Forex News

• DJIA futures trade flat as traders digest Trump's rejection of Iran's latest ceasefire counterproposal.
• Oil prices jump more than 2% with the Strait of Hormuz still effectively shut.
• Markets brace for Tuesday's April CPI, the single most important macro print of the week.

US equity index futures opened the week little changed as Wall Street weighed a renewed flare-up in the US-Iran standoff against this week's marquee inflation print. Dow Jones Industrial Average (DJIA) futures hugged the flat line above 49,500 in premarket trade, with the S&P 500 ticking marginally lower and the Nasdaq Composite softer after Friday's record-setting close. The Russell 2000 outperformed, helped by a bid for energy and small-cap industrials.

Trump rejects Iran offer, Oil spikes

President Trump on Sunday torpedoed Iran's response to the latest US ceasefire proposal, calling it "totally unacceptable" on social media and warning that the truce was on "massive life support." Tehran's counter-proposal reportedly included recognition of Iranian sovereignty over the Strait of Hormuz and a demand for war reparations, alongside a refusal to dismantle nuclear enrichment infrastructure. With the waterway still effectively closed after 10 weeks, West Texas Intermediate (WTI) crude rallied more than 2% toward $97 a barrel, while Brent pushed above $103. Drone attacks on Kuwait, the UAE, and a cargo ship in Qatari waters over the weekend kept the geopolitical risk premium firmly embedded in energy markets.

April CPI takes center stage

Tuesday's Consumer Price Index (CPI) is the only macro print that really matters this week. Consensus calls for headline CPI to rise 0.6% MoM and 3.7% YoY in April, with core CPI at 0.3% MoM and 2.7% YoY. The release will offer the first clean read on how much of the Oil shock has bled into non-energy categories. A core surprise above 0.3% would all but bury what little is left of 2026 rate-cut hopes; CME FedWatch currently pegs the probability of a hold at next month's Federal Open Market Committee (FOMC) meeting above 95%, with markets pricing essentially no cuts for the rest of the year. Bank of America has formally scrapped its 2026 cut call, while JPMorgan expects YoY inflation to stay above 3% well into 2027.

Intel jumps on Apple chip deal

Intel (INTC) led the premarket gainers, rallying as much as 6% after the Wall Street Journal reported the chipmaker had reached a preliminary agreement with Apple (AAPL) to manufacture some of the chips used in Apple devices. The news lifted the broader semiconductor complex, with Micron Technology (MU) up more than 3% and South Korea's SK Hynix surging 12% on separate reports of a potential Samsung worker strike that could tighten memory supply. Apple ticked higher in sympathy, while Lumentum (LITE) gained around 4% after being added to the Nasdaq-100 Index. Nvidia (NVDA) traded firmer as the AI complex continued to set the tone for index direction.

Moderna spikes on hantavirus angle, Palantir slips

Moderna (MRNA) was among the biggest single-name movers, jumping as much as 12% after US health officials reported a passenger on a repatriation flight had tested positive for the Andes strain of hantavirus. The biotech confirmed it had already been developing a hantavirus vaccine candidate ahead of the outbreak aboard the cruise ship Hondius, building on a 12% rally on Friday. On the other side of the tape, Palantir (PLTR) fell more than 2% on lingering valuation concerns following last week's Q1 print, while Wendy's (WEN) dropped around 3% after JPMorgan cut the burger chain to Underweight with a sharply lower price target.

Powell exits, Warsh waits in the wings

Adding to the macro stew, Federal Reserve (Fed) Chair Jerome Powell's term formally ends Friday, May 15. The Senate is expected to confirm Kevin Warsh as his successor this week, marking the first Fed Chair transition since 2018. Markets have so far shrugged off the handover, partly because the April FOMC minutes already showed three members objecting to the policy statement language and Governor Miran dissenting in favour of a 25 basis point cut. Whether Warsh proves more or less hawkish than Powell is largely academic in the near term, with a hot CPI virtually guaranteed to keep the Fed on hold regardless of who occupies the chair. Separately, Trump heads to Beijing from Wednesday through Friday for a summit with Xi Jinping, where the Iran war and AI export controls are expected to dominate the agenda.

Dow Jones 5-minute chart

Donald Trump, United States (US) President, said that Iran’s proposal was “stupid” and that they agreed on his terms but then reversed on them. Trump told reporters in the Oval Office on Monday.

Key takeaways:

Iran's proposal is a stupid proposal.

Iranians said US can have nuclear material but would have to take it out.

Iran agrees with US, then reverses itself.

Iran did not mention not pursuing nuclear weapon in letter.

