Forex News

• USD/CHF appreciates as the US Dollar remains stronger amid market caution ahead of further US-Iran peace talk updates.
• Traders price in the odds of the Fed holding interest rates steady at 3.50% to 3.75% this Wednesday.
• Money markets expect the Swiss National Bank to keep interest rates unchanged through the end of the year.

USD/CHF gains ground after registering modest losses in the previous day, trading around 0.7950 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) holds steady amid broad market caution. Investors remain on the defensive as they await further updates regarding Iran’s unresolved nuclear program.

Both Washington and Tehran have not released the official text of the agreement; major shipping lines are delaying vessel rerouting through the strategic waterway until full transparency is established.

Even though US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the blockaded Strait of Hormuz, market participants remain deeply cautious. According to Iran's semi-official Mehr news agency, the current draft calls for the strait to reopen within 30 days under Iranian arrangements.

The Federal Reserve (Fed) is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% on Wednesday, which could be attributed to the higher US inflation due to elevated energy prices linked to Middle East tensions. Traders will be closely monitoring the press conference for cues on how new Fed Chair Kevin Warsh intends to lead the central bank into its next era.

Sharp declines in oil prices have helped alleviate inflationary pressures, reducing expectations for further monetary tightening. Consequently, money markets are now pricing in no additional interest rate changes from the Swiss National Bank (SNB) for the remainder of the year.

This aligns with the latest data showing Swiss Producer and Import Prices fell 1.8% year-on-year in May. While this marks the softest pace of deflation in five months, easing from April's 2.0% decline due to slower drops in import prices, the monthly figures caught markets off guard. On a month-over-month basis, the price index fell 0.4%, missing forecasts for a 0.4% increase and reversing April’s 0.8% gain.

Rabobank’s Global Daily highlights that reported progress on a US-Iran understanding has not removed key risks around the Strait of Hormuz, with only a brief memorandum agreed and major details still unclear. The bank notes conflicting timelines for restoring flows, Iran’s 60‑day toll threat, and incentives on both sides that could still disrupt Oil shipments.

Hormuz reopening and Oil flow risks

"What we are hearing about is the reopening of Hormuz, which Trump claims has already happened: however, ‘mine your language’ on what that means. A US official says it might take 1-2 weeks to get energy flowing through the strait again. Other maritime experts suggest it could take 40-50 days."

"Recall it then takes weeks for energy cargoes to arrive at their final destinations if/when an exodus of trapped ships begins. That said, this morning three Iranian oil tankers and two ships carrying essential goods reportedly passed the US naval blockade."

"Iran also states ships can transit Hormuz freely for the 60-day negotiation period with the US, but after that it will charge de facto tolls. That’s something the US opposes and is a significant flashpoint - alongside many others. If you are a crude carrier, once you finally escape Hormuz, do you return knowing a geopolitical deadline is ticking down, or opt for new routes?"

"From Iran’s perspective, there is a case to see the deal collapse within months. Indeed, if Tehran cannot get the benefits promised by the US because it won’t take the steps required of it, then it arguably has little incentive to keep Hormuz open."

"Why allow energy to flow freely, taking pressure off the US and the world, while the GCC and others build alternative supply chains that reduce the strait’s strategic threat? Use it or lose it makes more sense, geopolitically."

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

• Gold price edges higher in Tuesday’s Asian session. 
• A memorandum of understanding to end the war has been signed by Trump, JD Vance, and the speaker of Iran's parliament. 
• Swap traders priced in lower chances of a rate hike by December. 

Gold price (XAU/USD) gains momentum during the Asian trading hours on Tuesday. The precious metal extends the rally after the United States (US) and Iran reached a comprehensive framework deal to end hostilities, easing inflation concerns. 

Bloomberg reported on Monday that US President Donald Trump and Vice President JD Vance signed an electronic copy of a memorandum of understanding with Iran. Trump noted that the Strait of Hormuz “is already partially opened,” and “it’ll be completely opened” on Friday. 

"The gold market is moving past the conflict and pricing it out. The peace deal news took down Treasury yields, the dollar, and oil, and those were the biggest inflation and cross asset risks," said Phillip Streible, chief market ‌strategist at Blue Line Futures. 

