Forex News
- USD/JPY holds steady near 159.05 in Wednesday’s early Asian session.
- Trump said a new US attack would happen in the coming days if no agreement were reached.
- Traders largely ignored the stronger Japanese GDP growth data, but concerns about intervention could still underpin the Japanese Yen.
The USD/JPY pair trades on a flat note around 159.05 during the early Asian session on Wednesday. The potential upside for the pair might be limited amid intervention fears from Japanese authorities. Traders continue to digest the latest headlines on US talks with Iran to end the war. Japan’s April National Consumer Price Index (CPI) inflation report will be in the spotlight later on Friday.
US President Donald Trump on Tuesday threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, per Bloomberg. On Monday, Trump said that he had paused a planned resumption of hostilities following a new proposal by Tehran to end the US-Israeli war.
Meanwhile, an Iranian official stated that the US threat of a massive assault at any moment will be met "resolutely," and Iran is “prepared to confront any military aggression.” Signs of a prolonged war between the US and Iran could lift the US Dollar (USD) against the Japanese Yen (JPY) in the near term.
On the JPY’s front, traders shrugged off Japan's stronger-than-expected Gross Domestic Product (GDP) growth data for the first quarter (Q1). “Though Japan’s GDP grew healthily by 0.5% in Q1, we think the Q1 GDP is already in the rear-view mirror and expect the economy to feel the strains from high energy costs ahead,” said Norihiro Yamaguchi, lead Japan economist at Oxford Economics.
Japanese officials are on high alert for another round of currency intervention, which might provide some support to the JPY and act as a headwind for the pair. Finance Minister Satsuki Katayama said on Monday that Japan stands ready to act against excessive foreign exchange volatility at any time, while ensuring that any intervention is conducted in a way that avoids pushing up U.S. Treasury yields.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
US President Donald Trump threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, after he said he had just called off a US attack, Bloomberg reported on Tuesday.
“I hope we don’t have to do the war, but we may have to give them another big hit,” Trump told reporters on Tuesday. When asked how long he would wait, he said: “Well, I mean, I’m saying two or three days, maybe Friday, Saturday, Sunday. Something maybe early next week — a limited period of time,” said Trump.
An Iranian official stated that the US threat of a massive assault at any moment will be met “resolutely” and Iran is “prepared to confront any military aggression”.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 1.30% on the day at $103.35.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Federal Reserve (Fed) Bank of Philadelphia President Anna Paulson said that she favored leaving interest rates unchanged and conditioned lower borrowing costs on making sustained progress on inflation, Bloomberg reported on Tuesday.
Key quotes
Policy is mildly restrictive and that restrictiveness is helping to keep inflation pressures in check while the labor market remains stable.
Current policy rate is suitable and keeps applying downward pressure on inflation.
Healthy markets start weighing scenarios of rates holding or increasing.
Some families struggle with rising prices, but overall resilience prevails.
If job market stays balanced, rate reductions suitable only with new inflation progress.
Appropriate rate increase possible if growth exceeds potential or inflation threats arise.
No need seen at last meeting to alter policy language.
It’s still early to assess AI’s impact on productivity and inflation.
Risks to inflation and outlook are "super-elevated" right now.
Labor market currently resembles full employment.
Iran conflict prolongation would heighten inflation and unemployment risks.
Current steadiness in job market is unusual.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading around 99.31, up 0.33% on the day.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Gold price tumbles to around $4,480 in Wednesday’s early Asian session.
- Increase bets that global central banks may hike interest rates, which weighs on the Gold price.
- Trump threatened to resume strikes on Iran in the coming days.
Gold price (XAU/USD) faces some selling pressure near $4,480 during the early Asian session on Wednesday. The precious metal drops to its lowest since March 30 as persistent inflation fears keep interest rate hike expectations and Treasury yields high.
The US 30-year Treasury yields rose as much as seven basis points to 5.20% on Tuesday, a level last seen on the eve of the 2007 global financial crisis. Meanwhile, US 10-year Treasury yields climbed as much as 10 basis points to 4.69%, the highest since early 2025, before the move pared to around 4.66%.
