Forex News
- GBP/JPY rises as the Yen remains under pressure from elevated Oil prices amid Middle East tensions.
- Wide interest rate differential between the BoE and BoJ keeps the British Pound supported.
- Technically, GBP/JPY holds above key SMAs, but momentum remains mixed with RSI near neutral and MACD in negative territory.
GBP/JPY edges higher on Tuesday as the Japanese Yen tumbles across the board, with the impact of Tokyo’s intervention fading and attention shifting back to ongoing tensions in the Middle East. At the time of writing, the cross is trading around 213.90, up nearly 0.53% on the day.
The Japanese Yen remains under pressure as rising Oil prices increase concerns about Japan’s import costs. While both the UK and Japan rely on energy imports, Japan is more vulnerable due to its heavier dependence on supplies passing through the Strait of Hormuz, where tensions remain high.
Meanwhile, the cross continues to draw support from the wide interest rate differential between the Bank of England (BoE) and the Bank of Japan (BoJ). Oil-driven inflation risks are reinforcing this divergence, as expectations grow that central banks may need to tighten policy to contain price pressure.
While the BoJ remains on a gradual tightening path, concerns over economic growth from the energy shock could cloud its policy outlook, whereas the BoE is seen as more likely to act, with traders pricing in at least two rate hikes by year-end, keeping the yield gap tilted in favor of the British Pound (GBP).
Technical Analysis:
In the daily chart, GBP/JPY holds a constructive bias as it remains above both the 100-day Simple Moving Average (SMA) and the 200-day SMA. The placement of price over these medium- and long-term averages suggests the broader uptrend is still intact, although the Relative Strength Index around 50 hints at neutral momentum and a lack of immediate directional conviction, while the negative Moving Average Convergence Divergence (MACD) reading warns that upside progress could be uneven in the near term.
On the topside, initial resistance aligns with the nearby horizontal barrier at 214, where a clear break and daily close higher would open the way for a renewed advance within the prevailing bullish structure. On the downside, the 100-day SMA at 212 offers the first layer of support ahead of the horizontal floor at 209, with the 200-day SMA down at 206 reinforcing the broader bullish backdrop as a deeper but still trend-consistent demand zone.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Rabobank’s Senior FX Strategist Jane Foley notes the US Dollar Index (DXY) is trading near key moving averages, with markets reluctant to extend USD longs despite renewed Middle East tensions. Foley still sees scope for the Dollar to move higher in coming weeks, even as they expect Federal Reserve (Fed) rate cuts later this year to moderately weigh on USD against the Euro.
Dollar holds near key resistance
"The DXY dollar index is currently positioning almost on top of its 100- and 200-day smas which are at 98.479 and 98.568 respectively. For now these levels are providing some resistance which is reflecting the market’s reluctance to lengthen USD positions."
"However, it appears that the market is reluctant to push the dollar higher again, given risk that these gains could again be swiftly unwound. For now we continue to see risk that the USD can move higher in the coming weeks."
"In our view, the USD’s safe haven credentials are based around liquidity. This is unmatched by any other currency, and it drives the use of the greenback in transactions around the world."
"In Rabobank’s view the Fed is likely to cut rates further this year. This could undermine the USD moderately against the EUR on a 3 to 6 month view."
"Consequently, we do not expect the market to rebuild long EUR positions back to last year’s levels and expect any up move in EUR/USD in H2 to lack strong conviction."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- US Job Openings declined slightly in March to 6.866 million.
- DXY slips to near 98.40 after the release of US JOLTS data.
The number of job openings in the United States (US) printed at 6.866 million in March, down from the revised 6.922 million in February, the US Bureau of Labor Statistics (BLS) reported in its Job Openings & Labor Turnover (JOLTS) report on Tuesday. This reading came in above the market expectation of 6.83 million.
"Over the month, hires increased to 5.6 million, and total separations changed little at 5.4 million," the BLS noted in its press release. "Within separations, quits (3.2 million) were little changed while layoffs and discharges (1.9 million) were also little changed."
