Forex News

Societe Generale strategists note that India’s June Consumer Price Index (CPI) release will be important for bond markets, with the 10-year IGB yield holding near its 200-day moving average around 6.71%. They highlight that inflation is expected to rise modestly, while robust FPI inflows and a narrower trade deficit support the Indian Rupee (INR), but do not ensure a sustained move away from the 95.23 level on the 50-day moving average.

INR supported but still constrained

"In EMs, June CPI data for India due later today will be closely watched by bond markets with the 10y IGB yield anchored at the 200dma (6.71%). Yields have retraced almost 43bp from the May peak."

"Inflation is forecast to have edged up to 4.2% in June from 3.93% in May, although robust FPI inflows have continued following the investment incentives announced by the RBI and MinFin in early June."

"Middle East conflict and oil prices should exert a greater influence in the near term."

"The narrowing of India’s trade deficit in June should provide support to the INR but does not guarantee a move away from 95.23 (50dma)."

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

BNY’s Geoff Yu argues that United Kingdom (UK) assets, including the British Pound (GBP) and gilts, will react more to the choice of chancellor under incoming Prime Minister Andy Burnham than to the leadership change itself. Yu stresses that markets are focused on fiscal sustainability, with real gilt yields attracting domestic demand but limited foreign interest.

Fiscal path key for gilts and Pound

"Andy Burnham will likely be confirmed as the U.K.’s seventh prime minister in 10 years in the coming days, and he would take office the week of July 20."

"For GBP and gilt markets, the identity of the next chancellor is far more significant, as they’re looking at binary outcomes with respect to a significant deviation from the November budget or the broad status quo."

"The political challenges involved mean that “early” doesn’t mean major changes until the next general election – a new mandate for adjustment is required first."

"For gilt investors, we do not expect a major change in current flow dynamics: real rates are attracting strong domestic buying, but international interest is nonexistent."

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

• AUD/USD wavers around 0.6950 with the immediate bullish trend in play.
• The US Dollar remains on the defensive on Monday, despite rising geopolitical tensions.
• The Aussie Dollar has broken above the descending trendline resistance.

The Australian Dollar (AUD) posts marginal losses against the US Dollar (USD) on Monday, as the pair's reversal from Friday's 0.6970 highs found support above 0.6120. Rising tensions in Iran have hammered risk appetite, but the US Dollar’s weakness is keeping the Aussie from retreating further.

US and Iran escalated hostilities over the weekend, and Tehran announced the closure of the Strait of Hormuz, boosting Crude prices. This adds pressure to central banks to hike interest rates in order to contain inflation, in a context of sluggish global growth.

The Aussie, however, is drawing some support from the US dollar’s weakness. Risk aversion has failed to support the Greenback on Monday, as investors await the US Consumer Price Index (CPI) release, due on Tuesday, and the testimony of Federal Reserve (Fed) Chairman Kevin Warsh to the US Congress.

Technical Analysis: Aussie breaks the descending trendline

AUD/USD trades at 0.6941, holding a constructive near-term bias after breaking and confirming above the trendline resistance from early June highs. The four-hour Relative Strength Index is trading back and forth around 50, while the Moving Average Convergence Divergence (MACD) hovers near the zero line, highlighting a lack of a clear bias.

On the topside, Bulls need to break Friday's highs, in the 0.6970 area and the 38.2% Fibonacci retracement of the May-June selloff, at 0.7020, to confirm a bullish reversal and target the Mid June highs around 0.7085. On the downside, session lows at 0.6923 are likely to provide some support ahead of the broken trendline, at 0.6880 and the June 30 low at 0.6865.

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

Silver prices (XAG/USD) fell on Monday, according to FXStreet data. Silver trades at $58.72 per troy ounce, down 1.92% from the $59.87 it cost on Friday.

Silver prices have decreased by 17.40% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 69.39 on Monday, up from 68.82 on Friday.

(An automation tool was used in creating this post.)

Rabobank strategist Michael Every discusses rising geopolitical risks around the Strait of Hormuz after the apparent collapse of a US-Iran memorandum of understanding. Every notes both sides are now striking each other, with United States (US) strategy shifting to escorted energy flows. Despite this, markets currently assume the US can act militarily without significant Oil price pain, helped by Strategic Petroleum Reserve (SPR) use and weak Chinese Oil demand.

Hormuz tensions and Oil risk window

"The US-Iran MoU [Memorandum of Understanding] appears to have collapsed sooner than we had thought."

"With both sides striking the other, US efforts will turn to ensuring energy can flow through Hormuz ‘the hard way’ via escorting ships through it."

"For now, markets are saying the US can ‘comfortably bomb’ and ‘there is no pain’ even if the ‘MoU are receding’, mostly due to finite SPR drains and low Chinese oil imports."