However, caution lingered as both sides offered differing accounts on key issues. Iran intends to collect certain “fees” in the critical waterway, while Trump said it would fully reopen Friday without tolls. Trump said on Monday that if Iran failed to reach a final nuclear accord with the US, he would restart military attacks on Tehran.

Bets on Federal Reserve (Fed) rate hikes receded after the framework deal, supporting the yellow metal, a non-yielding asset. Traders cut the chance of a US rate hike in December to 58% from nearly 70% last week, according to the CME FedWatch tool.

The Fed is due to announce its next policy decision on Wednesday. Economists expect the US central bank to keep its benchmark rate in a range of 3.50% to 3.75% as it waits to see how the war’s energy-price shock ripples through the economy.

XAU/USD daily chart

Gold keeps the bearish vibe in near term below the key 100-day SMA

In the daily chart, the near-term tone of XAU/USD stays bearish as price holds beneath the Bollinger middle band and well below the 100-day simple moving average (SMA), keeping the broader recovery structure capped. The Relative Strength Index (RSI) at about 43 sits below the midline, hinting at lingering downside pressure despite the recent attempt to stabilize.

On the topside, initial resistance emerges at the June 9 high of $4,363. The next hurdle to watch is the Bollinger SMA midline near $4,415, with the upper Bollinger band around $4,685 and the 100-day SMA at roughly $4,762 forming a broader supply zone if a rebound extends. On the downside, the lower Bollinger band at about $4,145 marks the next notable support, and a decisive break beneath this area would expose further weakness toward prior swing lows.

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

• AUD/JPY weakens to near 113.20 in Tuesday’s Asian session. 
• BoJ raised the interest rate by 25 bps to 1.0% as expected, the highest since 1995. 
• RBA is anticipated to hold its key interest rate steady at the June policy meeting. 

The AUD/JPY cross loses traction to around 113.20 during the Asian trading hours on Tuesday. The Japanese Yen (JPY) edges higher against the Australian Dollar (AUD) following the Bank of Japan (BoJ) interest rate decision. The attention will shift to the Reserve Bank of Australia (RBA) interest rate decision later in the day. 

As widely expected, the BoJ decided to raise the short-term interest rate by 25 basis points (bps) to 1.0% from 0.75% after concluding the two-day monetary policy review meeting on Tuesday. The BoJ makes a rate decision by a 7-1 vote. According to the Monetary Policy Statement, the board members will continue to increase the policy rate in response to developments in economic activity, prices and financial conditions.

BoJ Governor Kazuo Ueda, who is hospitalized for medical treatment, missed the meeting and did not vote. Deputy Governor Shinichi Uchida will hold a press conference on Ueda's behalf at 06:30 GMT to explain the policy decision.

On the Aussie front, the RBA is set to keep the Official Cash Rate (OCR) on hold at 4.35% at its June policy meeting on Tuesday, with money markets paring bets on further tightening. This would be a pause following three consecutive 25 bps rate hikes earlier this year. Traders will closely monitor the press conference to see whether RBA Governor Michele Bullock signals some comfort at the current rate or keeps the door open to further moves to counter stubborn price pressures. 

• The Reserve Bank of Australia is expected to hold the interest rate steady at 4.35% in June.
• RBA Governor Bullock’s words to be dissected for fresh cues on the monetary policy outlook.
• The Australian Dollar is primed for intense volatility on the RBA policy announcement.

The Reserve Bank of Australia (RBA) is widely expected to leave the Official Cash Rate unchanged at 4.35% when it announces its monetary policy decision on Tuesday, marking a pause after three consecutive rate hikes delivered earlier this year.

The decision will be announced at 04:30 GMT, accompanied by the Monetary Policy Statement (MPS). RBA Governor Michele Bullock’s press conference will follow at 05:30 GMT.

The RBA policy announcement and Bullock’s presser could trigger a big reaction in the Australian Dollar (AUD), as markets eagerly await signals on the bank’s path forward on interest rates.

RBA pauses, end of the tightening cycle?

While inflation remains stubbornly elevated and continues to pressure households, a growing number of signals suggest the Australian economy may be losing momentum. Higher borrowing costs have started to weigh on consumer demand and early signs of labour market cooling are emerging.

