attacks on tankers in the Strait. The renewed strikes on the kingdom are adding pressure on Washington to step up support for its ally.
Still, Saudi oil output has continued to recover. The kingdom reported to OPEC that its crude production jumped by a third last month, recovering from the lowest in more than three decades. Saudi Arabia is also working to bypass Hormuz, with Aramco able to add roughly 1.2 million barrels a day of export capacity within two months. Total Middle East flows are also returning to pre-war levels, with around 14 mbpd flowing through the strait.
From a technical perspective, oil presents a bearish bias for the day. On the 1-hour chart, prices have taken resistance at the 96.3 level. The immediate target for prices is at $93.8. A break from this level can push prices to $91. On the 1-hour chart, Brent has immediate support at the $106 level, followed by the $104 level. On the upside, a break above 109 can establish bullish momentum.
