Forex News
- SD/JPY holds above 50-day SMA, but upside remains capped.
- RSI slopes toward 50, signaling sellers are gaining traction.
- Break below 158.78 exposes 158.14 and 157.59 support levels.
USD/JPY edges lower during the North American session, sponsored by geopolitical headlines, which weighed on the US Dollar. In the meantime, fears of a possible intervention of Japanese authorities in the FX markets underpinned the Japanese Yen. The pair trades at 158.91, down 0.19%.
USD/JPY Price Forecast: Technical outlook
From a technical perspective, USD/JPY is consolidating above the 50-day Simple Moving Average (SMA) at 158.78, with buyers pushing the exchange rate towards the intervention zone around 159.00-160.00.
If that area is hurdled, the next area of interest would be the year-to-date (YTD) at 160.73, followed by the 161.00 figure.
Although momentum remains bullish, as indicated by the Relative Strength Index (RSI), further downside is expected as the slope approaches the 50-neutral level, an indication that sellers are gaining steam.
Downwards, the USD/JPY first support would be the 50-day SMA at 158.78, followed by the 20-day SMA at 158.14. A breach of the latter will expose the 100-day SMA at 157.59, followed by the May 14 daily low of 157.31. Below this area, look for the 157.00 mark.
USD/JPY Price Chart – Daily
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.35% | -0.55% | -0.19% | -0.14% | -0.67% | -0.40% | -0.27% | |
| EUR | 0.35% | -0.22% | 0.15% | 0.18% | -0.34% | -0.03% | 0.07% | |
| GBP | 0.55% | 0.22% | 0.39% | 0.41% | -0.13% | 0.19% | 0.27% | |
| JPY | 0.19% | -0.15% | -0.39% | 0.04% | -0.52% | -0.24% | -0.14% | |
| CAD | 0.14% | -0.18% | -0.41% | -0.04% | -0.54% | -0.26% | -0.16% | |
| AUD | 0.67% | 0.34% | 0.13% | 0.52% | 0.54% | 0.29% | 0.39% | |
| NZD | 0.40% | 0.03% | -0.19% | 0.24% | 0.26% | -0.29% | 0.10% | |
| CHF | 0.27% | -0.07% | -0.27% | 0.14% | 0.16% | -0.39% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- Hormuz reopening hopes drag WTI sharply below the $91 level.
- US Dollar weakness supports Gold despite firmer equity-market sentiment.
- Traders eye Core PCE, GDP and Fed speakers next.
Gold (XAU/USD) price edges up by over 1.30% on Monday amid thin trading due to the US Memorial Day holiday, yet sentiment remains positive as US equity futures are rising to new all-time highs, while the US Dollar dives. The XAU/USD pair trades at $4,570 after bouncing off daily lows of $4,519.
XAU/USD rises as a softer Dollar offsets thin holiday trading
Geopolitical headlines pushed the Greenback lower due to its positive correlation with Oil prices, with the US Dollar Index (DXY) down 0.32%. The DXY, which measures the performance of the American currency against six other currencies, dropped to near 99.00. The US crude Oil benchmark, WTI, is falling more than 6% to $91.00 per barrel, as US President Donald Trump said negotiations with Iran are “proceeding nicely.”
Negotiations between the US and Iran continued, and Nikkei reported that Iran would reopen the Strait of Hormuz, as Washington and Tehran reached a deal to extend a ceasefire for 60 days, pending approval from the Iranian Supreme Leader, Ayatollah Mojtaba Khamenei.
Under the deal, Iran would clear mines from the Strait of Hormuz within 30 days, restore passage for all ships, and end transit fees. Nuclear talks would resume during the 60-day ceasefire, while Washington would gradually ease sanctions on Iranian assets.
Recent headlines reduced the odds that the Federal Reserve (Fed) will raise rates in 2026, even though most board members said they’re leaning toward holding or raising rates amid inflationary pressures from the Middle East conflict.
