In October, the UK’s GfK Consumer Confidence score improved to -17, beating the expected -20. This indicates that people feel more positively about the economy than previously thought. The FXStreet report highlighted some important market changes. Gold prices fell in anticipation of US-China trade discussions and upcoming US inflation data. Additionally, WTI oil prices decreased to around $61.00 due to concerns about supply.

Forex Market Trends

The forex market stabilized, with the EUR/USD staying steady around 1.16. However, the GBP/USD dropped for five days in a row. Meanwhile, the Australian Dollar remained stable after recent PMI data was released. In the cryptocurrency market, there was notable whale activity in Ethereum, with large holdings being reported. Aster’s price experienced a slight increase due to positive sentiment in the wider crypto market. The article also discussed Japan’s reaction to Sanae Takaichi becoming Prime Minister. Investors are weighing the risks tied to Japan’s fiscal policies. Additionally, the People’s Bank of China set the USD/CNY reference rate at 7.0928, adjusting from the previous rate. The unexpected rise in UK consumer confidence to -17, surpassing the -20 forecast, is a good sign for the pound. Despite this, GBP/USD has declined over five consecutive days, indicating that the market is more focused on upcoming US inflation data. This means any strength in the pound is being overshadowed by dollar positioning ahead of this key event.

US Inflation Impact

Gold prices are softening towards $4,100 as the market prepares for the US Consumer Price Index data. Traders anticipate that high inflation could prompt the Federal Reserve to act, boosting the dollar. The US inflation rate has stayed around 3.8% for the last quarter, so any unexpected rise could lead to major market fluctuations. With EUR/USD staying close to 1.16, the pair is stuck in a holding pattern before the US inflation figures are released. The European Central Bank has taken a more cautious approach compared to the Federal Reserve throughout 2025, making this pair sensitive to any signs of ongoing US price pressures. If EUR/USD dips below 1.1585, it could indicate a new downward trend, making put options a worthwhile hedge. WTI crude prices remain around $61 despite a stronger dollar, highlighting underlying supply challenges. OPEC+ has kept production discipline throughout 2025, similar to its response during the price drop in 2020. This suggests that even if a strong US CPI report strengthens the dollar, any declines in oil prices may be short-lived and seen as buying opportunities. Given the market’s anticipation of the US inflation data, we should think about using options to take advantage of the expected volatility. A straddle on currency pairs like EUR/USD or a major index ETF could profit from significant price movements in either direction. This strategy allows us to prepare for a breakout without guessing the specific outcome of the data release. Create your live VT Markets account and start trading now.

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