USDX Firms Ahead of FOMC Minutes, Tech Sector Cautious Before Nvidia Earnings

The EUR/USD pair dropped 0.08% on Tuesday, largely driven by the strengthening dollar due to less dovish Federal Reserve expectations, which warrants caution for euro bulls. While the market sees counter-pressure from concerns over the labor market, suggested by an increase in continuing unemployment claims to 1.957 million during the week ended October 18, and an ADP report showing employers cut 2,500 jobs a week on average through early November, any significant euro recovery is capped by hawkish signals.

Fed officials continue to indicate reluctance toward further monetary policy easing, with Vice Chair Philip Jefferson recently noting the central bank needs to proceed "slowly" with any potential rate cuts, and Richmond Fed President Barkin stating that inflation is unclear. Simultaneously, the Euro is attempting to hold ground as traders expect the European Central Bank (ECB) to adopt a generally cautious stance, with the central bank widely anticipated to keep rates unchanged amid stable economic performance.

The spotlight is now on this week’s data-heavy calendar, with Thursday’s Nonfarm Payrolls (NFP) report and Friday’s Real Earnings figures expected to set the tone for markets.

Gold is gaining positive traction for the second straight day, having surged 0.99% on Tuesday, and is now hovering at the top end of its weekly range. The metal is finding support from reviving safe-haven demand due to persistent investor worries about weakening US economic momentum following the government shutdown.

However, the fundamental backdrop warrants caution. The US Dollar is struggling for buyers and acts as a tailwind for the non-yielding metal, but any significant gain is capped by less dovish Federal Reserve expectations. Fed officials continue to signal caution on further monetary policy easing, with Vice Chair Philip Jefferson recently noting the central bank needs to proceed "slowly," countering concerns over the labor market suggested by an increase in continuing unemployment claims to 1.957 million during the week ended October 18.

Gold traders will now wait for fresh impetus from two major releases: the FOMC Minutes due later today, and the delayed US Nonfarm Payrolls (NFP) report on Thursday. These reports will offer crucial cues on the Fed's rate-cut path and influence the metal's near-term direction.

Oil prices retreated on Wednesday morning, erasing some of the gains seen on Tuesday where WTI surged 1.47% and Brent advanced 1.17%. The price decline was triggered by a relatively bearish industry report from the American Petroleum Institute (API), which indicated a significant rise in U.S. crude and fuel stocks for the week ended November 14. Crude inventories reportedly rose by 4.45 million barrels, gasoline by 1.55 million barrels, and distillate inventories by 577,000 barrels, reinforcing concerns of a persistent global oversupply.

However, price declines were limited by high market attention to supply risks. U.S. sanctions targeting major Russian producers (deadline November 21), coupled with recent Ukrainian attacks, are expected to curb Russia's export volumes. This leaves benchmark prices rangebound between upward pressure from supply disruption fears and downward pressure from oversupply sentiment. Traders are now awaiting the official U.S. government inventory data, due later today.

The main US equity indices moved lower on Tuesday, adding to recent losses as the selloff in technology shares continued just a day ahead of key earnings from Nvidia and the long-awaited labor market reading for September. The tech sector's rout came amid growing doubts over the long-term prospects and potential returns from the billions being invested in the AI industry.

Nvidia continued its slide ahead of its quarterly earnings report, closing Tuesday with a drop of -2.69%. Broader tech shares also fell, but Alphabet sidestepped the deep selloff, closing down only -0.20% after Google announced the next version of its AI model, Gemini 3, with improving coding and search abilities. Microsoft stock closed with a drop of -2.66% as markets eagerly awaited details on the software giant's plans for rapid data center expansion to meet AI computing power demand.

Beyond the tech sector, major retailers are reporting this week, offering crucial insights into the US consumer's health. The sector started the week with disappointment as Home Depot reported third-quarter adjusted earnings that fell short of analyst expectations, leading its stock to fall -6.04%.

Away from the corporate sector, investors are awaiting the release of key US economic readings that were delayed by the prolonged government shutdown in October. Nonfarm payrolls data for September is due on Thursday, and the US producer price index data will also be released on the same day. These delays mean the Federal Reserve will be "flying mostly blind" into its December meeting, making a hold more likely. Markets are now pricing in just over a 40% chance for a 25 basis point cut during the Fed’s December meeting.