The odds that the Fed will raise rates by December are at 50%, according to Prime Terminal data.
Last Friday, Fed Governor Christopher Waller said he does not support a rate change now but wants to remove the easing bias from the statement. He added that if inflation expectations move away from target, he “would not hesitate” to back a rate hike, calling rate-cut talk “crazy.”
This week, the US economic calendar highlights housing data, Durable Goods Orders, the second estimate of Q1 2026 GDP, jobs data, and the Fed’s preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index.
XAU/USD technical outlook: Gold tests higher prices, buyers eye $4,600
Gold appears to have found a floor near $4,450, clearing $4,500 and poised to challenge $4,600. The Relative Strength Index (RSI) remains bearish but is rising, indicating that buyers are gaining momentum.
If XAU/USD clears $4,600, the next stop would be the 20-day SMA at $4,603, followed by the 50-day SMA at $4,657. On further strength, the next stop would be the $4,700 mark.
Downwards, Gold’s first support is the $4,550 milestone. Once hurdled, the next stop would be the $4,500 mark, followed by the $4,450 psychological level. Below, the next key support levels are $4,400 and the 200-day SMA at $4,357.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- GBP/USD climbs toward 1.3500 as optimism over a potential US-Iran deal pressures the US Dollar.
- Markets remain cautiously optimistic over Middle East negotiations, though key disagreements continue to slow progress.
- Political uncertainty in the United Kingdom limits aggressive bullish bets on the British Pound.
The British Pound (GBP) strengthens against the US Dollar (USD) on Monday, with GBP/USD climbing toward the 1.3500 mark as improving optimism surrounding a possible US-Iran agreement boosts market sentiment and weighs on the Greenback. At the time of writing, the pair is up 0.54% on the day, hovering near its highest level since May 14.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, consolidates losses near the 99.00 mark after touching more than one-month highs around 99.50 last week.
Markets remain cautiously optimistic that the United States (US) and Iran are moving closer toward an agreement that could eventually end the conflict in the Middle East and reopen the Strait of Hormuz. A potential deal reportedly includes a 60-day ceasefire extension, the reopening of the Strait of Hormuz and the removal of the US naval blockade on Iranian ports, while negotiations over Iran’s nuclear program would continue.
Over the weekend, US President Donald Trump said negotiations with Iran were progressing “in an orderly and constructive manner,” though he added there was “no rush” to finalize an agreement because time was on the US side.
Meanwhile, Iranian Foreign Ministry spokesman Esmaeil Baghaei said some progress had been made in Pakistan-mediated talks with the US on “a large portion of the discussion topics,” but stressed that it does not mean “the signing of an agreement is imminent.”
However, the slow pace of negotiations continues to keep markets cautious, as major disagreements reportedly remain over Iran’s nuclear program, sanctions relief, the release of frozen Iranian assets and the US naval blockade on Iranian ports.
Against this backdrop, downside pressure on the US Dollar appears limited, while traders also remain cautious about placing aggressive bullish bets on the British Pound amid rising political uncertainty in the United Kingdom (UK) as pressure mounts on Prime Minister Keir Starmer to resign following weak local election results.
At the same time, investor attention remains firmly focused on the monetary policy outlook. Although hopes for a potential US-Iran agreement have pushed crude Oil prices lower, prices remain elevated and continue to fuel inflation concerns.
Traders will closely monitor upcoming speeches from officials at the Federal Reserve (Fed) and the Bank of England (BoE) later this week for fresh clues on the interest rate outlook.