"We are seeing a multi-country rise in real rates around the world, and that is really weighing mostly on gold. The dollar is also stronger, that's a negative," said Edward Meir, an analyst at Marex.
A lack of progress in reopening the Strait of Hormuz continued to raise fears of inflation and increase bets that global central banks may hike interest rates. Bloomberg reported on Tuesday that US President Donald Trump threatened to resume attacks on Iran in the coming days as part of the push for a deal to end the war, after he said he had just called off a US attack.
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.
- WTI rallied through Tuesday's session to settle above $103, recouping all of the ground lost after Trump called off a planned Iran strike at the request of Saudi Arabia, Qatar, and the UAE.
- Trump spent Tuesday walking back the Monday pause, signaling a 2-3 day timeline and warning the US "may have to give Iran another hit," while Iran's Deputy Foreign Minister talked of triumph or martyrs and NATO floated a Hormuz deployment if the strait is not open by July.
- API reported a 9.1M barrel US crude stock draw for the week ended May 15, well above the 3.4M barrel consensus and more than four times the prior week's 2.188M print.
The Crude Oil market spent Tuesday teaching the headline writers a lesson. West Texas Intermediate (WTI) gapped lower into the GMT session after President Trump announced he had called off a Tuesday strike on Iran at the request of Persian Gulf allies, with the front-month contract briefly trading near $101. The bid then reasserted almost immediately as Tuesday's wires brought a more bellicose Trump, a defiant Iran, and the prospect of NATO action on Hormuz by July. A late-session American Petroleum Institute (API) inventory print, showing a 9.1 million barrel crude stock draw against a 3.4 million barrel consensus, then poured fuel on the rally. By the New York close the contract was changing hands above $103, leaving the daily candle as a clear bullish rejection of the session lows and a 1.30% gain on the day.
Trump and Tehran walk back the de-escalation
The Monday strike cancellation framing did not survive contact with Tuesday morning. Trump used a string of public appearances through the European session to reframe the pause as a tactical delay rather than a strategic shift. He told reporters the US is "not leaving Iran yet," that "we may have to give Iran another hit," and that "Middle East countries asked for a few more days before the attack." He put a 2-3 day timeline on the next decision and dismissed the idea of being close to a deal with the line "I've heard this before." Iran's Deputy Foreign Minister responded with the framing that the country is "prepared to confront any military aggression" and will "either triumph or become martyrs." That is not the language of a regime preparing to fold, and the Strait of Hormuz remains effectively closed more than two weeks after the operational phase of the conflict wound down on May 5. Tanker traffic through the strait is still running in single digits per day against a pre-war baseline above 120.
NATO puts a July deadline on Hormuz
The harder geopolitical development arrived from Brussels. NATO indicated it would consider a Hormuz deployment if the strait is not open by July. That changes the structure of the trade in two ways. First, it multilateralises a conflict that has been functionally a US-Israel-Iran triangle, with the prospect of allied involvement raising the cost of continued obstruction for Tehran and the cost of unilateral escalation for Washington. Second, it puts a hard supply-side calendar in place. A forced reopening would be unambiguously bearish for crude, but the runway to July is long enough for the war premium to compound, and the escalation risk in the meantime points the other way.
API confirms what the IEA was warning
Tuesday's API release didn't leave much room for interpretation. A 9.1 million barrel crude stock draw against a 3.4 million barrel consensus is the kind of miss that doesn't get explained away by storage logistics or refinery turnarounds, and the prior week's reading of -2.188 million was already pointing in the same direction. The print lands directly into the macro framing the International Energy Agency (IEA) had been pushing earlier in the week, when it warned that global oil inventories are drawing down rapidly across crude and key refined product categories. The aggregate cushion still reads above emergency thresholds in barrel-day terms, but the rate of drawdown matters more than the level, and producers have not been able to fully reroute the roughly 10 to 12 million barrels a day choked off from world markets by the Hormuz disruption.
The chart still wants higher
WTI is trading well above both the 50-day and 200-day Exponential Moving Averages (EMAs), with the 50-day sitting near $90 and acting as the line that has caught every dip since April. Price has been grinding higher off the early-May lows around $93 and is now back in the $103 to $104 area, leaving the April and early-May peaks around $108 as the next overhead reference and the year's March peak above $113 as the broader ceiling. The daily Stochastic Relative Strength Index (RSI) has rolled out of the mid-range and is heading higher, which leaves room for another leg up before the move gets stretched.
