US–China Trade Talks Begin, CPI Report in Focus

Daily Market Insights – October 24, 2025, Brought to you by Ultima Markets

U.S.–China Trade Talks Begin

Market sentiment recovered on Thursday as investors balanced diplomatic optimism with ongoing geopolitical risks ahead of the U.S.–China trade negotiations.

Malaysia Talks Begin Today: High-level U.S. and Chinese officials — led by Vice Premier He Lifeng — will begin four days of economic and trade consultations in Malaysia (October 24–27). These talks are viewed as a key step toward preparing for the expected Trump–Xi meeting at the APEC summit in South Korea next month.

Despite President Trump’s continued public optimism, the threat of expanded U.S. export restrictions on software — in retaliation for China’s rare-earth export controls — is keeping investors cautious. Markets remain highly headline-sensitive, and any sign of deadlock in Kuala Lumpur could quickly swing sentiment back into risk-off mode.

For now, however, the start of talks is being interpreted as a positive signal, offering near-term support to risk assets.

The Delayed U.S. CPI Report

Alongside trade developments, the key macro catalyst for today is the long-awaited release of the September U.S. Consumer Price Index (CPI), delayed earlier due to the government shutdown. This is the final major data point before next week’s FOMC meeting, making it a pivotal driver for the U.S. dollar and global market sentiment.

Why It Matters:

Markets have already priced in a 25-bps rate cut at the October FOMC meeting (~99% probability). While today’s CPI data is unlikely to change that outcome, it will heavily influence expectations for a December rate cut and the U.S. dollar’s near-term direction.

CPI Scenarios and Market Implications:

• Hotter than forecast – A less dovish Fed stance: Traders may question the likelihood of a December cut. This could lift the U.S. dollar and weigh on risk assets.
• Softer than forecast – A more dovish Fed stance: Markets may price in additional easing, putting pressure on the U.S. dollar while supporting gold and risk sentiment.

In short: Market tone is cautiously optimistic as trade talks begin, but CPI remains the key driver for USD and risk sentiment today.

Daily Outlook for US Dollar

USDX, Daily Chart | Source: Ultima Market MT5

The U.S. Dollar Index (DXY) is currently trading in a tight range, holding near key resistance at 99.00, with immediate resistance at 98.50.

Notably, recent price action and the validated trend channel indicate that the dollar remains in a near-term uptrend.

• A hot CPI print could push the dollar higher, potentially breaking above 98.50 and triggering a short-term upside extension toward — or even above — the 99.00 level.
• Conversely, a soft CPI print would likely pressure the greenback. A break below 98.00 would invalidate the recent uptrend structure, opening the door for further downside toward 97.50.

Bottom line: The 98.00–99.00 zone is critical for USD direction today, and CPI will likely determine whether the dollar confirms its uptrend or slips back into a prolonged consolidation phase.

USD/JPY: Yield Differential Back in Focus

Over USDJPY, market attention is turning to yield differentials as a key driver of price action. In Japan, the recent leadership victory of Sanae Takaichi signals a policy stance tilted toward fiscal expansion and continued dovishness from the Bank of Japan, which is expected to keep domestic yields lower for longer.

If today’s hot CPI print in the U.S. pushes back the Fed’s rate-cut timeline, the resulting widening yield gap between the U.S. and Japan could further strengthen the dollar against the yen.

USDJPY, Daily Chart

Technically, USD/JPY shows strong upside potential after holding firmly above the 150.00 level. With resistance above this zone appearing relatively clear, a hot CPI print could reinforce bullish momentum — pushing the pair higher as the yen remains under pressure.

Bottom line: The policy divergence between the Fed and the BoJ remains supportive of USD/JPY upside in the near term, especially if U.S. yields stay elevated.

Daily Market Takeaway – October 24, 2025

• Trade Talks Lift Sentiment: U.S.–China negotiations in Malaysia offer near-term support, but headline risks remain high.
• CPI in Focus: Today’s CPI release will be the key driver for the Fed outlook, USD direction, and overall risk sentiment.
• USD at a Crossroad: A hot print could confirm the uptrend; a soft print may trigger a pullback toward 97.50.
• USD/JPY Upside Favored: Yield divergence between the Fed and BoJ supports dollar strength, but focus remain on the 150.00 support.
• Market Tone: Equities hold steady on diplomatic optimism, but CPI and trade updates could spark volatility into the weekend.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.