On the data front, the United Kingdom’s economic calendar remains relatively quiet this week, while in the United States, traders await the Personal Consumption Expenditures (PCE) Price Index data on Thursday.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.35% | -0.54% | -0.21% | -0.14% | -0.67% | -0.42% | -0.27% | |
| EUR | 0.35% | -0.21% | 0.15% | 0.20% | -0.33% | -0.08% | 0.07% | |
| GBP | 0.54% | 0.21% | 0.36% | 0.40% | -0.13% | 0.14% | 0.26% | |
| JPY | 0.21% | -0.15% | -0.36% | 0.06% | -0.50% | -0.26% | -0.12% | |
| CAD | 0.14% | -0.20% | -0.40% | -0.06% | -0.54% | -0.29% | -0.17% | |
| AUD | 0.67% | 0.33% | 0.13% | 0.50% | 0.54% | 0.25% | 0.39% | |
| NZD | 0.42% | 0.08% | -0.14% | 0.26% | 0.29% | -0.25% | 0.12% | |
| CHF | 0.27% | -0.07% | -0.26% | 0.12% | 0.17% | -0.39% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
According to Nikkei, the US and Iran agreed to extend the ceasefire from early April by 60 days, the newspaper reported, citing a source.
The article states that Iran would clear the mines in the Strait of Hormuz within a 30-day window after reaching an agreement, freeing ships and vessels of all countries using the strait, as before the closure. Tehran would stop charging transit fees.
A resumption of Iran’s nuclear talks would happen within this two-month pause in hostilities. Washington is expected to lift sanctions on Iran’s assets, but the process would be phased.
The deal is expected to be approved by the Iranian Supreme Leader, Ayatollah Mojtaba Khamenei.
Market’s reaction
Oil prices extended their losses, with West Texas Intermediate (WTI) reaching a three-week low beneath $90.00 per barrel, down nearly 7% on the day.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- USD/CAD snaps a four-day winning streak as easing US-Iran tensions weigh on the US Dollar.
- Falling Oil prices pressure the commodity-linked Canadian Dollar, limiting downside in the pair.
- Traders await US PCE inflation data while monitoring headlines surrounding a possible US-Iran agreement.
USD/CAD trades on the back foot on Monday, snapping a four-day winning streak as markets monitor evolving developments surrounding ongoing US-Iran negotiations. At the time of writing, the pair is trading around 1.3803 after easing from an intraday high near 1.3820.
The US Dollar (USD) came under selling pressure after reports suggested the United States (US) and Iran were making progress toward a potential agreement that could eventually reopen the Strait of Hormuz. The optimism dragged crude Oil prices sharply lower, with West Texas Intermediate (WTI) falling to its lowest level in almost three weeks.
Falling crude prices eased fears of an Energy-driven inflation shock while also limiting downside pressure in USD/CAD, as weaker Oil prices tend to weigh on the commodity-linked Canadian Dollar (CAD), given Canada is one of the world’s largest crude exporters.
Meanwhile, lingering uncertainty surrounding the negotiations continues to limit downside pressure on the US Dollar, as major disagreements reportedly remain over Iran’s nuclear program, sanctions relief, the release of frozen Iranian assets, and the US naval blockade of Iranian ports.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is consolidating losses near the 99.00 mark.
At the same time, investors remain focused on the monetary policy outlook. Despite the recent pullback in Oil prices, they remain well above pre-war levels, keeping Energy-driven inflation concerns in focus and reinforcing expectations that major central banks, including the Federal Reserve (Fed), may be forced to raise interest rates or maintain a higher-for-longer policy stance.