Setup into the rest of the week
The reaction function is mechanical from here. A confirmed Iranian acknowledgement of talks, or a credible reopening of even partial Hormuz traffic, would let the market fade the war premium back toward the $90 area where the 50-day EMA sits. A continuation of the standoff, particularly if Wednesday's Energy Information Administration (EIA) inventory report confirms the API read, keeps the bid intact and opens up the $108 area. Trump's own 2-3 day timeline puts a binary on the calendar before the end of the week. Either talks materialise and the war premium starts to bleed, or the pause expires and the chart prints higher. The downside catalyst is a political signal that does not yet exist. The upside catalyst is data that has already started arriving.
Crude traders have spent the year learning that the Strait does the talking, not the State Department.
WTI 5-minute chart
Technical Analysis
In the five-minute chart, WTI US Oil trades at $103.42. Price holds comfortably above the day’s opening level at $101.68, keeping the near-term bias constructive despite the latest pullback from the intraday highs. The Stochastic RSI has retreated toward the low-20s, hinting at easing upside momentum but not yet flagging outright oversold conditions, which suggests the move is more of a consolidation within the prevailing intraday advance than a trend reversal.
On the downside, immediate support is seen at the psychological $103.00 area ahead of the day’s open near $101.68, where buyers could look to defend the broader intraday uptrend. As long as WTI holds above that opening pivot, dips are likely to attract demand, while a sustained break back below $101.68 would weaken the bullish tone and expose deeper corrective pressure.
In the daily chart, WTI US Oil trades at $103.35, maintaining a constructive bullish bias as it holds well above both the 50-day exponential moving average (EMA) at roughly $92.12 and the 200-day EMA near $76.07. The wide separation between these EMAs, with price extended on the upside, suggests a firmly established uptrend, while the Stochastic RSI easing back toward mid-range around 43 hints that upside momentum is cooling without yet signaling an outright reversal.
On the downside, immediate support is seen around the prior close zone at $103.35, with the 50-day EMA at $92.12 offering a deeper trend-aligned floor before the longer-term 200-day EMA near $76.07. As long as WTI holds above the $92 area, pullbacks are likely to be viewed as corrective within the broader advance, while a daily close below that level would risk exposing the more strategic support band anchored around the 200-day EMA.
(The technical analysis of this story was written with the help of an AI tool.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- GBP/USD held the 200-day exponential moving average into Tuesday's close, but only just, after a soft UK labour market print did not stop the slide through the prior session's range.
- Average weekly earnings including bonuses came in hot at 4.1% versus 3.8% consensus, while the Unemployment Rate ticked up to 5% and the Claimant Count rose by 26.5K.
- Wednesday's Consumer Price Index (CPI) print is now the catalyst that resolves it, with headline inflation seen falling sharply from 3.3% to 3%.
Tuesday handed the Pound a labour market reading that was mixed enough to satisfy nobody. UK payroll data showed Average Earnings excluding bonuses cooling to 3.4% on the three-month-on-year measure, in line with consensus, while the Including Bonus figure ran hot at 4.1% against a 3.8% expectation. The Employment Change print was a chunky 148K, but the headline ILO Unemployment Rate ticked up to 5% versus the 4.9% reading both expected and prior, and the Claimant Count Change came in north of 26K.
The Bank of England (BoE) had wanted a clean signal. Instead it got a labour market that is still adding jobs faster than the population is willing to absorb them, with wages mostly cooling but a stubborn bonus-driven tail, and unemployment quietly drifting higher. Sterling slid through Tuesday's London session, eventually probing below 1.34 in late trade before clawing back toward the handle into the close.
The chart tells the harder story
GBP/USD's daily chart broke through the 50-day exponential moving average (EMA) last week and spent Tuesday testing the 200-day EMA, which sits just below current levels. That is the line that has held every meaningful pullback since the spring lows. A clean daily close below it would put 1.32 back in scope, with very little structural support in between. The Stochastic RSI on the daily is rolling over from the mid-range, which suggests there is room for the move to extend before it gets oversold.