Data from the Australian Bureau ​of Statistics (ABS) showed that Gross Domestic Product (GDP) grew 0.3% quarter-over-quarter (QoQ) in the first three months of the year, compared with a forecast of 0.5% and decelerating from 0.9% in the prior quarter. Annual ​growth steadied at 2.5% in the same period, below the 2.7% expected.

Meanwhile, the country’s Unemployment Rate jumped to 4.5% in April, the highest since September. The monthly Consumer Price Index (CPI) inflation slowed to 0.4% in April from 1.1% in March, while the annual pace also declined to 4.2% from 4.6%.

The central bank, therefore, finds itself balancing inflation that remains above target and an economy that appears to be slowing down.

“Markets now imply just a 22% probability of an August RBA hike, down from 80% a month ago, and just 11 bps of tightening this year as higher interest rates have started to slow economic activity,” per Reuters.

The shift in sentiment accelerated after National Australia Bank (NAB) ditched its peers by suggesting the RBA's next move could eventually be a rate cut rather than another hike.

Three of the four major banks, NAB, Commonwealth Bank of Australia (CBA), and Australia and New Zealand Banking Group (ANZ), expect the RBA to leave the cash rate at 4.35% for the remainder of 2026.

For now, policymakers are likely to maintain a cautious tone, acknowledging persistent inflation pressures while emphasizing increased uncertainty surrounding growth, employment and household spending.

The main focus will be on whether the reopening of the Strait of Hormuz is enough to calm the central bank’s inflation concerns and to signal a pause in the current tightening cycle.

"It'll be about the little clues as to whether the cycle is over or it's still alive - that's going to be really important for both the Aussie and the kiwi markets," said Imre Speizer, a strategist at Westpac.

How will the Reserve Bank of Australia’s decision impact AUD/USD?

The AUD has rebounded firmly against the US Dollar (USD) in the countdown to the RBA event risk.

The key market takeaway will therefore be any change in the RBA's forward guidance. A statement retaining a tightening bias could revive expectations for an August rate increase and support the Aussie Dollar.

Conversely, any indication that the central bank is becoming more concerned about growth risks could reinforce market pricing for a prolonged pause and weigh down on the AUD.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the policy announcement.

“The pair is challenging the key 100-day Simple Moving Average (SMA) on the road to recovery. The 14-day Relative Strength Index (RSI) has bounced off the oversold territory, but remains in the bearish zone, suggesting that sellers are likely to retain control.”

“On the topside, initial resistance emerges at the 100-day SMA near 0.7084, followed by the 21-day SMA around 0.7116 and the 50-day SMA close to 0.7143, levels that would need to be reclaimed to ease the current downside pressure. On the downside, the 200-day SMA at roughly 0.6844 offers the next major support, with a sustained break below that long-term average likely opening the door to a deeper retracement,” Dhwani adds.

The Bank of Japan (BoJ) announced on Tuesday that it increased the short-term interest rate by 25 basis points (bps) to 1% after concluding the two-day monetary policy review meeting.

The decision came in line with the market expectations.

Summary of the BoJ’s Monetary Policy Statement

BoJ makes rate decision by 7-1 vote.

Board member Asada dissented to rate decision.

Will continue to raise policy rate in response to developments in economic activity, prices, financial conditions.

Will examine likelihood of realising baseline scenario as well as risks, in considering timing and pace of policy adjustment.

Accommodative financial conditions are expected to be maintained after change in policy rate, continuing to firmly support economic activity.

Japan's economy has recovered moderately, although some weaknesses have been seen in part.

Risk of significant economic slowdown appears to have decreased compared with a while ago.

Japan's economy has been developing generally in line with BoJ’s baseline scenario.

Pass-through of rising oil prices has been progressing at relatively faster pace, which could spread to increase in consumer prices across wide range of items.

There is risk of underlying CPI inflation deviating upward to level above price target.

Japan's financial conditions have been accommodative.

Real interest rates have been negative mainly in short-, medium-term zone.

Japan's economic growth is likely to decelerate, but is expected to continue growing moderately.

Year-on-year increase in CPI likely to accelerate to a level clearly above 2%.

Mechanism in which wages and prices rise moderately in tandem will be maintained.

