Forex News
Philip Wee at DBS Group Research points out that the Australian Dollar (AUD) has been a key beneficiary of the risk-on shift. AUD/USD broke above 0.72 after the Reserve Bank of Australia (RBA) signalled a pause following three consecutive rate hikes. The report suggests markets may rotate into other high-beta pairs as investors seek carry and growth exposure.
Australian Dollar benefits from risk recovery
"The global currency market has exhibited a classic V-shaped sentiment shift over the US-Iran conflict that closed the Strait of Hormuz."
"Risk appetite returned, favouring commodity-linked and high-yield currencies, especially the AUD, KRW, and GBP."
"AUD/USD’s break above 0.72 yesterday was notable, especially after the Reserve Bank of Australia signalled a pause after its third consecutive rate hike on Tuesday."
"Markets may rotate to NZD/USD, which broke above its 0.5925 resistance, on expectations that the Reserve Bank of New Zealand will follow the RBA’s lead and hike before the Fed later this month."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Eurozone Retail Sales, a key measure of consumer spending, decline by 0.1% month-on-month (MoM) in March, while it was expected to contract at a steady pace of 0.3%. February’s figure revised lower from -0.2%.
On an annualized basis, the consumer spending measure expands at a stronger pace of 1.2% against 1% estimates, but slower than the previous reading of 1.3%, revised lower from 1.7%.
Market reaction
The Euro (EUR) remains neutral to the Eurozone's Retail Sales data, with risk-on impulse dominating global markets. As of writing, EUR/USD trades 0.2% higher at around 1.1770.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the 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.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
- US Dollar Index may find initial support at the two-month low of 97.62.
- The 14-day Relative Strength Index at 39.71 points toward oversold conditions without signaling extreme market weakness.
- The DXY may rebound toward the nine-day EMA at 98.28.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second successive day, trading around 97.90 during the European hours on Thursday. The technical analysis of the daily chart shows that the dollar index is moving sideways within the descending channel, suggesting an ongoing bearish bias.
The US Dollar Index is extending its retreat below both the nine-period and 50-period Exponential Moving Averages (EMAs), which now cap the upside and reinforce a bearish near-term bias.
The 14-day Relative Strength Index (RSI) at 39.71 leans toward oversold territory without extreme readings, suggesting persistent but not yet exhausted downside pressure as sellers retain control beneath the short- and medium-term trend filters.
The DXY may test the two-month low of 97.62, recorded on May 6. The US Dollar Index may further fall toward the lower boundary of the descending channel around 96.70, followed by the three-month low of 96.49. Further declines below the channel would expose the 95.56, the lowest since February 2022, which was reached on January 27.
On the upside, the US Dollar Index may rebound toward the nine-day EMA of 98.28, followed by the 50-day EMA at 98.66, aligned with the upper descending channel boundary around 98.70. A sustained break above this confluence resistance zone would cause the bullish emergence and support the dollar index to approach the 11-month high of 100.64, which was recorded on March 31.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | -0.20% | -0.03% | -0.05% | -0.28% | -0.32% | -0.14% | |
| EUR | 0.20% | -0.01% | 0.20% | 0.16% | -0.09% | -0.13% | 0.05% | |
| GBP | 0.20% | 0.00% | 0.19% | 0.15% | -0.09% | -0.12% | 0.06% | |
| JPY | 0.03% | -0.20% | -0.19% | -0.04% | -0.27% | -0.35% | -0.12% | |
| CAD | 0.05% | -0.16% | -0.15% | 0.04% | -0.23% | -0.27% | -0.10% | |
| AUD | 0.28% | 0.09% | 0.09% | 0.27% | 0.23% | -0.03% | 0.14% | |
| NZD | 0.32% | 0.13% | 0.12% | 0.35% | 0.27% | 0.03% | 0.18% | |
| CHF | 0.14% | -0.05% | -0.06% | 0.12% | 0.10% | -0.14% | -0.18% |
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).
Here is what you need to know on Thursday, May 7:
Market mood continues to improve early Thursday as investors grow increasingly optimistic about the United States (US) and Iran finalizind a truce deal. In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims data and several Federal Reserve (Fed) policymakers will be delivering speeches.
Reports claiming that the US and Iran were closing in on a final agreement triggered a risk rally midweek. Late Wednesday, however, investors turned cautious after Iran's Tasnim News agency said that the US' latest proposal contained some unacceptable provisions. Nevertheless, the US Dollar (USD) Index lost about 0.5% for the day and Wall Street's main indexes rose between 1.3% and 2.1%. According to the latest headlines, Iran is expected to officially respond to the US' proposal for ending the war on Thursday. Reflecting the upbeat sentiment, US stock index futures trade modestly higher on the day, while the USD Index stays in the red below 98.00.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.17% | -0.22% | 0.27% | -0.62% | -1.28% | -0.33% | |
| EUR | 0.19% | 0.00% | -0.07% | 0.46% | -0.38% | -1.10% | -0.11% | |
| GBP | 0.17% | -0.00% | -0.09% | 0.45% | -0.39% | -1.10% | -0.13% | |
| JPY | 0.22% | 0.07% | 0.09% | 0.56% | -0.34% | -0.97% | -0.11% | |
| CAD | -0.27% | -0.46% | -0.45% | -0.56% | -0.86% | -1.52% | -0.58% | |
| AUD | 0.62% | 0.38% | 0.39% | 0.34% | 0.86% | -0.71% | 0.26% | |
| NZD | 1.28% | 1.10% | 1.10% | 0.97% | 1.52% | 0.71% | 0.99% | |
| CHF | 0.33% | 0.11% | 0.13% | 0.11% | 0.58% | -0.26% | -0.99% |
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).
The minutes of the Bank of Japan's (BoJ) March policy meeting showed early Thursday that some members argued that maintaining the policy rate was appropriate amid heightened uncertainties in the Middle East, while agreeing that they should continune to raise rates as the economy and prices improve. USD/JPY stays relatively quiet and fluctuates above 156.00 after losing nearly 1% on Wednesday.
EUR/USD holds its ground and trades in positive territory above 1.1750 after gaining about 0.5% on Wednesday. Earlier in the day, the data from Germany showed that Factory Orders rose by 5% on a monthly basis in March, surpassing the market expectation for an increase of 1% by a wide margin. Additionally, Eurostat reported that Retail Sales in the Eurozone declined by 0.1% in March.
Gold gathered bullish momentum and rose narly 3% on Wednesday, posting its largest one-day gain since late March. XAU/USD extends its rally and trades at its highest level in two weeks above $4,700.
AUD/USD corrected lower after touching its highest level in nearly four years above 0.7270 on Wednesday but managed to end the day in positive territory. The pair gains traction in the European session on Thursday and trades above 0.7250.
GBP/USD clings to marginal gains above 1.3600 in the European morning on Thursday after rising about 0.4% on Wednesday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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