The CPI test that sets the tone
Wednesday's CPI is the print that decides whether Tuesday's bounce off the 200-day EMA was meaningful or just noise. Consensus is for headline CPI to drop from 3.3% to 3% YoY, with Core CPI easing from 3.1% to 2.6%. A clean cooling print, particularly in the Services CPI component the BoE has been pointing at, gives the doves on the Monetary Policy Committee (MPC) the cover they need to argue for another cut sooner rather than later. The rates strip is already nudging in that direction.
A hot print would be the worst possible outcome for Sterling. It would not be enough to revive a hike narrative, but it would force the BoE to keep holding for longer, which is precisely the kind of stagflation-lite signal that has pressured the Pound through gilt yields all year. The fiscal noise around UK debt servicing has not gone away either, and a sticky core read would bring it straight back to the front of the conversation.
Setup into the rest of the week
A daily close back above the 50-day EMA puts Tuesday's break in the rearview. A daily close below the 200-day EMA, particularly on a cool CPI that is read as accelerating the cutting path, opens the door toward the 1.32 handle. Thursday's S&P Global Composite PMI, expected to soften toward 51.7 from 52.6, and Friday's Retail Sales print, where consensus is for a 0.6% month-on-month contraction, fill out the week's catalysts. Both lean in the same direction.
The Pound goes into Wednesday morning with everything to lose and very little ready to support it.
GPB/USD 5-minute chart
Technical Analysis
In the five-minute chart, GBP/USD trades at 1.3400. The pair holds a bearish intraday bias as it remains below the day’s open at 1.3434, keeping the short-term tone pressured despite the absence of nearby structural supports on the chart. The Stochastic RSI has retreated from earlier overbought readings toward lower ground, suggesting waning upside momentum and leaving the path of least resistance tilted to the downside while price stays capped beneath the daily opening level.
On the topside, initial resistance is located at the day open around 1.3434, and a sustained break above this hurdle would be needed to ease immediate selling pressure and allow a corrective rebound. Until then, the lack of clearly defined intraday support levels below current price implies that any further declines could unfold into relatively thin air, with short-term sellers likely to remain in control while momentum oscillators stay soft.
In the daily chart, GBP/USD trades at 1.3395, holding a bearish near-term bias as it sits just under the 200-day exponential moving average (EMA) at 1.3401 and well below the 50-day EMA at 1.3470. This configuration suggests rallies remain capped by overhead trend resistance, while the Stochastic RSI near 28 hints that downside momentum is stretched but not yet decisively reversed.
On the topside, immediate resistance arises at the 200-day EMA around 1.3401, with a stronger barrier aligned at the 50-day EMA near 1.3470, and the pair would need to reclaim both to ease the current bearish tone. On the downside, the absence of nearby structural support levels in this dataset leaves the pair vulnerable to further slippage, with any fresh lows likely guided by how long price can remain suppressed beneath the 200-day EMA as the oversold Stochastic RSI tries to stabilize.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- AUD/USD spent Tuesday's session under steady pressure, sliding through 50-day exponential moving average support on the daily chart and testing the 0.71 region intraday.
- Westpac Consumer Confidence rebounded sharply in May, but the print barely moved the needle with bigger catalysts lined up later in the week.
- Wednesday's People's Bank of China rate decision, Australian flash PMIs, and Thursday's jobs print sit between current levels and any directional resolution for the Aussie.
The Aussie's Tuesday slide had little to do with anything domestic. Westpac Consumer Confidence printed a +3.5% rebound for May, a swing that should normally count as a meaningful signal after April's -12.5% slump, and the Reserve Bank of Australia's (RBA) latest Meeting Minutes did little to disturb pricing for the next move. Yet AUD/USD still drifted through the 50-day exponential moving average (EMA) on the daily chart, the line that has cushioned every dip since April's reversal, with sellers leaning into broader US Dollar firmness rather than fading the Aussie itself.