Underlying CPI inflation expected to increase gradually, reach level consistent with the price target between the 2nd half of fiscal 2026 and fiscal 2027.

For the time being, need to pay particular attention to impact of future course of middle east situation on financial, FX markets, economy and prices.

Must pay attention to the effects of global AI-related demand, future FX moves on Japan's economy, prices.

Will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving 2% inflation target.

To pause bond taper from April 2027, keep the monthly pace of JGB buying at around 2 trln yen.

No change in current plan to reduce monthly JGB buying by 200 bln yen each quarter until January-March 2027.

Decision on bond tapering approved by 7-1 vote.

Will discontinue practice of conducting interim assessment of bond taper plan.

Will respond nimbly, such as by increasing JGB buying and conducting fixed-rate purchase operations, in case of rapid rise in long-term rates.

Market reaction to the BoJ policy announcements

USD/JPY maintains the offered tone around 160.15 following the Bank of Japan's (BoJ) monetary policy announcement, down 0.07% on the day. 

This section below was published on June 15 at 23:00 GMT as a preview of the Bank of Japan Interest Rate Decision.

• The Bank of Japan is expected to hike interest rates to 1% in its June meeting.
• Governor Kazuo Ueda will not precede the meeting due to health issues.
• USD/JPY retains its bullish bias despite easing demand for the US Dollar.

The Bank of Japan (BoJ) will announce its monetary policy decision on Tuesday, at around 3:00 GMT.

The BoJ is widely expected to deliver a hawkish move by hiking the benchmark interest rate by 25 basis points (bps) to 1%, its highest level since 1995. The hike is meant not only to address mounting inflationary pressures but also the Japanese Yen’s (JPY) strength.

Governor Kazuo Ueda, who was hospitalized last week, won’t attend the monetary policy meeting. Deputy Governor Ryozo Himino would chair the policy meeting, while Deputy Shinichi Uchida would hold the press conference following the decision.

Ahead of the announcement, the USD/JPY pair trades above the 160.00 mark, a line in the sand for Japanese authorities, as it is usually seen as an intervention level.

Finally, the Middle East crisis has reached an inflection point: The United States (US) and Iran reached an agreement that will reopen the Strait of Hormuz and extend the ceasefire for another 60 days, allowing talks to continue. Financial markets are optimistic ahead of the announcement, resulting in mild US Dollar (USD) weakness across the FX board.

What to expect from the BoJ interest rate decision?

An interest rate hike has long been priced in, meaning the rate move itself should have a limited impact on the JPY. Japanese policymakers, however, will also discuss the BoJ’s plan to reduce purchases of Japanese Government Bonds (JGBs) to allow long-term rates to be guided more by the market. Their decision on the matter could define the JPY’s near-term direction.

Japan’s annual inflation, as measured by the Consumer Price Index (CPI), stood at 1.4% in April this year, easing from 1.5% in March. However, wholesale inflation jumped to 6.3% You in May, a clear sign that inflationary pressures are likely to extend in time, despite a potential end to the Iran war later this week.

But it is not only about higher Oil prices: the significant depreciation of the JPY also results in inflation stemming from pretty much all imported goods and raw materials. And the BoJ's mandate is clearly focused on the matter: “The Bank of Japan, as the central bank of Japan, decides and implements monetary policy with the aim of maintaining price stability,” targeting 2% annual inflation.

That being said, the current CPI at 1.5% YoY may not be enough to justify a rate hike, but wholesale prices and JPY weakness are.

BoJ Governor Ueda said before being hospitalized that policymakers should not look at Oil prices in isolation, noting that temporary energy shocks can become persistent and affect wages, expectations, and price-setting behavior.

"If inflation expectations are already high and wages are accelerating, the risk of second-round effects is large," Ueda stated, adding that the boundary between temporary and persistent inflation is not mechanical

How could the Bank of Japan's monetary policy decision affect USD/JPY?

As previously noted, market participants have already priced in a 25 bps rate hike. Any decision on future bond purchases is partially discounted. Japanese policymakers don’t tend to surprise investors and tend to act too cautiously. With that in mind, and given that the press conference will be led by Deputy Shinichi Uchida, the BoJ’s announcement is likely to have a limited impact on JPY.

