Market Drivers – US Session, Nov. 6

The 10-year yield increased to 4.66%, while the 2-year yield rose from 4.85% to 4.93%, providing support for the Dollar and averting further losses. Thus far, the dollar’s recovery seems corrective, and fundamental reasons continue to give the currency vital support.

The US Dollar Index fell to its lowest point since September 21 at 104.86, but it later rose above 105.00. Although it closed higher, it is still under pressure in light of the US employment data and the Federal Reserve meeting from last week.

The EUR/USD pair fell to 1.0720, retreating from monthly highs after failing to hold above 1.0750. The Producer Price Index (PPI), whose annual rate is predicted to be -12.5%, will be released by Eurostat on Tuesday.

After touching the 200-day Simple Moving Average (SMA) at 1.2439, the GBP/USD pair started to decline, dropping as low as 1.2350. Although there is still room for correction, the bias is still heavily skewed upward. At 1.2300, the next support level appears.

After somewhat dovish remarks by Bank of Japan Governor Kazuo Ueda and a rise in the yields on government bonds around the world, the value of the Japanese yen declined. After three days of losses, the USD/JPY increased and approached the 150.00 mark.

Resistance in the 0.6520 region was encountered by AUD/USD, which turned negative and dropped below 0.6500. When the Reserve Bank of Australia (RBA) makes its announcement on Tuesday, a lot of analysts predict a rate increase of 25 basis points.

USD/CAD fell to 1.3626 and rebounded, rising to the 1.3700 area. The pair posted daily gains after falling during three trading days, losing 250 pips. It remains under the 20-day SMA, with risks tilted to the downside.

Gold lost momentum amid higher US Treasury yields and fell below $1,980. Silver was unable to break above the crucial resistance area at $23.30 and dropped to $23.00.

What to watch on Tuesday

The key event during the Asian session will be the Reserve Bank of Australia’s policy meeting, with a rate hike expected. China will release important trade data. Later in the day, Eurostat will release the Producer Price Index.