I am very disappointed in the Kurds.

Ceasefire is on life support.”

• WTI rises to around $94.70 on Monday, up 3.18% on the day after Donald Trump rejected Iran’s peace proposal.
• Fears of a prolonged closure of the Strait of Hormuz are supporting Oil prices and reviving concerns over global supply.
• Strong Chinese trade data boosts expectations of firmer energy demand from the world’s second-largest economy.

West Texas Intermediate (WTI) Oil posts strong gains on Monday, with the US benchmark trading around $94.70 at the time of writing, up 3.18% on the day after opening the week with a significant bullish gap. The Oil market is reacting to deteriorating prospects for a quick agreement between the United States (US) and Iran, which is reviving concerns about global energy supply.

The bullish move accelerated after US President Donald Trump described Tehran’s latest response to the US peace proposal as “totally unacceptable”. The statement reduced hopes for a lasting ceasefire and a swift reopening of the Strait of Hormuz, a strategic passage through which nearly 20% of the world’s Oil supply transits.

According to Iranian state media, Tehran is demanding financial compensation for war damages, the lifting of sanctions, and recognition of its authority around the Strait of Hormuz. At the same time, tensions remain elevated in the region following Iranian accusations regarding US attacks on Oil tankers over the weekend.

Comments from Israeli Prime Minister Benjamin Netanyahu also maintained geopolitical concerns, as he stated that the conflict would not end until Iran’s enriched uranium is eliminated, a condition rejected by Tehran.

Societe Generale analysts believe that a potential reopening of the Strait of Hormuz would not immediately translate into relief for global supply. The bank noted that the normalization of Oil flows and shipping traffic could take several weeks, thereby maintaining tensions in the physical Crude market.

On the macroeconomic front, the latest Chinese trade data is also supporting Oil prices. The figures released on Monday suggest improving activity in the world’s second-largest economy, fuelling expectations of stronger energy demand in the coming months.

However, prospects of a prolonged restrictive monetary policy stance from the Federal Reserve (Fed) could limit Oil’s upside potential. Strong recent US labor market data has reduced expectations of rapid interest rate cuts, an environment that could restrain consumption and fuel demand.

Reuters reported on Monday that Donald Trump said he wants to temporarily suspend the 18-cent federal gasoline tax, a move that could help ease pressure on consumers amid elevated fuel prices.

• Labour Party election losses fuel speculation over Starmer’s leadership.
• UK 30-year Gilt yields jump amid fiscal policy concerns.
• US-Iran tensions keep the USD supported ahead of US inflation data.

The Pound Sterling (GBP) holds modestly firm against the US Dollar (USD) during the North American session on Monday, down a minimal 0.06% as pressure mounts on the UK’s Prime Minister Keir Starmer as his party sustained losses in local elections. The GBP/USD pair trades at 1.3625 after hitting a daily high of 1.3630.

Pound holds near highs as UK political risks intensify

The UK PM Starmer said, “I know that people are frustrated by the state of Britain. Frustrated by politics, and some people frustrated with me.” Regarding Starmer's speech, Catherine West, a Labour MP who is threatening to launch a leadership campaign, commented that Starmer’s relaunch speech was “too little too late”.

West said that she would collect names of Labour MPs “to call on the prime minister to set out a timetable for the election of a new leader in September,” according to the Financial Times.

Meanwhile, GBP/USD seems contained amid increasing speculation that Starmer could be ousted in September. Consequently, the UK 30-year GILT yield soared by over 10 basis points to 5.675%, spurred by fears that Great Britain could lean more to the left.

US Dollar remains bid on geopolitics

Also, rising tensions in the Middle East prompted traders to buy the US Dollar as Iran’s response to the US 14-point memo was seen by Trump as “totally unacceptable.”

Data in the US Existing Home Sales rose less than expected in April, up 0.2% MoM, at a seasonally adjusted rate of 4.02 million, according to the National Association of Realtors.

The data was largely ignored by market participants, who are awaiting the release of the Consumer Price Index (CPI), the Producer Price Index (PPI), and Retail Sales data in the US. In the UK, traders eye the release of Gross Domestic Product (GDP) data.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3648. The pair holds well above a dense cluster of the 50-, 100- and 200-day simple moving averages (SMAs) around 1.3400, keeping the broader bias bullish as the recent breakout extends away from the former descending resistance trend line, which now acts as a secondary floor. The upward-sloping support trend line traced from 1.3035 continues to underpin the advance, while the latest readings from the FXStreet Fed Sentiment Index, which has pushed to fresh highs, hint that external policy expectations may be reinforcing sterling’s constructive tone against the dollar.