Hawkish Fed expectations continue to offer underlying support to the US Dollar, with investors now turning their attention to the US Personal Consumption Expenditures (PCE) Price Index data due on Thursday for further clues on the interest rate outlook. Traders also continue to assess whether ongoing negotiations between Washington and Tehran could eventually lead to a final agreement.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.34% | -0.53% | -0.19% | -0.11% | -0.64% | -0.40% | -0.23% | |
| EUR | 0.34% | -0.20% | 0.15% | 0.21% | -0.30% | -0.07% | 0.09% | |
| GBP | 0.53% | 0.20% | 0.34% | 0.41% | -0.12% | 0.15% | 0.28% | |
| JPY | 0.19% | -0.15% | -0.34% | 0.08% | -0.48% | -0.24% | -0.10% | |
| CAD | 0.11% | -0.21% | -0.41% | -0.08% | -0.54% | -0.30% | -0.16% | |
| AUD | 0.64% | 0.30% | 0.12% | 0.48% | 0.54% | 0.25% | 0.40% | |
| NZD | 0.40% | 0.07% | -0.15% | 0.24% | 0.30% | -0.25% | 0.14% | |
| CHF | 0.23% | -0.09% | -0.28% | 0.10% | 0.16% | -0.40% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Scotiabank’s Global FX Strategy team highlights that global benchmark Oil prices are lower, with WTI nearing the psychologically important $90/bbl level and Brent slipping toward the mid-$90s after briefly trading above $100/bbl. They link weaker Oil to a broader risk-on tone, as equities rally and bond yields decline across major markets.
Benchmarks slide toward critical thresholds
"The US/Iran negotiation details have been relatively limited but reporting seems to focus on the reopening of the Strait of Hormuz while offering little on thornier, longer-term issues like uranium enrichment."
"The broader market’s tone is bullish and suggestive of risk appetite with US equity futures pushing to fresh highs as global benchmark oil prices trade down about $5/bbl on the day. "
"WTI is now threatening a break below the psychologically important $90/bbl level and Brent is threatening the mid-$90s after breaching $100/bbl overnight."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
UOB’s Jester Koh notes that Singapore’s 1Q26 GDP was sharply revised higher and that MTI kept its 2026 growth forecast at 2.0–4.0%. The bank raises its 2026 GDP forecast to 3.2%, citing sustained AI-related demand and strong electronics indicators. However, it highlights significant downside risks from Middle East-related supply disruptions and a weaker global backdrop.
AI demand lifts Singapore growth outlook
"Outlook – We raise our 2026 GDP growth forecast to 3.2% (from 2.5% prev; 2027F: 2.1%), incorporating the 1Q outperformance alongside sustained AI-related tailwinds, as evidenced by the improvement in the Apr electronics PMI (51.7; Mar: 51.4), driven by increases in the new orders (Apr: 52.3; Mar: 52.0) and order backlog (Apr: 51.7; Mar: 51.4) subindices."
"Meanwhile, South Korea’s first 20-day exports data for May showed a 202% y/y jump in semiconductor exports, confirming that AI-related tailwinds could continue to support growth in 2Q26 and possibly 3Q26, likely fully offsetting the associated drag from energy and petrochemical input supply disruptions stemming from the Middle East conflict."
"Our forecast is subject to significant left-tail risks, contingent on the duration and extent of the supply disruptions."
"Under our baseline forecast, growth is likely to run moderately above potential in 2026, with an estimated positive output gap of 0.6%."
"In the Economic Survey of Singapore 1Q26 Box Article 2.1, it was highlighted that higher electricity prices, as well as material disruptions to critical semiconductor inputs (helium, bromine, and sulfur), could result in a slowdown in semiconductor production."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
The Greenback has started the week on the back foot, receding to two-week lows on the back of the generalised improvement in the risk complex, all in response to rising optimism on a potential US-Iran deal.
Here is what you need to know on Tuesday, May 26:
The USD Index (DXY) dropped to two-week troughs after breaking below the 99.00 support, always following the better tone in the risk-linked space. The Conference Board’s Consumer Confidence gauge will be the salient event on the US docket, seconded by the Chicago Fed National Activity Index, the FHFA’s House Price Index and the S&P/Case-Shiller Home Price Index.
EUR/USD improved markedly, advancing to multi-day highs and revisiting the 1.1650 zone amid the widespread selling bias hurting the US Dollar. There will be no data releases in either Germany or the Eurozone.
GBP/USD reversed two daily pullbacks in a row and surpassed the 1.3500 hurdle against the backdrop of the broad-based risk-on sentiment. The BRC Shop Price Inflation is due alongside the CBI Distributive Trades.