That distinction matters. The week's heavy lifting on the Aussie side starts Wednesday with the People's Bank of China (PBoC) rate decision, where consensus is for the one-year Loan Prime Rate to be left at 3% for another month. A pass-through hold barely registers, but any hint of further easing would put fresh strain on the CNH leg of the cross and drag AUD/USD lower regardless of what the RBA minutes implied. Worth noting that the local PMI batch lands the same session, with the prior reads sitting just above the expansion line on all three measures.
Domestic catalysts coming into view
Thursday brings the heavyweight: Australian employment data alongside the May Consumer Inflation Expectations print. The market is looking for Employment Change near 17.5K with the Unemployment Rate steady at 4.3%, in line with the prior month. Even a modest miss would let the doves in the RBA debate argue that the next move is more clearly down, and that is the read the rates strip seems to want.
Why the technical break matters
The 50-day EMA had been holding AUD/USD inside a clean uptrend since April's low near 0.69. Tuesday's daily close on the wrong side of that line, with the move briefly testing below 0.71 intraday, leaves the chart open to a deeper drift toward the 0.70 handle. There is very little structural support between current levels and that round figure on the daily, and momentum has flipped. The 200-day EMA, which has been an irrelevance for most of the year, suddenly looks like a level worth circling for the medium-term picture.
Setup into Thursday's jobs print
For the rest of the week the setup is fairly mechanical. A reclaim of the 50-day EMA on a daily close would mean Tuesday's break is a fade and the broader uptrend remains intact. A second daily close below it, particularly if jobs data confirms the loosening picture, opens up the 0.70 handle as the next target. Anything in between, and AUD/USD probably wastes time chopping near current levels while traders wait for the Federal Open Market Committee (FOMC) Minutes on Wednesday and the US flash PMIs on Thursday to do the work the RBA minutes refused to.
The risk for bulls is that Tuesday's break was the easy part. Two cracks in one tape, on a day when the only domestic data point was outright positive for the Aussie, does not read like a market that wants to be long here.
AUD/USD 5-minute chart
Technical Analysis
In the five-minute chart, AUD/USD trades at 0.7108. The pair remains under clear intraday pressure, holding well below the day’s open at 0.7171, which keeps the near-term bias bearish despite a mild intraday stabilization. The Stochastic RSI has turned higher from deeply oversold territory, hinting at scope for a corrective bounce, but this momentum improvement has yet to challenge the prevailing downside structure.
On the topside, initial resistance is located at the day’s open level near 0.7171, where sellers are likely to defend the short-term downtrend. A sustained break above this hurdle would be needed to ease immediate bearish pressure and open the way for a more meaningful recovery; until then, rallies are likely to be viewed as corrective within a broader intraday decline.
In the daily chart, AUD/USD trades at 0.7108, hovering just under the 50-day exponential moving average (EMA) at 0.7111 while holding well above the 200-day EMA at 0.6856, which keeps the broader backdrop constructive but caps immediate upside. The Stochastic RSI around 52 suggests only modest bullish momentum, hinting that bulls lack the conviction to force a clear break above the near-term average for now.
On the topside, initial resistance is located at the 50-day EMA around 0.7111, and a sustained move above this barrier would be needed to reopen a more decisive advance. On the downside, the 200-day EMA at 0.6856 remains a key structural support level, and as long as price holds well above this longer-term floor, pullbacks are likely to be treated as corrective within a medium-term upward bias.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- NZD/USD falls as strong US ADP employment data supports the Greenback.
- US President Trump warns the US “may have to give Iran another hit,” boosting safe-haven demand for the USD.
- Investors await upcoming New Zealand Retail Sales and PMI data.
The NZD/USD pair falls toward the 0.5830 region on Wednesday as the United States (US) Dollar (USD) strengthens following upbeat labor-market data and renewed tensions linked to Iran.
The latest ADP employment report showed that US private employers added 42,250 jobs in the first week of May, marking the strongest reading since October 2025. The stronger labor-market data reinforced expectations that the Federal Reserve (Fed) could maintain a cautious stance on interest-rate cuts, supporting US Treasury yields and boosting the Greenback.
Additional pressure on the New Zealand Dollar (NZD) emerged after United States President Donald Trump stated that “we may have to give Iran another hit” and added that “Iran is begging to make a deal.” The comments revived fears of a broader escalation in the Middle East, increasing safe-haven demand for the US Dollar, and weighing on risk-sensitive currencies such as the NZD.