"That gives the US a window for action: if it can keep enough oil flowing through Hormuz, which is our base case, it underlines military action can move markets in a desired direction; if it fails, we face a far larger energy crisis with far less in the tank as mitigants - or a geostrategic reckoning."

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

• The Indian Rupee declines to an over six-week low at around 95.95 against the US Dollar due to multiple headwinds.
• Surging Oil prices could push the Indian Rupee to an all-time low at around 97.10 against the US Dollar.
• Investors await India and the US CPI data for June.

The Indian Rupee (INR) trades significantly lower against the US Dollar (USD) on Monday. The USD/INR jumps to over a six-week high around 95.95, as renewed Middle East hostilities have strengthened oil prices.

In India's afternoon trading session, the MCX Crude Oil contract expiring on July 20 is up 2.4% to near Rs. 6,980.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

US strikes over 300 Iranian targets in the last three days

Earlier in the day, the US Central Command (CENTCOM) reported that forces had already struck more than 300 Iranian targets over three nights, including 140 on Saturday alone, per Reuters. The Iranian media has also confirmed several explosions near Sirik, west of Bandar Abbas, Qeshm, and Jask. US forces also stated that strikes were aimed to cripple Iran’s ability to attack civilian ships in the Strait of Hormuz, a critical chokepoint to almost 20% of the global energy supply.

In the wake of renewed aggression between the US and Iran, the appeal of safe-haven assets has improved.

As part of retaliation, Iran announced over the weekend that the Hormuz would now be closed “until further notice”.

India and US inflation data awaited

On the domestic front, investors will pay close attention to the Consumer Price Index (CPI) data from both India and the US. India’s retail CPI is scheduled to be published at 04:00 PM IST (10:30 GMT). India’s retail CPI is expected to arrive at 4.3% Year-on-Year (YoY), higher from 3.93% in May. Signs of rising inflationary pressures would prompt expectations of interest rate hikes by the Reserve Bank of India (RBI).

The US inflation data is scheduled to be released on Tuesday. The US core CPI – which excludes volatile food and energy items such as food and energy – is seen rising at a steady pace of 2.9% YoY.

Apart from the US CPI data, investors will also pay attention to comments from Federal Reserve (Fed) Chair Kevin Warsh in his two-day testimony before the Treasury Committee, which will start on Tuesday.

FIIs invested a significant amount on Friday

Foreign Institutional Investors (FIIs) remained net buyers in the Indian stock market on Friday, investing a significant amount of Rs. 2,603.72 crore. This is the highest one-day buying seen since June 19.

The interest of foreign investors toward the Indian equity market seems to be improving in the past few weeks with the kickstart of the first quarter earnings season of FY2026-27. So far in July, foreign investors have remained net buyers in five out of eight trading sessions.

Analysts at Goldman Sachs see ample room for foreign flows to return to India, clarifying that India's outlook has improved in recent weeks amid lower commodity prices, a stable currency, resilient domestic growth, and healthy earnings expectations. The investment banking firm expects reasonably valued pockets like large-caps and banks will likely gain the most in the foreign outflows reverse course.

Technical Analysis: USD/INR stays firmly above 20-day EMA

USD/INR trades higher at around 95.95, keeping a constructive near-term bias as it holds well above the 20-day Exponential Moving Average (EMA) at 95.18. The pair also holds the breakout of the Descending Triangle formation.

The Relative Strength Index (RSI) at 58.05 leans toward bullish momentum without yet signaling overbought conditions, suggesting buyers remain in control.

On the downside, initial support is seen at the 20-day EMA near 95.18, which lines up with the short-term bullish trend and could attract dip-buying interest. A deeper pullback would expose the former downtrend break zone around 94.50, ahead of the rising trend-line region between roughly 94.12 and 94.06, where a loss of this band would undermine the current bullish tone and open the door to a more pronounced correction.

Looking up, the pair would attempt to revisit the all-time high around 97.10 if it manages to break above the July 9 high at 95.96.

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

ING analysts Chris Turner, Frantisek Taborsky and Francesco Pesole note that higher energy prices and tensions in the Gulf are supporting the Dollar against low-yielding currencies. They highlight that US energy independence and live Fed tightening prospects underpin Dollar strength. ING expects the Dollar to stay in demand versus the Euro, Japanese Yen and Swiss Franc, with DXY seen grinding higher.

Dollar stays supported by energy

"In the G10 space, the dollar is holding up well, and the macro story should keep it supported. US energy independence will come back to the fore if Iran is effective in re-closing the Strait of Hormuz. And this time around, US rates should rise along with overseas rates given that prospects of Fed tightening are now live."