On the downside, initial support is seen near the recent breakout area around 1.36, ahead of the rising support trend line currently intersecting close to 1.3500. A deeper pullback would expose the key demand band formed by the converging 50-, 100- and 200-day SMAs clustered just above 1.3400, where the former descending resistance line also converges, and which should act as a robust base while the bullish daily trend remains intact.

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

• AUD/USD recovers despite renewed tensions in the Middle East.
• Trump rejects Iran’s peace proposal, reviving concerns over Strait of Hormuz disruptions.
• Markets now focus on Tuesday’s US CPI report for clues on the Federal Reserve’s policy outlook.

AUD/USD surges toward the 0.7260 region on Monday, supported by improving demand for commodity-linked currencies despite renewed geopolitical tensions after United States (US) President Donald Trump rejected Iran’s latest peace proposal, calling it “totally unacceptable.”

The rejection of the proposal revived concerns about a prolonged conflict in the Middle East and about extended disruptions to global Oil shipping through the Strait of Hormuz. On Monday, Trump told Fox News he was considering relaunching his initiative to have US naval ships escort tankers through the Strait, a policy he curtailed last week after Iran fired warning shots. Oil prices surged following the headlines, increasing fears of renewed inflationary pressure and keeping markets cautious.

Investors are now turning their attention toward Tuesday’s United States Consumer Price Index (CPI) report, which could provide fresh signals on the inflation outlook and the Fed’s next policy steps.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7255, holding a constructive bullish bias as it clings to a nearby horizontal pivot while staying above both the 20-period Simple Moving Average (SMA) at 0.7237 and the 100-period SMA at 0.7183. The Relative Strength Index lifts toward the low-60s, suggesting firm but not overextended upside momentum as price tests a key cap just overhead.

On the topside, immediate resistance is aligned at the horizontal barrier near 0.7260, where a clear break would open room for further gains. On the downside, initial support emerges at 0.7249, followed by 0.7243, with the 20-period SMA at 0.7237 and the deeper 100-period SMA at 0.7183 reinforcing the broader bullish structure on pullbacks.

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

Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is slightly softer versus the Dollar (USD), struggling against resistance in the upper 1.17s as softer European Central Bank (ECB) expectations weigh, partly offset by better risk sentiment. They flag upcoming ZEW data and ECB speeches as key event risks. Technically, they describe a bullish setup, eyeing Fibonacci resistance and a defined near-term trading range.

Euro bias stays constructive above 1.17

"The EUR is soft, down a modest 0.2% vs. the USD as it struggles to extend its latest recovery with resistance observed in the upper-1.17s. The recent softening in ECB rate expectations has eroded some of the EUR’s fundamental support however this has been offset by the improvement in broader market sentiment."

"Fundamental releases have been limited and market participants are eyeing Tuesday’s market-moving ZEW data – a leading indicator for industrial production in the euro area. Headline risk lies with Wednesday’s speeches from both ECB President Lagarde and Chief Economist Lane. "

"Bullish – the technical setup remains bullish with an RSI in the upper 50s that confirms the broader recovery from the March low."

"The retracement of the Jan-March decline remains the most important feature of the medium-term chart, as we look to near-term resistance at the 61.8% Fibo at 1.1825 ahead of a full retracement to the January high around 1.2080."

"We look to a near-term range bound between 1.1720 and 1.1820."

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

BNP Paribas economists expect the US economy to grow above potential in 2026, with Gross Domestic Product (GDP) at 2.4% and inflation overshooting at 3.5%. They see the Fed Funds target range steady at 3.5%-3.75% as the Federal Open Market Committee (FOMC) adopts a two-sided outlook. In FX, economists project a gradual US Dollar (USD) depreciation versus the Euro (EUR) and stabilization against the Japanese Yen (JPY) and Pound (GBP).

Fed steady as Dollar seen softening

"We expect the Fed Funds target range to remain steady at 3.5% - 3.75%, with a FOMC shifting to a ‘two-sided outlook’, signaling equal readiness to implement rate hikes or cuts if warranted."

"In our base-case scenario (gradual normalisation of the Middle East situation with persistent price tensions), we expect the USD depreciation against the EUR to resume, albeit very gradually, amid broader diversification away from the dollar."

"We forecast EUR/USD to reach 1.21 by Q4 2026 and 1.25 by Q4 2027."

"We anticipate stabilisation of the yen and the GBP against the dollar in 2026 (USD/JPY 160 and GBP/USD 1.35 by Q4 2026) and 2027."