Looking ahead, traders will closely monitor upcoming New Zealand data releases, including Retail Sales and Purchasing Managers Index (PMI).
Short-term technical analysis:
On the four-hour chart, NZD/USD trades at 0.5836, maintaining a bearish near-term tone as the pair holds below both the 20-period Simple Moving Average (SMA) at 0.5857 and the 100-period SMA at 0.5905. The Relative Strength Index (RSI) hovers near 33, reflecting persistent downside pressure, though the sub-40 reading also hints that sellers may be stretching the move as price stabilizes just above nearby support.
On the topside, initial resistance emerges at 0.5842, followed by a closer cap at 0.5849; a sustained break above these levels would be needed to challenge the 20-period SMA at 0.5857 and, later, the 100-period SMA at 0.5905. On the downside, immediate support is aligned at 0.5826, with a further floor at 0.5817; a drop through this band would reinforce the bearish bias and open the way to fresh lows on the four-hour horizon.
(The technical analysis of this story was written with the help of an AI tool.)
- US Dollar strengthens as Treasury yields rise on inflation concerns.
- ECB officials flag June hike if energy shock persists.
- Fed minutes loom as markets price year-end hike risk.
EUR/USD drops near 1.1600 on Tuesday as the Greenback recovers some ground, supported by soaring US Treasury yields, even though ECB officials opened the door to rate hikes at the June meeting. The pair trades with losses of 0.48% at the time of writing.
EUR/USD falls as rising yields revive Fed hike fears
Financial markets are driven by geopolitics. Mixed headlines from the Middle East keep investors anxious, even though US President Donald Trump decided to halt strikes on Iran scheduled for Tuesday, due to Gulf allies' requests. Recently, he said that the US may need to attack Iran again, but that Tehran is begging for a deal.
Regarding talks between the US and Iran, the US Vice President JD Vance said both countries have made significant progress and that neither is eyeing a resumption of hostilities.
High energy prices had increased speculation that major central banks would need to hike rates. Traders had priced in a 50% chance that the Federal Reserve would lift borrowing costs towards the end of the year, via the CME FedWatch Tool.
The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.35% at 99.30.
Money markets had priced a 50% chance that the Federal Reserve would increase borrowing costs once, towards the end of the year, according to Prime Terminal data.
On Wednesday, investors will look to the minutes from the Fed’s latest policy meeting for insight into how strongly policymakers support shifting from an easing bias toward a neutral stance.
Across the pond, the Eurozone schedule was absent, except for speeches by European Central Bank (ECB) officials. Kocher said that a June rate hike is possible if there’s “no improvement in the Iran war.”
Echoing his comments was Joachim Nagel of the Bundesbank, who stated that the ECB is moving away from a baseline scenario, and that “maybe we have to do something in June.”
Francois Villeroy of the Banque de France said that the central bank “will be ready to act as needed” and that the Iran conflict created risks to growth and inflation.
EUR/USD Price Forecast: Technical outlook
In the daily chart, EUR/USD trades at 1.1606, keeping a bearish near-term tone as spot holds below the cluster of simple moving averages grouped around 1.1648. The pair also trades under the broader descending resistance line traced from the 1.1929 area, while the upward sloping support line that previously underpinned the advance now sits overhead, reinforcing a capped configuration. The Relative Strength Index (14) at roughly 40 remains in negative territory but above oversold, hinting at persistent downside pressure rather than exhaustion.
On the topside, initial resistance is located around the 50/100/200-day simple moving average band near 1.1648, where a daily close above would be needed to ease immediate selling pressure. Further ahead, the former rising support line turned barrier comes in around 1.1759, followed by the recent trend-line-related highs near 1.1796, which together define a broader supply zone limiting recovery attempts while price holds below them.
(The technical analysis of this story was written with the help of an AI tool.)
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- USD/JPY pushed up through the 159.00 area on Tuesday, posting an intraday high just above that level before settling on the figure into the close, with the Japanese Yen leaking lower against a firm US Dollar.
- Japan's national Consumer Price Index (CPI) is due Thursday, with headline inflation seen at 1.5% year-on-year and core measures still printing softer than the prior month.
