19-month high: US Dollar Index hits new peak as Gold falls below $4,000 | Forex Today

11 November, Wednesday: Key market developments to watch:

Above 103.00, the US Dollar Index is at its highest since April 2025. Thursday's advance extends a rally driven by hot inflation figures and hawkish remarks from Federal Reserve (Fed) policymakers. Weekly Initial Jobless Claims and Existing Home Sales figures are due in the second half of the day on the US economic calendar. Central bank officials' comments will also remain firmly in investors' focus.

US Dollar Performance This Week

This week's percentage moves in the US Dollar (USD) against the major currencies listed appear below. The Swiss Franc recorded the largest decline against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.59%	0.69%	0.93%	1.00%	0.60%	0.22%	1.72%
EUR	-0.59%		0.11%	0.32%	0.41%	0.11%	-0.36%	1.12%
GBP	-0.69%	-0.11%		0.21%	0.29%	0.00%	-0.48%	1.01%
JPY	-0.93%	-0.32%	-0.21%		0.06%	-0.38%	-0.69%	0.73%
CAD	-1.00%	-0.41%	-0.29%	-0.06%		-0.41%	-0.79%	0.75%
AUD	-0.60%	-0.11%	-0.00%	0.38%	0.41%		-0.47%	0.92%
NZD	-0.22%	0.36%	0.48%	0.69%	0.79%	0.47%		1.51%
CHF	-1.72%	-1.12%	-1.01%	-0.73%	-0.75%	-0.92%	-1.51%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. Selecting the US Dollar on the left and following its row across to the Japanese Yen, for instance, gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Nearly 62% is now the market-implied probability of a combined 50 basis points (bps) of Fed rate increases over the next two meetings, according to the CME FedWatch Tool. That compares with only 10% a week earlier. This repricing of the Fed outlook has supported the USD's outperformance against its peers this week. After three consecutive daily gains, the benchmark 10-year US Treasury bond yield is steady at around 5% on Thursday. US stock index futures, meanwhile, remain negative despite Wednesday's gains.

25bps offers better risk-reward, MUFG says as Fed hike debate builds

Recent market shifts have reignited speculation about a stronger Fed policy response, MUFG/BTMU analysts acknowledge. However, they “remain sceptical of the need to hike by 50bps at this stage and suspect the majority will see the better risk-reward in going by 25bps.” Ahead of the FOMC meeting, they note that “we still have another payrolls report (but no further CPI prints, although it’s the day after) before the FOMC meeting,” while warning that “a strong print plus a rebound in crude oil after the recent sharp drop would be one scenario of a possible more aggressive hike.”

Annual growth in UK Gross Domestic Product reached 1.9% in the third quarter, the Office for National Statistics reported earlier in the day. The result met market expectations and followed growth of 1.4% in the preceding quarter. September's monthly Industrial Production and Manufacturing Production increases were 0.3% and 0.7%, respectively. Both exceeded analysts' forecasts. Following a two-day decline of more than 1%, GBP/USD has contained its losses on the positive UK figures. It nevertheless remains around 1.3250, its lowest in nearly a month.

Bank of Japan (BoJ) board member Toichiro Asada warned on Thursday that weak consumption momentum meant the central bank needed to consider the risk of rate increases pushing underlying inflation lower. USD/JPY remains firm near 160.00, its strongest level since early September, following Wednesday's rise of nearly 0.7%. Figures released earlier in the day showed Japan's Producer Price Index rose 0.7% month on month in October, reversing September's reported 0.2% decline.

The continued shift towards a more hawkish Fed outlook is putting heavy pressure on Gold. Down more than 2.5% since the week began, the precious metal reached a fresh weekly low around $3,960 during Thursday's European session.

EUR/USD remains under selling pressure below 1.1100, its lowest level since May 2025.

AUD/USD is approaching 0.6800 as Thursday brings a third consecutive daily decline. Meanwhile, NZD/USD is near 0.5500 following a fall of about 0.8% on Wednesday.

USD/CAD trades above 1.4250 during the European morning, taking its gain for the week to nearly 1%.

Fed questions answered

The Federal Reserve's role and its influence on the US Dollar

The Federal Reserve (Fed) sets US monetary policy with a dual mandate: maintaining price stability and promoting full employment. Interest rate adjustments are its main means of pursuing these objectives. If prices climb too rapidly and inflation exceeds its 2% target, the Fed increases rates. Higher borrowing costs across the economy make the US more attractive to international investors, strengthening the US Dollar (USD). Conversely, inflation below 2% or excessively high unemployment may prompt the Fed to cut rates to stimulate borrowing. This puts downward pressure on the Greenback.

Eight meetings a year: The Fed's policy schedule

At eight policy meetings each year, the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) reviews economic conditions and decides monetary policy. Twelve Fed officials participate: the Board of Governors' seven members, the president of the Federal Reserve Bank of New York, and four presidents drawn from the other eleven regional Reserve Banks. Those four positions rotate, with each president serving a one-year term.

Quantitative Easing (QE): Its purpose and effect on USD

To address extreme conditions, the Federal Reserve may use Quantitative Easing (QE), substantially expanding the flow of credit through a stalled financial system. This unconventional policy is deployed in crises or when inflation is exceptionally low. During the Great Financial Crisis in 2008, it was the Fed's preferred tool. Under QE, the Fed prints additional Dollars to purchase high-grade bonds from financial institutions. The US Dollar usually weakens as a result.

Quantitative Tightening (QT): How it affects the US Dollar

The reverse of QE is Quantitative tightening (QT). Under QT, the Federal Reserve ceases bond purchases from financial institutions. It also allows its existing bonds to mature without reinvesting the principal in new bonds. The process generally supports the US Dollar's value.