"Tomorrow sees the June CPI, where headline inflation is set to drop month-on-month. But with energy prices rising again and core inflation probably rising at 2.8/2.9% year-on-year, it looks too early for the market to price out a Fed rate hike this year."

"With energy prices turning bid again and no signs of an imminent slowdown in US activity to take the sting out of higher prices (keeping Fed tightening prospects alive), the dollar should hold onto its gains. Expect it to be favoured against low-yielding energy importers such as the euro and the yen. And in a world of higher interest rates, the Swiss franc lags."

"USD/CHF can retest last month's high at 0.8140, while DXY can grind to 101.50."

"The deteriorating situation in the Gulf and the rise in energy prices are supporting the dollar against the low-yielders, including the euro. Worryingly for Europe, natural gas prices are creeping higher again at a time of low inventories. In the absence of direction from the Fed, higher energy prices will keep tightening fears alive and the dollar in demand."

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

• The Euro turns positive after recovering early losses against the Canadian Dollar.
• Signs of easing fears of a prolonged US-Iran war have strengthened the Euro.
• Investors await BoC’s monetary policy announcement scheduled for Wednesday.

The Euro (EUR) claws back its early losses and turns slightly positive at around 1.6170 against the Canadian Dollar (CAD) during the European trading session on Monday. The cross bounces back as the Euro strengthens amid hopes that the ongoing aggression in the Middle East won’t be prolonged.

A spokesperson from the Iranian Foreign Ministry has confirmed that efforts from Qatar, Oman, and Pakistan to mediate tensions with the United States (US) continue.

The impact of easing fears of a prolonged US-Iran war is also visible on oil prices and the US Dollar. At press time, the WTI Oil price trades 2.13% higher to near $73 but has given back a majority of its gains after surging to near $75.00. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, turns upside down to near 100.80.

The Canadian Dollar has also given back a majority of its early gains, with oil prices easing significant gains.

Going forward, investors will focus on the Bank of Canada’s (BoC) monetary policy announcement on Wednesday, in which the central bank is expected to leave interest rates unchanged at 2.25%. Investors will pay close attention to comments regarding inflation and the economic outlook.

In the Eurozone, investors await fresh cues regarding whether the European Central Bank (ECB) will deliver one more interest rate hike this year.

• EUR/USD could pull back below the nine-day EMA of 1.1425.
• The 14-day Relative Strength Index at 45 suggests that any price rebounds currently lack strong upward momentum.
• The initial resistance lies at the three-week high of 1.1472.

EUR/USD gains ground after posting losses in the previous day, trading around 1.1440 during the European hours on Monday. The currency pair holds just above the nine-day Exponential Moving Average (EMA) but remains capped by the 50-day EMA, keeping the near-term tone cautiously bearish.

The 14-day Relative Strength Index (RSI) at 45 stays below the neutral 50 line, hinting that rebounds lack strong momentum even as price stabilizes slightly off recent lows. The daily chart technical analysis indicates that the EUR/USD pair is remaining slightly above the descending channel pattern, suggesting that while a bearish bias persists, immediate downside momentum is pausing as buyers defend the channel's upper boundary.

A successful break below the nine-day EMA of 1.1425 could pull EUR/USD back toward the descending channel and target the 13-month low of 1.1322, which was recorded on June 24. A break below this level could put downward pressure on the pair to navigate the area around the lower boundary of the descending channel at 1.1060.

On the upside, the primary barrier lies at the three-week high of 1.1472, reached on July 2, followed by the 50-day EMA of 1.1521.

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

UOB’s Quek Ser Leang and Lee Sue Ann report that USD/JPY rebounded after a sharp drop to 161.26, with intraday gains expected to be capped between 161.60 and 162.45. Over the next 1–3 weeks, the outlook is described as mixed, with trading likely between 160.60 and 163.00. On a 1–3 month view, further gains are possible as long as the pair holds above the 21‑day EMA near 161.00.

Dollar Yen rebound seen limited

"24-HOUR VIEW: USD fell sharply in the early Asian session last Friday. When it was at 162.00, we stated that “further declines seem likely, but it is unclear whether 161.40 will come into view.” USD then fell to 161.26 before rebounding to close at 161.69 (-0.42%). USD continues to rebound today. The price action suggests that the sharp drop from Friday has stabilised. Today, while USD could rebound further, any advance is likely to be contained within a 161.60/162.45 range."

"1-3 WEEKS VIEW: Our most recent narrative was from last Tuesday (07 Jul, spot at 162.10), when we indicated that “the outlook for USD is mixed,” and it could “trade between the two major levels of 160.60 and 163.00.” Last Friday, USD dropped sharply to 161.26 before recovering. The price action provides no fresh clues, and the outlook remains mixed. For the time being, USD could continue to trade between the two major levels of 160.60 and 163.00."

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