USD/JPY seems to have embarked on a consolidative move in the upper end of its range near the 159.00 neighbourhood, setting aside at the same time two consecutive daily declines. The final prints of the Coincident and Leading Economic indices will be on top of the agenda in the 'Land of the Rising Sun'.
AUD/USD rose sharply and flirted with multi-day peaks near 0.7180, resuming the uptrend after two straight daily pullbacks. Next on the Australian calendar will be the key inflation figures on May 27.
WTI prices retreated sharply and approached their lowest level in the last three weeks, near the $90.00 mark per barrel, as traders assessed the likelihood of a reopening of the Strait of Hormuz any time soon.
The strong retracement in the Greenback lent support to Gold, pushing the troy ounce closer to the $4,600 yardstick. The mixed tone from US Treasury yields across the curve also bolstered the yellow metal’s recovery.
- US-Iran ceasefire hopes push WTI sharply below $92.
- ECB officials keep June hike expectations alive amid inflation risks.
- Holiday-thinned trading leaves geopolitics driving EUR/USD price action.
The Euro (EUR) advances during Monday’s session, up 0.37% amid renewed hopes for an agreement between the US and Iran to extend the ceasefire by 60 days and discuss a deal regarding Iran’s uranium enrichment program. The EUR/USD pair trades at 1.1645 at the time of writing.
EUR/USD gains as Oil slump fuels broad Dollar weakness
The base-case scenario for traders is that an agreement could be reached within days, after which discussions on a new Iran nuclear deal would begin. US equity futures climbed, while the Greenback is on the back foot, as shown by the US Dollar Index (DXY).
The DXY, which tracks the performance of the buck’s value against a basket of six currencies, is down 0.33% at 98.99, after ending the last week almost flat.
West Texas Intermediate (WTI), the US crude Oil benchmark, is plummeting nearly 5.50% to $91.66 per barrel, another reason for the Euro’s strength, as it is positively correlated with the US Dollar.
The Eurozone and US economic docket is absent due to the holidays on both sides of the Atlantic, but several European Central Bank (ECB) policymakers crossed the wires.
ECB’s Yannis Stournaras said that a temporary overshoot of the ECB’s inflation target might warrant cautious tightening. Martin Kocher of the Governing Council echoed his words, adding that a hike is necessary if 2% in the medium term is “unattainable.”
Last week’s economic sentiment in Germany improved, but the outlook looks weak, according to the Ifo Business Sentiment survey. Additionally, the European Commission foresaw that the Eurozone economic growth will slow to 0.9% in 2026 from 1.3% last year, and that inflation will rise to 3% from 1.9%, above the ECB’s 2% target.
Money markets have so far priced in two ECB interest rate hikes towards the end of the year, according to Prime Terminal data. The first increase is expected at the June 11 meeting, with odds standing at 77.64%.
Ahed this week, the US economic docket will feature housing data, Durable Goods Orders, the Gross Domestic Product (GDP) second estimate for Q1 2026, jobs data and the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.
Across the pond, the Eurozone docket will feature speeches by ECB policymakers and the Business Climate and Consumer Confidence for May.
EUR/USD Price Forecast: Technical outlook
In the daily chart, EUR/USD trades at 1.1645. The pair sits just under the clustered simple moving average (SMA) triple at 1.1658, keeping the near-term tone broadly neutral and slightly capped while it trades above the reclaimed trend-line supports at 1.1573 and 1.1271. The Relative Strength Index (RSI) at 46 stays below the midline, hinting at modest downside risk but without strong momentum in either direction as price consolidates between underlying trend support and immediate moving average resistance.
On the topside, initial resistance is located at the SMA triple near 1.1658, with a subsequent barrier at the downward resistance trend line around 1.1813, which would need to give way to reopen a more constructive upside phase. On the downside, first support emerges at the rising trend line around 1.1573, ahead of a deeper structural floor at 1.1271, where failure would significantly weaken the broader technical backdrop.
