Forex Today: US Dollar selloff loses steam ahead of critical inflation data

On Tuesday, November 10, the US Dollar's downward trend weakened as market participants awaited crucial inflation data. The USD Index experienced a slight decline on Monday, before consolidating under the 102.00 mark on Tuesday. Key economic policymakers from the Federal Reserve, European Central Bank, and Bank of England would release speeches throughout the day.

Throughout the week, the USD showed weakness against the New Zealand Dollar, indicating its relative decline. Market sentiment improved, enabling Wall Street's major indexes to gain over 3% on Monday, with the Nasdaq Composite rising more than 3%. Asian markets also saw positive performances, with Korea's KOSPI Index rising more than 4% and Japan's Nikkei gaining nearly 3%.

Analysts at MUFG/BTMU believed the upcoming inflation report would be crucial for understanding the potential currency impact. They argued that if the core CPI (excluding volatile food and energy prices) showed a softer increase of 0.2% M/M in October, it could help dampen the USD's upward momentum. The USD was observed to be outpacing short-term yield spreads, suggesting a need for a hawkish surprise to maintain its strength.

Meanwhile, EUR/USD remained steady around 1.1200, GBP/USD gained 0.7%, and USD/JPY lost about 0.3% before stabilizing at around 158.00. China's export and import data for October showed impressive growth, but the impact on AUD/USD was minimal, as the pair remained virtually unchanged at 0.6920.