Europe Fundamental Forecast | 11 November 2026 | IC Markets
What happened in the Asia session?
Asian markets are facing pressure from a stronger U.S. dollar following hotter-than-expected U.S. inflation and renewed expectations of further Federal Reserve rate increases. The Japanese yen and Australian dollar are particularly vulnerable, while gold remains under pressure from higher bond yields. Oil has recovered from changing Middle East developments, although geopolitical uncertainty remains an important driver.
What does it mean for the European & US sessions?
Markets are becoming increasingly concerned about persistent U.S. inflation and the possibility of further Federal Reserve interest-rate increases. This is supporting the U.S. dollar and Treasury yields while putting pressure on gold and equities.
Meanwhile, oil remains volatile as traders assess the possibility of an improvement in U.S.–Iran relations and the risk of supply disruptions. During today’s European session, ECB President Lagarde’s comments, German inflation, and Italian industrial production will be important. The U.S. session may be quieter because of Veterans Day, but dollar movements and interest-rate expectations will remain important market drivers.
The Dollar Index (DXY)
Key news events today
No major news event
What can we expect from the DXY today?
The US dollar is strengthening after hotter-than-expected October inflation and hawkish comments from Federal Reserve officials increased expectations of further interest-rate hikes in December. Treasury yields have climbed close to 5%, supporting the dollar and putting pressure on gold and major currency pairs such as EUR/USD and GBP/USD.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) kept interest rates unchanged at 3.75%–4.00% at its October 27–28 meeting. The decision was approved by a 10–2 vote, following September’s 25-basis-point rate hike. Two members preferred another 25-basis-point increase.
- The labor market remains relatively stable. The Fed noted that job gains have kept pace with workforce growth and that the unemployment rate has changed little. Employment conditions remain an important factor in future policy decisions.
- Inflation remains above the Fed’s 2% target. Policymakers want more economic data to assess whether inflation is moving sustainably towards the target. Persistent inflation could increase the possibility of further rate hikes.
- The Fed upgraded its assessment of the U.S. economy from a solid pace of growth to a strong pace. Domestic spending remains resilient, productivity growth is strong, and business investment remains robust. However, geopolitical developments continue to create uncertainty.
- The Fed has kept the door open to further rate hikes if inflation remains elevated. The latest decision suggests policymakers want more evidence before making their next move. Markets are watching closely for signals about a possible rate increase in December.
- Chair Kevin Warsh continues to emphasize the importance of bringing inflation back to the 2% target. The October decision reflects a cautious approach, with the Fed waiting for more information before adjusting interest rates again.
- The Fed’s decision could influence the U.S. dollar, Treasury yields, gold, and other financial markets. Expectations of higher interest rates may support the dollar and pressure gold, while signs of easing inflation could weaken the dollar and support gold prices. Market reactions will depend on incoming economic data and expectations for future policy.
- The next meeting is scheduled for 8 to 9 December 2026.
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
No major news event
What can we expect from the Gold today?
Gold is attempting a modest recovery on Wednesday after suffering a nearly 3% decline on Tuesday. However, stronger-than-expected U.S. inflation and growing expectations of a December Federal Reserve rate hike continue to weigh on the precious metal. A stronger dollar and higher Treasury yields remain bearish factors. For now, gold’s recovery may be limited unless the dollar weakens or Treasury yields retreat.
Next 24 Hours Bias
Medium Bearish
The Euro (EUR)
Key news events today
ECB President Lagarde Speaks (9:45 am GMT)
What can we expect from the EUR today?
The euro is facing downside pressure as stronger U.S. inflation increases demand for the dollar and strengthens expectations of further Fed tightening. However, elevated Eurozone inflation is keeping expectations of a possible ECB rate hike alive, which is helping limit euro losses. Traders should pay close attention to Christine Lagarde’s speech today for clues about the ECB’s December policy decision.
Central Bank Notes:
- At its 29 October meeting, the ECB kept all three key interest rates unchanged. The deposit facility rate remains at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. The ECB maintained its data-dependent, meeting-by-meeting approach, with no commitment to future rate changes.
- Inflation remains a major concern. Euro-area annual inflation rose to 3.8% in September, up from 3.2% in August. Higher energy prices were the main contributor, with energy inflation reaching 18.8%. This keeps inflation well above the ECB’s 2% target.
- Economic growth remains relatively modest. The ECB’s September projections expect GDP growth of 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028. Although the economy has shown resilience, higher energy costs and geopolitical uncertainty continue to threaten the outlook.
- Economic confidence weakened in October. The Euro-area Economic Sentiment Indicator declined by 0.6 points to 96.9, marking its second consecutive monthly decline. Consumer confidence also weakened, suggesting continued pressure on household spending and business activity.
- Energy prices remain a major risk to the inflation outlook. The ECB warned that prolonged increases in oil and natural gas prices could push inflation higher while weakening economic growth. The bank is also monitoring whether higher energy costs begin spreading into wages and broader consumer prices.
- The ECB’s balance-sheet reduction continues. The APP and PEPP portfolios are gradually declining as the central bank no longer reinvests principal payments from maturing bonds. This process represents continued quantitative tightening and a gradual withdrawal of monetary support.
- The main focus heading into November is whether persistent inflation will require further interest rate increases. The ECB remains cautious as rising energy costs create inflation risks, while weaker economic confidence and tighter financing conditions could weigh on growth. Upcoming inflation and economic activity data will be important in determining the bank’s next policy decision.
The next meeting is on 16-17 December 2026.
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from the CHF today?
