In October, the Eurozone’s Core Harmonised Index of Consumer Prices rose 2.4% year-over-year, which was higher than the 2.3% prediction. On the other hand, the overall Harmonised Index of Consumer Prices inflation fell to 2.1%, matching expectations. After the EU inflation data was released, the EUR/USD stayed above 1.1550, even though it had experienced drops on successive days. Meanwhile, the GBP/USD dipped below 1.3150, continuing its weekly decline as the US Dollar gained strength following comments from Fed Chair Powell.

Gold and Cryptocurrency Market Insights

Gold held steady above $4,000 after a bounce back, even as eased US-China tensions affected its recovery. In the cryptocurrency scene, Dogecoin, Shiba Inu, and Pepe saw losses and tested their support levels during a market sell-off. Artificial intelligence remains a strong force in global markets, alongside other news. The report also covers market dynamics related to copper supplies, gold demand, and Russian crude oil exports. The Eurozone’s core inflation rate hitting 2.4% today, which is higher than expected, is a crucial indicator. This persistent inflation may lead the European Central Bank to delay any planned interest rate cuts, diverging from market expectations. Such surprises can create volatility, making options on EUR/USD and Euro Stoxx 50 particularly important. The relationship between central banks will be the main focus in the upcoming weeks. While the US Federal Reserve appears set on keeping rates steady—reflected in the Fed funds futures market, which shows less than a 20% chance of a rate cut before spring 2026—this new data from Europe complicates matters. Therefore, exploring strategies that take advantage of fluctuations in the EUR/USD exchange rate, which is currently above 1.1550 but facing opposing forces, is wise.

Gold’s Strength and Caution in Equity Markets

Gold’s ability to stay above $4,000 is remarkable, especially given the usual pressure from a strong US dollar and high bond yields. This suggests continuing demand for a hedge against persistent inflation, a trend noted during the recovery phase in 2021-2022. Derivative traders might see this as a signal to maintain long positions while considering inexpensive puts for protection against sudden market shifts. In equity markets, AI-related stocks are pushing indices like the Dow Jones up, but signs of strain are appearing elsewhere. The sell-off in speculative assets like meme coins indicates a waning risk appetite. This calls for a cautious strategy, perhaps involving call options on tech leaders and protective puts on broader market indexes. Looking ahead, central bank officials’ speeches will be closely monitored for any changes in tone following this inflation data. The market is clearly sensitive, and any hawkish remarks could trigger sudden movements in interest rate futures and currency pairs. Positioning for higher implied volatility in the short term, especially related to European assets, seems like a smart approach. Create your live VT Markets account and start trading now.

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