Valeria Bednarik, Chief Analyst at FXStreet, notes: “The USD/JPY pair trades around the 160.00 mark, maintaining the positive bias despite easing market concerns undermining demand for the USD. The daily chart for the pair shows a bullish 20-day Simple Moving Average (SMA) that heads north, well above the 100- and 200-day SMAs. The same chart shows that technical indicators have lost their upward momentum but remain above their midlines, lacking directional strength. The mentioned 20-day SMA has attracted buyers and now provides near-term support at around 159.65”

Bednarik adds: “Once below the aforementioned dynamic support, the pair can extend its slide towards 159.00, while additional selling pressure could see the pair aiming for 158.60, a static support level. The USD/JPY pair peaked at 160.73 in April, a multi-decade high and a critical level to watch should JPY continue to weaken. Next comes 161.00, although it seems unlikely that Japanese authorities will allow the currency to weaken that much without actually intervening in the market.”

• The Japanese Yen gives back some of its early gains against the Euro after the BoJ’s monetary policy decision.
• The BoJ decides to raise interest rates by 25 bps to 1%, as expected.
• An array of ECB officials expect that the central bank needs to do more, while warning of upside inflation risks.

The Japanese Yen (JPY) surrenders some of its early gains against its major currency peers during the Asian trading session after the Bank of Japan’s (BoJ) monetary policy decision. The EUR/JPY pair rebounds from the day’s low of 185.45 to near 185.65, but is still 0.12% higher than its Monday closing price, as the BoJ has raised interest rates by 25 basis points (bps) to 1%, as expected, in the absence of Governor Kazuo Ueda, who has been hospitalized.

The Japanese central bank was expected to tighten its monetary conditions to counter higher inflationary pressures, driven by elevated energy prices due to Middle East conflicts.

Meanwhile, investors await BoJ’s monetary policy guidance from Deputy Governor Shinichi Uchida, who will brief the media on behalf of recently hospitalized Governor Ueda.

The Euro trades higher against its other peers, as a slew of European Central Bank (ECB) officials have predicted that the central bank would need to do more to tame inflation, even as a peace deal between the United States (US) and Iran has been confirmed and the Strait of Hormuz, a vital passage to almost 20% of global energy supply, has been reopened.

ECB Governing Council Member and President of the Deutsche Bundesbank, Joachim Nage,l said on Monday that there seems to be no relief from high inflation in the foreseeable future, as it will take “months for oil supply to return to normal”. Nagel also warned of “second-round effects of inflation” and stated that the central bank is “keeping all options open for July meeting”.

ECB Governing Council member Martins Kazaks also stated on Monday that the central bank “needs to act again, if needed,” while predicting upside inflation risks to persist.

Later in the day, investors will focus on German ZEW Survey data for June, which will be published at 09:00 GMT.

• USD/JPY holds losses as the Japanese Yen remains stronger following the BoJ’s 25-basis-point interest rate hike to 1%.
• The US Dollar may further advance as traders adopt caution ahead of further US-Iran peace talk updates.
• The Federal Reserve is widely expected to hold interest rates steady at 3.50% to 3.75% this Wednesday.

USD/JPY depreciates after two days of gains, trading around 160.10 during the Asian hours on Tuesday. The pair remains subdued as the Japanese Yen (JPY) holds ground following the release of the interest rate decision by the Bank of Japan (BoJ).

The BoJ decided to increase the short-term interest rate by 25 basis points (bps) to 1% after concluding the two-day monetary policy review meeting on Tuesday. The decision came in line with the market expectations.

However, the downside of the USD/JPY pair could be restrained as the US Dollar (USD) receives support from the market caution ahead of further developments regarding US-Iran peace talks.

Both Washington and Tehran have not released the official text of the agreement; major shipping lines are delaying vessel rerouting through the strategic waterway until full transparency is established.

Even though US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the blockaded Strait of Hormuz, market participants remain deeply cautious. According to Iran's semi-official Mehr news agency, the current draft calls for the strait to reopen within 30 days under Iranian arrangements.

The Federal Reserve (Fed) is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% at its upcoming policy meeting on Wednesday. Traders will be closely monitoring the press conference for cues on how new Fed Chair Kevin Warsh intends to lead the central bank into its next era.