- Federal Open Market Committee (FOMC) Minutes Wednesday and US flash Purchasing Managers Index (PMI) data Thursday provide the Dollar-side test that decides whether 160 gets retaken this week.
The Yen's slow drift back toward 160.00 has the feel of a market that has stopped waiting. USD/JPY climbed through Tuesday's London and New York sessions, posting a session peak just above 159.00 before settling near that figure into the close, with the move running on US Dollar strength rather than anything new on the Yen side. The Bank of Japan (BoJ) remains the silent presence in the room, with policy frozen and the official line still that price pressures are easing back to target on their own.
The data due Thursday does little to argue against the BoJ holding. Japan's national CPI is forecast at 1.5% year-on-year (YoY) for April, with the ex-Fresh Food gauge at 1.7% versus 1.8% prior and the ex-Food and Energy measure softening to 2.4%. The direction of travel is genuinely down, and even a modest beat on the ex-Fresh Food print would not be enough on its own to force the BoJ's hand. The market knows this, which is why USD/JPY trades like a pair where the rate differential is the only story that still moves it.
Why 160.00 keeps catching the eye
The 160.00 handle has been the line in the sand for Tokyo since the intervention episodes earlier in the cycle. USD/JPY printed a year-to-date high just above 160.00 earlier in May before being slapped back toward 156.00, and the recovery off that low has been almost a straight line. With price now back near 159.00 and momentum still running, the question is whether traders test the Ministry of Finance's patience a second time inside a single quarter. The Stochastic RSI on the daily chart is reading lower than it has been at any recent peak, which leaves room for the move to extend before it gets stretched.
The Fed side of the trade
The bigger swing factor this week is on the Dollar leg. FOMC Minutes land Wednesday at 18:00 GMT, and the market will read them for any sign that the recent run of speeches from regional Fed presidents reflects a broader committee shift rather than the usual policy-spread theatre. Thursday's US flash PMIs, with Manufacturing seen at 54 and Services holding around 51, are both marked high-impact. A firm set on either side keeps the Dollar bid and effectively forces the Yen lower regardless of what the Tokyo CPI does that same evening.
Setup into the end of the week
A daily close above 160.00 is the technical trigger that matters, and at current levels it is well within a session's range. The pattern of higher lows since the early May washout is intact, and the 50-day EMA on the daily sits just below price as the support line for any pullback. The path of least resistance is up unless the Fed Minutes deliver a meaningfully dovish surprise.
Friday's Fed Chair swearing-in is the wildcard. The new Fed leadership starts the week with an open inflation question, no signal yet on how the dot plot shifts, and a Dollar that wants to keep going. The Yen, as usual, gets caught in the middle.
USD/JPY 5-minute chart
Technical Analysis
In the five-minute chart, USD/JPY trades at 159.06. The pair holds a bullish intraday bias as price trades above the day’s opening level at 158.77, indicating buyers remain in control on dips. Momentum is stretched on the Stochastic RSI, which sits in overbought territory near 76.8, hinting that upside progress could slow even as the short-term tone stays constructive while above the intraday pivot around the current price zone.
On the downside, immediate support is seen at the day’s open near 158.77, where a break would signal fading intraday demand and expose deeper pullbacks. As long as USD/JPY remains above that floor, the path of least resistance stays higher in the near term, though overbought momentum readings warn that new highs may attract profit-taking rather than fuel an aggressive continuation.
In the daily chart, USD/JPY trades at 159.06. The pair holds a constructive bullish bias as spot remains above both the 50-day Exponential Moving Average (EMA) at 158.17 and the 200-day EMA at 155.29, suggesting the broader uptrend stays intact despite recent volatility. The Stochastic RSI around 54 leans slightly positive, hinting that upside momentum is stabilizing rather than overextended at current levels.
On the downside, immediate support is seen near the 50-day EMA at 158.17, with a deeper cushion at the 200-day EMA around 155.29 if selling pressure accelerates. As long as buyers defend these moving average supports, the technical structure favors further consolidation with a modest topside bias, even though clearly defined resistance levels are not yet visible in the immediate vicinity of the current price.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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