Forex News

TD Securities analysts highlight that the European Central Bank (ECB) Consumer Expectation Surveys showed a notable upside surprise in 1-year and 3-year inflation expectations. They argue this points to concerns about inflation persistence and is likely to push ECB communication in a more hawkish direction, although a less tight labour market may limit second-round wage effects, keeping data dependence high.

Upside inflation expectations seen as persistent

"The ECB Consumer Expectation Surveys registered a significant upside surprise in both the 1-year and 3-year inflation expectations, at 4.0% (mkt: 2.8%) and 3.0% (mkt: 2.6%), respectively."

"This suggests a concern of inflation persistence beyond the energy shock in the first year, and we expect it to tilt the ECB messaging more hawkish at the April 30th meeting, as a result."

"To caveat, though inflation expectations are crucial to the Governing Council's thought process, the labour market is less tight than it was in 2022, which could limit second-round pass-through to wage growth measures."

"Given the ongoing uncertainty, monitoring all other data points will still be essential to the ECB in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• The United Arab Emirates announces its withdrawal from OPEC and OPEC+ effective May 1.
• The decision weakens cartel cohesion amid an already tense geopolitical backdrop.
• Regional tensions and strategic disagreements accelerate the rupture.

The United Arab Emirates (UAE) announces its decision to leave the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+), marking a major turning point for the balance of the global energy market. According to Reuters, the withdrawal takes effect on May 1 and follows a comprehensive reassessment of the country’s energy strategy.

This announcement comes at a time of heightened geopolitical tensions, particularly linked to the conflict with Iran, which is already disrupting global energy flows. Exports from Gulf producers are under pressure due to threats targeting the Strait of Hormuz, a critical chokepoint through which a significant share of the world’s Oil and Liquefied Natural Gas (LNG) supply normally passes.

The exit of the United Arab Emirates represents a significant setback for the alliance, historically dominated by Saudi Arabia. The move could deepen internal divisions, already visible over production quotas and strategic direction. It also raises questions about the group’s ability to maintain a coordinated policy response in the face of a global energy shock.

According to Reuters, Emirati authorities justify the decision by the need to align their energy strategy with broader national priorities beyond Oil alone. This repositioning comes as the country has expressed dissatisfaction with the level of regional support following multiple attacks during the ongoing conflict.

Beyond the immediate impact on the organization, the decision could reshape power dynamics within the global energy market, increasing uncertainty over future supply coordination and price stability in an already highly volatile environment.

Market reaction

West Texas Intermediate (WTI) Crude Oil initially dropped sharply near $96 following the announcement, before rebounding quickly to around $97.60 at the time of writing, marking a 2.8% gain on the day.

Danske Bank’s Danske Research Team notes that the Bank of Japan (BoJ) kept its policy rate at 0.75% with a closer 6-3 vote, reinforcing expectations for a potential June or summer hike. The new outlook highlights stronger inflation pressures than activity, pushing JGB yields higher and strengthening the Japanese Yen. Markets now price roughly a 54% probability of a summer move.

Closer vote underpins summer hike risk

"As widely expected, the Bank of Japan is on hold this morning keeping the overnight call rate at 0.75%. The decision was taken with a 6-3 vote, a closer call than both at the March and January meetings when only Takata Hajime voted for a hike, supporting our expectation for a June hike."

"The new outlook report suggests that the energy crunch affects inflation more than activity with a 0.5pp revision to GDP growth in the fiscal year (FY) 2026 and only 0.1pp in FY2027 while inflation excluding fresh food and energy has been revised 0.4pp/0.5pp higher respectively."

"The board members' forecasts also indicate that they are more worried about faster inflation than the risk on activity."

"The market has reacted with a stronger JPY and JGB yields edging higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Antje Praefcke at Commerzbank discusses the likely confirmation of Kevin Warsh as new Fed Chair in May, potentially succeeding Jerome Powell by mid‑month. The bank highlights questions over Powell’s future role on the Board and whether Warsh will push for earlier rate cuts despite elevated inflation, as political pressure from the U.S. president raises concerns about long‑term Fed independence.

Warsh nomination and policy implications

"So it’s time to turn to another topic: the new Fed Chair."

"Apparently, the senator on the Banking Committee who had intended to veto the nomination of Kevin Warsh has withdrawn his objection after the Department of Justice dropped a criminal investigation into construction work on the Fed building involving current Fed Chair Jerome Powell."

"This clears the way for Warsh’s election in the committee tomorrow."