Market Reaction
The US Dollar Index (DXY) ticked lower to near the 98.46 price zone with the release of US data, as the country also published the ISM Services Purchasing Managers Index (PMI) that missed expectations.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.21% | 0.28% | -0.11% | -0.22% | -0.26% | -0.14% | |
| EUR | 0.10% | -0.12% | 0.42% | -0.01% | -0.14% | -0.17% | -0.04% | |
| GBP | 0.21% | 0.12% | 0.53% | 0.08% | -0.02% | -0.04% | 0.08% | |
| JPY | -0.28% | -0.42% | -0.53% | -0.39% | -0.53% | -0.55% | -0.41% | |
| CAD | 0.11% | 0.00% | -0.08% | 0.39% | -0.13% | -0.16% | -0.03% | |
| AUD | 0.22% | 0.14% | 0.02% | 0.53% | 0.13% | -0.03% | 0.11% | |
| NZD | 0.26% | 0.17% | 0.04% | 0.55% | 0.16% | 0.03% | 0.12% | |
| CHF | 0.14% | 0.04% | -0.08% | 0.41% | 0.03% | -0.11% | -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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Brown Brothers Harriman’s (BBH) Elias Haddad reports that the Australian Dollar (AUD) fell after the Reserve Bank of Australia (RBA) delivered a widely expected 25 bps hike to 4.35% and signalled a data‑dependent pause. With trimmed mean inflation projected above target until mid‑2027 and growth downgraded, Haddad expects limited repricing of cash rate futures and sees AUD/USD struggling to sustain gains above 0.7200 despite Australia’s positive energy balance.
RBA hike but cautious outlook weighs
"RBA raised rates as expected and signaled a data-dependent pause. Governor Michele Bullock stressed “One reason to increase interest rates was to give ourselves space now to sit and see what happens.”"
"The RBA voted 8-1 to deliver a third consecutive 25bps hike to 4.35%. Cash rate futures implied 80% odds of a hike today. According to the RBA “inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations.”"
"Indeed, the RBA projects its policy-relevant trimmed mean inflation to remain above the bank’s 2-3% range until mid-2027 (vs. end-2026 previously), as fuel-related cost increases are passed through to consumer prices."
"Market participants expect the cash rate to increase by 35bps to 4.70% by the end of 2026. We see limited scope for a big upward adjustment in the cash rate futures curve for two reasons. First, the RBA slashed Australia’s growth outlook, now seeing real GDP growth running below potential throughout the forecast horizon. Second, the cash rate currently sits within, but near the top of, the range of model-based central estimates of the nominal neutral rate."
"AUD/USD will struggle to sustain a break above key resistance at 0.7200. Still, Australia’s positive energy balance (production minus consumption) will continue to offer AUD a relative edge versus EUR and JPY."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is slightly firmer with USD/CAD holding near prior ranges. A softer US Dollar (USD) and firmer risk appetite are seen as mildly supportive for the CAD, while fair value has shifted lower toward 1.3424. Technicals remain bearish, with focus on a move back toward the 1.35 area.
CAD supported as fair value drops
"The CAD is edging a little firmer in early trade here but spot is holding close to yesterday’s ranges. A somewhat softer USD and some potential firming in risk appetite should be mildly CAD-supportive in the short run"
"Broader factors continue to tilt positively for the CAD, driving our fair value estimate for spot lower to 1.3424 this morning. The USD remains close to 1 standard deviation above its equilibrium estimate which should help limit USD gains and maintain a mild downward bias on spot at least."
"Bearish—Minor USD gains overnight topped out around 1.3625/30, former support (76.4% Fibonacci of the USD’s March rally)."
"The sustained break under retracement support plus the bearish alignment of trend oscillators across the intraday, daily and weekly studies maintains our focus on the potential for USD losses to extend back to the early March low at 1.3525 now."
"A collection of lows and weekly trend support at 1.3520 may bolster USD support around 1.35."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- ISM Services PMI recedes to 53.6 in April, slightly below consensus.
- The US Dollar trades slightly on the defensive on Tuesday.
Economic activity in the US services sector lost some momentum in April, with the ISM Services PMI easing to 53.6 from 54 in the previous month, coming in below analysts' expectations.
Further poll results found that the Prices Paid Index, a crucial barometer of inflation, held steady at 70.7, while the Employment Index rose to 48 from 45.2, indicating a modest improvement in labour market conditions in the services sector. Finally, the New Orders Index weakened to 53.5 from 60.6.
Market reaction
The Greenback navigates an inconclusive range following the release, with the US Dollar Index (DXY) alternating gains with losses in the 98.50-98.40 band.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
Forex Market News
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