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

MUFG analysts argue that the Swedish Krona is underperforming as the Riksbank, central bank of Sweden, stays cautious despite the energy shock. With inflation soft and policy described as a “good initial position”, they see little chance of a near-term hike, and note that even optimism on a US/Iran deal has not yet sparked a meaningful Swedish Krona (SEK) rebound.

Soft inflation keeps Riksbank patient

"In contrast, the Riksbank in Sweden is not in a rush to follow the Norges Bank in raising rates. Recent weaker growth and softer inflation have given the Riksbank greater scope to look through the energy price shock. The latest CPI report showed headline inflation falling into negative territory in April, while core inflation (CPIF excluding energy) remained flat."

"These developments have provided the Riksbank with leeway to signal that the current policy rate offers a “good initial position” from which to adjust monetary policy if needed to safeguard the inflation target. The Riksbank did note though that it would consider raising the policy rate if the war were to have significant effects on the global economy and lead to a “broad and persistent” increase in inflation."

"This cautious guidance suggests that a rate hike is unlikely as soon as the next policy meeting in June. The Riksbank’s relatively dovish stance is contributing to the SEK’s underperformance, alongside the negative impact from higher energy prices. A similar pattern was observed during the last energy price shock in 2022 following Russia’s invasion of Ukraine."

"Even the recent optimism surrounding a potential agreement between the US and Iran to resolve the conflict and reopen the Strait has so far failed to generate a meaningful rebound in the SEK."

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

• USD/CHF pulls back after a bullish gap-up open as traders monitor Middle East tensions.
• Ongoing standoffs in the Strait of Hormuz continue to disrupt Oil supply flows and fuel inflation concerns.
• Markets now await the US CPI report due on Tuesday for fresh clues on the Fed’s policy outlook.

The Swiss Franc (CHF) regains traction against the US Dollar (USD) on Monday, with USD/CHF pulling back after opening the week with a bullish gap as the Greenback gives up part of its earlier gains while traders continue to monitor developments in the Middle East.

At the time of writing, the pair is trading around 0.7773 after touching an intraday high near 0.7795, though it remains up about 0.12% on the day.

The pullback in USD/CHF appears largely technical in nature as traders partially fill the bullish opening gap. However, the US Dollar’s downside remains limited as fading hopes for a near-term resolution to the US-Iran conflict support safe-haven demand for the Greenback.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 97.88 after hitting an intraday high near 98.15.

US President Donald Trump rejected Iran’s response to a US-backed proposal aimed at ending the war, calling it “totally unacceptable” in a post on Truth Social.

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said on Monday that Tehran was only trying to secure its rights and had offered “generous and responsible” suggestions to the US. Baghaei also said the latest proposal was not excessive and accused Washington of making “unreasonable demands.”

The lack of progress in reaching a deal is raising fears of a prolonged conflict between the US and Iran, while the ongoing standoff in the Strait of Hormuz continues to disrupt Oil supply flows.

As a result, Oil prices remain elevated, fueling inflation concerns globally and increasing pressure on central banks to maintain tight monetary policy settings. Traders are now awaiting the US Consumer Price Index (CPI) data due on Tuesday, which could influence expectations for the Federal Reserve’s (Fed) interest rate path.

In Switzerland, recent inflation data showed consumer prices rising for a second consecutive month, though inflation remains well below the Swiss National Bank’s (SNB) 2% target. The data suggests policymakers could keep interest rates unchanged for now as they continue to assess the impact of rising global energy prices.

OCBC’s FX Christopher Wong describes USD/JPY as a two-way trade after suspected Ministry of Finance (MoF) intervention capped gains near 160. He notes bearish daily momentum but says fundamentals are not decisively Japanese Yen (JPY)-positive, with higher Oil prices still a drag. The pair is expected to stay choppy, driven by Oil swings, with support from 155.40 and resistance up to 158.70.

Intervention risk tempers upside bias

"USD/JPY traded near recent lows last week. Price action remains a two-way trade after recent suspected MoF intervention helped cap upside near the 160-handle."

"While intervention risk may keep JPY shorts more cautious, the fundamental backdrop is not yet decisively JPY-positive. Higher oil prices remain a terms-of-trade drag on JPY. "

"Near term, USD/JPY may stay choppy, driven by swings in oil prices. Pair was last at 156.70 levels. Bearish momentum on daily chart intact while RSI was flat. 2-way trades likely to continue."

"Support at 155.40 (61.8% fibo retracement of 2026 low to high), 154.15/30 (200 DMA, 76.4% fibo). Resistance at 157.40 (100 DMA, 38.2% fibo), 158.70 levels (23.6% fibo, 21, 50 DMAs)."

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