"Following tomorrow’s committee vote, Warsh could be confirmed by the Senate in early May (possibly as early as next week)."

"Our economists assume that the Fed will not be able to resist pressure from the U.S. president in the medium term, which is why the key interest rate is likely to be cut for the first time toward the end of the year, with two further cuts expected in 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Gold drops to a four-week low as stalled US-Iran talks keep the US Dollar supported amid lingering uncertainty.
• Hormuz supply disruption keeps Oil prices elevated, fueling inflation risks and reinforcing a “higher-for-longer” rate outlook.
• Technically, XAU/USD remains capped below the 100-day and 50-day SMAs, with momentum indicators signaling growing bearish pressure.

Gold (XAU/USD) slips to a near one-month low, pressured by a firmer US Dollar (USD) and mounting Oil-driven inflation concerns, as investors await clearer signals on stalled diplomatic efforts between the United States (US) and Iran to end the war. At the time of writing, XAU/USD is trading around $4,571, down roughly 2.37% on the day.

This Tuesday marks two months since the US and Israel launched attacks on Iran. While a ceasefire appears to be holding, there has been no meaningful progress toward a second round of peace talks. The United States is reviewing Iran’s latest proposal. Still, early signals suggest that US President Donald Trump and his national security team remain skeptical of Tehran’s offer, which leaves nuclear negotiations for a later stage.

With no near-term resolution in sight, risk sentiment remains fragile, keeping the US Dollar supported. A stronger Greenback reduces demand for bullion as it becomes more expensive in other currencies. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.74, erasing the previous day’s losses and up 0.25% on the day.

At the same time, Oil prices continue to rise as supply through the Strait of Hormuz remains largely disrupted due to a dual blockade, fueling inflation risks. This, in turn, adds further pressure on the metal, as markets expect central banks, particularly the Federal Reserve (Fed), to keep borrowing costs higher for longer and may even consider raising rates if inflation pressures persist.

Higher interest rates increase the opportunity cost of holding Gold, as the metal does not offer any yield. Traders now look ahead to the upcoming Fed monetary policy decision due on Wednesday, where a hold is fully priced in, according to the CME FedWatch tool. The focus will be on forward guidance, which is likely to determine the next directional move in Gold, as a hawkish stance is expected to keep prices under pressure.

Looking ahead, investors will continue to monitor US-Iran developments while keeping an eye on US economic data, including the ADP Employment Change 4-week average and the Conference Board’s Consumer Confidence Index for April.

Technical analysis: XAU/USD trades below key SMAs as downside momentum builds

On the daily chart, XAU/USD remains capped below the 100-day Simple Moving Average (SMA) and the 50-day SMA, keeping the near-term bias bearish. The Relative Strength Index (RSI) around 39 holds below the midline, while a negative Moving Average Convergence Divergence (MACD) reading points to building downside momentum, suggesting sellers remain in control.

On the topside, initial resistance is seen at the 100-day SMA around $4,749, with a subsequent barrier at the 50-day SMA near $4,854, and bulls would need a daily close above this cluster to reassert a stronger uptrend. On the downside, immediate support comes from the nearby horizontal level at $4,550, while a deeper slide would expose the 200-day SMA around $4,263, where longer-term buyers could attempt to defend the broader bullish structure.

(The technical analysis of this story was written with the help of an AI tool.)

ING strategist Francesco Pesole notes that despite higher Oil prices and geopolitical uncertainty, the Dollar has only found limited support as resilient US equities and month‑end flows weigh on USD performance. He highlights that high‑beta commodity currencies like the Australian Dollar and Canadian Dollar are currently favored, but warns that once month‑end flows fade, USD gains could accelerate if Gulf negotiations fail to progress.

Risk, flows and FOMC shape USD

"In theory, this should be a favourable environment for the dollar, yet USD has found only limited support so far. We see two reasons. First, US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic."

"That remains a key missing link for a sustained dollar rally; EUR/USD, like many other USD crosses, currently shows a higher beta to global equities than to oil prices or rate differentials. Second, month‑end flows should be acting as a drag on the dollar, given relative US equity outperformance in April."

"Once month‑end flows roll off in the coming days, barring tangible progress in negotiations, we would expect USD gains to accelerate."

"For today, some focus will be on consumer confidence figures, although a wait‑and‑see approach ahead of tomorrow’s FOMC decision and big tech earnings (Alphabet, Microsoft, Amazon and Meta) could keep volatility in USD crosses somewhat contained."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)