The upcoming U.S. inflation report is set to have a significant impact on gold prices, EUR/USD, and the Nasdaq 100. On Tuesday, the U.S. Bureau of Labor Statistics will release the October consumer price index data, with headline CPI expected to rise 0.1% month-on-month and 3.3% year-on-year. The core gauge, which excludes food and energy, is forecasted to increase by 0.3% month-on-month and 4.1% year-on-year.
The Federal Reserve has expressed concern about rising inflation and has indicated that it will proceed cautiously in its response. The October CPI figures will carry additional weight in the eyes of financial markets, potentially leading to increased volatility for gold prices, EUR/USD, and the Nasdaq 100.
Chair Powell’s comments suggest that the Federal Open Market Committee (FOMC) is not on a pre-set course and is ready to respond as appropriate to adverse developments that may hinder the fulfillment of its mandates. Any upward deviation of the October CPI figures from consensus expectations could lead policymakers to favor another rate hike at one of their upcoming meetings.
If interest rate expectations shift in a more hawkish direction on account of a hot CPI report, U.S. yields should rise, boosting the U.S. dollar and potentially exerting downward pressure on gold, the Nasdaq 100, and EUR/USD. Conversely, a downside surprise in last month’s inflation data should support precious metals, tech stocks, and the EUR/USD by restraining yields and undermining the higher-for-longer argument.
In terms of technical analysis, gold is fluctuating around the 200-day simple moving average, with resistance at $1,980 and support at $1,935. Meanwhile, EUR/USD faces resistance at 1.0765 and pivotal support at 1.0650, with a potential bullish breakout toward 1.0840. The Nasdaq 100 broke out to the upside, with support at 15,500/15,400 and resistance at 15,720 and 16,062.
Traders and investors are advised to closely monitor the upcoming U.S. inflation report and its potential implications for these key financial assets.