The Swiss franc is facing downward pressure, particularly against the US dollar, following stronger-than-expected US inflation data and rising expectations of a December Federal Reserve rate hike. Reduced geopolitical tensions have also weakened demand for the franc as a safe-haven currency.
However, rising Swiss inflation has increased expectations that the SNB could raise interest rates in December, which may provide support for CHF. For now, the stronger US dollar remains an important headwind.
Central Bank Notes:
- At its 24 September meeting, the SNB kept the policy rate unchanged at 0.00%, citing appropriate monetary conditions.
- Swiss inflation increased from 0.6% in May to 0.8% in August, mainly due to higher energy prices. The SNB expects inflation to rise somewhat in Q4 before easing during 2027.
- The SNB now projects average inflation of 0.7% in 2026, 0.8% in 2027, and 0.8% in 2028, assuming the policy rate remains at 0%.
- The SNB remains willing to intervene in the foreign-exchange market if necessary to maintain appropriate monetary conditions, particularly if exchange-rate movements become problematic.
- The SNB expects Swiss growth to remain moderate, forecasting 1.5–2% growth in 2026 and around 1.5% in 2027.
- The main risks remain Middle East tensions, elevated energy prices, global growth, and trade-policy uncertainty. Higher energy prices could increase inflation while weakening economic growth.
The next meeting is on 10 December 2026.
Next 24 Hours Bias
Medium Bullish
The Pound (GBP)
Key news events today
No major news event
What can we expect from the GBP today?
The British pound is facing pressure from renewed US dollar strength following hotter-than-expected US inflation figures. However, the Bank of England’s recent interest-rate increase to 4% provides some support for sterling.
Investors are now looking ahead to Thursday’s UK GDP figures, which could influence expectations for further BoE rate increases.
Central Bank Notes:
- The BoE raised its bank rate by 25 basis points to 4.00% at its 4 November 2026 meeting. The MPC voted 8–1 in favour of the increase, with one member preferring a larger hike to 4.25%. The decision reflects growing concerns about persistent inflation driven by higher energy prices.
- UK CPI inflation increased to 3.5% in September, up from 3.1% in August, remaining well above the BoE’s 2% target. Core CPI also increased to 2.8%, while services inflation rose to 3.7%, highlighting continued underlying price pressures.
- The ongoing Middle East conflict continues to push energy prices higher. The BoE expects inflation to rise further, potentially reaching around 5% by mid-2027, before gradually declining as energy-related pressures ease.
- The UK economy has shown more resilience than previously expected, with economic activity stronger than anticipated. However, higher energy costs and borrowing expenses continue to create uncertainty for households and businesses.
- Wage growth and services inflation remain key concerns for policymakers. The BoE is closely monitoring whether higher energy costs will lead to further increases in wages and business prices, creating more persistent inflation.
- The BoE continues to review its balance-sheet reduction strategy and the management of its government bond holdings. The bank is monitoring market conditions while maintaining its longer-term approach to quantitative tightening.
- The BoE’s future decisions will remain data-dependent, with inflation, energy prices, wage growth, and economic activity determining whether further rate increases are necessary. Policymakers have indicated that the latest increase does not automatically signal the beginning of a prolonged rate-hiking cycle.
- The next meeting is on 17 December 2026.
Next 24 Hours Bias
Medium Bullish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from the CAD today?
The Canadian dollar remains under pressure on Wednesday as stronger-than-expected U.S. inflation supports the U.S. dollar and increases expectations of a December Federal Reserve rate hike. Meanwhile, Canada’s weakening employment market and reduced expectations of another Bank of Canada rate increase are weighing on the loonie. Although recovering oil prices are providing some support, the overall outlook remains challenging.
Central Bank Notes:
- On 28 October 2026, the Bank of Canada raised its overnight interest rate by 25 basis points to 2.50%, ending its extended period of holding rates steady. The bank cited persistent inflation risks and stronger economic activity. Further rate increases remain possible.
- Canada’s economy grew by an annualized 3.3% in Q2 2026, with growth estimated at around 2% in Q3. However, new US tariffs and trade uncertainty are expected to slow economic activity in Q4.
- Unemployment has remained around 6.5%, indicating continued spare capacity in the labor market. Although employment conditions have stabilized, uncertainty over trade and economic growth remains a concern.
- Canada’s annual inflation rate rose to 3.1% in September, up from 3.0% in August. Higher gasoline prices were the main driver, while inflation excluding gasoline remained at 2.2% and core inflation measures stayed close to 2%.
- Persistently high global oil prices and Middle East tensions continue to increase fuel and transportation costs. The bank warned that these pressures could spread to other goods and services, keeping inflation elevated for longer.
- Renewed US tariffs and uncertainty over trade relations remain significant risks to Canada’s economic outlook. These pressures could weaken exports, delay business investment, and slow growth, while also increasing business costs.
- The BoC has raised its policy rate to 2.50% to limit the risk of persistent inflation. The bank may raise rates further if price pressures continue, but future decisions will depend on economic data, energy prices, and trade developments.
- The next meeting is on 9 December 2026.
Next 24 Hours Bias
Medium Bearish
Oil
Key news events today
EIA Crude Oil Inventories (2:30 pm GMT)
What can we expect from the Oil today?
Oil prices are recovering slightly today after Tuesday’s sharp decline. Geopolitical tensions around the Strait of Hormuz are providing support, but rising U.S. inventories and increasing global supply are limiting gains. The short-term outlook remains mixed, with further volatility likely as traders monitor Middle East developments and upcoming U.S. inventory data.
Next 24 Hours Bias
Medium Bearish
