USD AI Market Pulse, Wednesday, 11 November 2026
JAFX AI’s read of the news on USD (US dollar), as it stood at the end of the day: read at 22:55 UTC.
Bias: bullish
USD at fresh yearly highs after a hot CPI and Waller's 50bp threat. A 25bp December hike is fully priced, so further gains need the 50bp debate kept alive by PPI and Fed speakers.
The dollar extended its post-CPI rally across the board. DXY broke out of a bullish flag to a year-to-date high, after trading near 102.52 earlier. EUR/USD slipped below 1.1100 to 1.1092, its lowest since May 2025. USD/CHF reached ~0.8335 and USD/CAD hit 1.4230, both four-week highs, and GBP/USD fell to just under 1.3300. Treasuries sold off from the short end: the 2y posted its biggest daily jump (+17.6bps to 4.74%) since April 2025, the 10y approached 5%, gold fell below $4,050 and equities wobbled.
The past week
The week turned on Waller's pre-CPI warning that a third straight hot core print could justify a 50bp hike at the 9 December FOMC. October CPI then delivered: headline 0.4% m/m vs 0.3% forecast, and core 0.3% vs 0.2%. That shifted the debate from 'hold vs 25bp' to '25bp vs 50bp'. Banks broadly back USD strength: SocGen cites resilient payrolls, retail sales and GDP and targets EUR/USD at 1.10 by year-end, while ING sees a hawkish Fed dominating into year-end despite bullish December seasonals for EUR/USD.
The bigger picture
The regime is a re-accelerating Fed hiking cycle, with pricing now extending into 2027, US growth outperforming and bear-flattening curves that favour USD over procyclical currencies. Rabobank argues that reduced fears of Fed political interference and renewed safe-haven demand outweigh medium-term deficit and Treasury-market concerns. De-dollarisation is a slow structural theme, not a near-term driver.
Positioning
A 25bp December hike is fully priced (~28.5bps per Deutsche Bank), with up to ~15% odds of 50bp (BBH). More USD upside needs evidence that pushes the 50bp odds materially higher. With EUR/USD RSI near oversold and DXY extended after a two-day surge, a soft PPI or dovish Fed pushback carries real profit-taking risk, even though the broader trend is intact.
Scenarios it set out
- Core PPI y/y above ~5% (f/c 5%) and/or hawkish Fed speakers (Hammack, Daly, Williams) endorse 50bp 50bp odds climb and the 2y pushes above 4.74%. DXY tests 103.00, and a sustained break opens 104.00. EUR/USD heads toward 1.1050 then 1.1000, and USD/CAD holds above 1.4230.
- Core PPI in line at ~5% and Fed speakers stick to 25bp USD stays firm but consolidates near highs. EUR/USD holds near 1.1100, around ING's 1.1110 retracement floor, with SocGen's ~1.1150 fair value capping bounces.
- Core PPI below 5% and/or claims well above 195K, with Fed officials pushing back on 50bp Profit-taking unwinds part of the CPI move and front-end yields ease. DXY retreats toward 102.20 support and EUR/USD reclaims 1.1110–1.1150. Gold recovers above $4,050.
What it said to watch
- DXY daily close vs 103.00 (upside trigger) and 102.20 (initial support)
- EUR/USD daily close below 1.1100 to confirm the breakdown; next 1.1050/1.1000/1.0951
- Fed funds futures odds of a 50bp December hike (~15% peak) as speakers Hammack, Barr, Goolsbee, Daly, Schmid and Williams talk Thursday
- US 2y yield around 4.74% and 10y near 5%: the front end is driving USD
- USD/CHF 0.8300–0.8315 zone and USD/CAD 1.4230 high as breadth gauges
- UK Q3 GDP Thursday (f/c 0.7% vs 0.5% prior) for GBP/USD near 1.3300
Risk ahead, as it saw it
Thu 12 Nov: Initial Jobless Claims 13:30 UTC (f/c 195K), then a heavy Fed slate from 14:00 UTC (Hammack, Barr, Goolsbee, Daly, Schmid, Williams at 23:30) and the Monthly Budget Statement 19:00 UTC (f/c -$298.6B). Fri 13 Nov: core PPI y/y 13:30 UTC (f/c 5%) is the key high-impact test for 50bp repricing ahead of the 9 Dec FOMC.