Forex Today: Crude Oil Plunges Over 7%; Stock Selloff Continues

Crude Oil plunged yesterday as hopes of US-Iran diplomacy reduced the premium for a possible military escalation after today’s US midterm elections. WTI futures fell 7.36% to settle at $96.46, its biggest daily loss since July, while Brent dropped 7.63% to $104.77. This is a substantial reversal from last week’s advance to six-month highs.

The stock market selloff is continuing despite cheaper crude oil. US equity weakness has carried into today’s trading, with technology shares again under pressure as investors question AI spending and earnings prospects. The benchmark S&P 500 Index is approaching a key support level and round number at 7500. Asian technology stocks are also falling. The failure of sharply lower energy prices to restore confidence is notable: this correction is not simply an inflation trade, and doubts about technology valuations and returns on investment remain unresolved.

Markets are reassessing the risk of war after the elections. President Trump had said he would not attack Iran before the midterms, leaving traders concerned that military action could resume afterwards. Yesterday, he said Iran wanted to “make a deal and that could happen,” while Secretary of State Marco Rubio emphasised a preference for diplomacy. The resulting reduction in the post-election war premium has been substantial, but talks have not yet produced a breakthrough, although President Trump has talked up the possibility - but note he has an electoral reason to do so as the war is very unpopular in the USA. Polymarket sees a US and/or Israeli assault on Iran as probable by the end of November.

The RBA raised its interest rate this morning, but the Australian Dollar fell as the hike was widely expected. The cash rate increased by 0.25% to 4.85%, its highest since 2008 and the fifth increase this year. The decision was split 6–3, with three members preferring a hold. AUD/USD dropped below $0.7000 towards $0.6974 as traders reassessed the likelihood of further near-term tightening. The Australian Dollar carries the highest interest rate of any major currency.

Australian inflation remains a serious concern despite the divided vote. The RBA raised its inflation forecasts, citing energy costs, domestic capacity pressures, and broadly based price increases. It expects inflation to remain above 3% over the coming year. The split decision therefore signals uncertainty about the pace of tightening, not confidence that inflation has been defeated.

In the Forex market, the EUR/USD currency pair has risen again but is struggling to get established above 1.1200. Trend traders like me remain short of this currency pair for now, which is in a long-term bearish trend.

Today’s US midterm elections remain the main political event. Control of Congress could change expectations for spending, taxation, and the administration’s ability to advance its agenda. For oil and wider risk sentiment, the immediate issue is whether the outcome changes perceptions of renewed military action against Iran. Election expectations should not be confused with confirmed results, which are not yet available this morning.

Bitcoin has fallen farther below $80,000. It is trading near $76,822, while Ethereum is around $2,250. The failure to reclaim $80,000 leaves Bitcoin’s former bullish consolidation substantially weakened, with the old $87,293 breakout threshold now extremely remote.

Gold rallied strongly yesterday but remains below the key round number at $4,000. The precious metal gained more than 2% as falling Crude Oil prices eased inflation concerns, then slipped approximately 0.5% to $3,926.52 during Asian trading. The recovery offers some relief after October’s heavy losses, but bulls still need to regain and hold above $4,000 before calling it a more convincing reversal.

Late today there will be a release of the New Zealand Unemployment Rate.