(The technical analysis of this story was written with the help of an AI tool.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Gold recovers from recent losses as traders react to fresh headlines surrounding US-Iran negotiations.
- WTI crude falls more than 5% while the US Dollar Index retreats toward the 99.00 mark.
- Technically, XAU/USD remains stuck in a broad range while holding above the 200-day SMA near $4,380.
Gold (XAU/USD) rebounds sharply on Monday as hopes for a US-Iran deal to end the war in the Middle East and reopen the Strait of Hormuz weigh on the US Dollar (USD) and Oil prices. At the time of writing, XAU/USD is trading around $4,572, up 1.40% on the day.
Optimism over a possible breakthrough in negotiations intensified after US President Donald Trump said talks with Iran were progressing in an “orderly and constructive manner.”
A potential deal reportedly includes a 60-day ceasefire extension, the reopening of the Strait of Hormuz and the removal of the US naval blockade to Iranian ports, while negotiations over Iran’s nuclear program would continue.
Reuters also reported that Iran’s Foreign Ministry spokesman Esmaeil Baghaei said progress had been made on a “large portion” of the discussions through Pakistan-mediated talks. However, he stressed that a final agreement was not yet imminent. Trump also said there was “no rush” to finalize a deal.
Meanwhile, a report from The Wall Street Journal on Monday suggested negotiations continue to face hurdles over disagreements tied to Iran’s nuclear program and sanctions relief.
The latest headlines triggers a sharp decline in crude Oil prices on Monday, with West Texas Intermediate (WTI) down more than 5% at the time of writing. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, retreats toward the 99.00 mark.
For Gold, a successful agreement could significantly alter the recent macro narrative that has pressured bullion since the start of the war, as rising Oil prices fueled inflation concerns and reinforced expectations that major central banks, including the Federal Reserve (Fed), may need to raise borrowing costs.
A higher interest rate environment typically acts as a headwind for non-yielding assets like Gold. Markets are currently pricing in nearly a 40% chance of a 25 basis point hike at the Fed’s December meeting, according to CME FedWatch data.
However, if a deal is reached and the Strait of Hormuz fully reopens, further declines in Oil prices could ease fears of an energy-driven inflation shock, potentially cooling expectations that the Fed may need to raise interest rates again.
That said, until there is more clarity on the negotiations, Gold’s upside may remain limited and continue to be driven largely by movements in the US Dollar, Oil prices and shifting interest rate expectations.
Still, ongoing central bank buying and firm investment demand continue to provide an important longer-term support pillar for bullion, helping limit deeper downside pressure.
Looking ahead, investors will keep a close eye on further headlines surrounding the US-Iran negotiations for fresh direction. Focus later this week will shift to the US Personal Consumption Expenditure (PCE) inflation report on Thursday and speeches from several Fed officials for additional clues on the interest rate outlook.
Technical Analysis: XAU/USD needs to break above the 100-day SMA to revive bullish momentum
XAU/USD holds above the 200-day Simple Moving Average (SMA) at roughly $4,381, keeping a broader constructive backdrop, but remains capped by the 100-day SMA near $4,800, which limits immediate upside.
The Relative Strength Index (RSI) around 44 on the daily chart leans slightly negative, while the Moving Average Convergence Divergence (MACD) indicator sits below zero with a mildly negative histogram reading, together suggesting subdued momentum and a consolidative, range-bound bias between these key moving averages.
On the downside, initial support aligns with the nearby horizontal floor around $4,500, ahead of the more significant 200-day SMA cluster just above $4,381, where dip-buying interest could re-emerge if bears press their advantage.
On the topside, a sustained break above the 100-day SMA at approximately $4,800 would be needed to ease the current cap and open the way toward the psychological resistance band around $5,000, where prior supply defines the next key obstacle for bulls.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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