Forex News

• The Indian Rupee opens flat at around 95.72 against the US Dollar, with investors awaiting the RBI’s monetary policy.
• US President Trump said that Iran has agreed to give up its nuclear ambitions.
• The Indian government approves scrapping the capital gains tax on foreign investment in government bonds.

The Indian Rupee (INR) trades flat against the US Dollar (USD) on Thursday after a strong Wednesday. The USD/INR pair holds onto the previous day’s gains around 95.72 even as the Indian administration decides to scrap capital gains tax on overseas investment in government bonds.

India approves scrapping capital gains tax on foreign investment in government bonds

Earlier in the day, the Cabinet meeting had approved the scrapping of capital gains tax on foreign portfolio investment in government bonds, aiming to improve the condition of foreign flows in the Indian economy.

The move was highly anticipated by the Indian government as significant Foreign Institutional Investors (FIIs) selling in the Indian stock market has been one of the key reasons behind the Indian Rupee’s sharp depreciation.

On Monday, FIIs also remained net sellers in the Indian equity markets, offloading their stake worth Rs. 5,616.56 crore. So far in June, overseas investors have remained net sellers in all three trading days.

Trump confirms Iran Ayatollah's involvement in negotiations

US President Donald Trump said in The New York Post’s "Pod Force One" program on Wednesday that Iran has agreed not to have nuclear weapons, adding, “Iran's Ayatollah [referring to Supreme Leader Mojtaba Khamenei] is involved in negotiations with Washington” and he will meet him at some time. However, Trump warned that Iran could change its mind and pursue its nuclear ambitions.

When asked about the timeframe in which the US and Iran could reach a deal, Trump said a memorandum of understanding (MoU) between the nations could reopen the Strait of Hormuz as early as this week; however, there is a possibility that the US blockade on Iranian sea ports could last till Labor Day, September 7.

If the US-Iran negotiations fail to reach a breakthrough, oil prices would remain higher, and act as a major hurdle for the Indian Rupee.

In India's afternoon trading hours, MCX Crude Oil price opens 1.2% lower to near 9,120, but is close to its 10-day high of 9,290 posted on Wednesday.

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.

RBI’s policy and US NFP data awaited

Going forward, the major trigger for the Indian Rupee will be the Reserve Bank of India’s (RBI) monetary policy, which will be announced on Friday. The RBI is expected to hold the Repo Rate steady at 5.25% and guide a hawkish monetary policy outlook, as higher energy prices have de-anchored inflation expectations.

In the US, investors will pay close attention to the Nonfarm Payrolls (NFP) data for May, which will be released on Friday. The impact of the US NFP data will be significant on the Federal Reserve’s (Fed) monetary policy outlook.

Technical Analysis: USD/INR flattens around 95.70

USD/INR trades almost flat at around 95.72 on Thursday. The pair maintains a modest bullish bias as it stays above the 20-day Exponential Moving Average (EMA) at 95.47. The price action consolidates near recent highs while the Relative Strength Index (RSI) at about 54.8 sits slightly above the neutral territory, suggesting steady but not overextended upward momentum.

On the downside, immediate support is aligned with the 20-day EMA around 95.47, which reinforces the underlying demand zone and would need to give way to signal a deeper corrective phase towards the June 2 low at 95.00, followed by the May 7 low at around 94.00. Looking up, the pair could reclaim the all-time high of 97.09 if it manages to rise above the May 28 high at 96.65.

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

Societe Generale strategists note that Central and Eastern European (CEE) policy paths are increasingly diverging, with Hungary moving toward easing while Poland and the Czech Republic remain on hold with a hawkish bias. They highlight that Hungarian yields have fallen sharply as Czech and Polish yields have risen, while HUF strength against the euro, in contrast to CZK and PLN weakness, points to Hungary’s macro resilience rather than simple dovishness.

Hungary’s easing seen as resilience signal

"In CEE, recent days have crystallised an increasingly divergent policy path across central banks. Hungary is moving toward easing, while Poland and the Czech Republic remain on hold with a hawkish bias."

"NBP Governor Glapiński yesterday emphasized that interest rates are sufficiently restrictive to stabilise inflation, pointing to a lack of broadening price pressures. He also acknowledged growth headwinds from oil prices."

"In the Czech Republic, inflation slowed to 2.1% in May from 2.5% in April but is unlikely to tempt the CNB to abandon its tightening bias."

"The divergence across CEE is reflected in the bond market: since late February, the 10y HUFGB yield has plummeted by 93bp, while Czech and Polish yields have gained 48bp and 76bp respectively."

"In contrast, FX tacked the other way, with the HUF strengthening 6.5% vs EUR. The CZK and PLN have weakened. This contrast points to a deeper macro differentiation: in the current environment, the capacity to credibly ease is less a sign of dovishness than of macro resilience."

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

• The Oil price consolidates around $93.20 as US-Iran negotiations are not getting a breakthrough.
• US President Trump said that Iran agreed to not building nuclear weapons.
• Investors will focus on the outcome of global monetary policy meetings to get cues regarding the Oil demand outlook.

West Texas Intermediate (WTI), futures on NYMEX, trades in a tight range around $93.20 during the European trading session on Thursday. The oil price consolidates as negotiations between the United States (US) and Iran towards a permanent peace deal are going nowhere.

United States (US) President Donald Trump has been expressing confidence that Washington is close to reaching a deal; however, no agreement has been reached so far.

On Wednesday, US President Trump stated that Iran has agreed that it won’t pursue its nuclear ambitions, while warning that the nations cannot be trusted. Trump added that Iran's Ayatollah [referring to Supreme Leader Mojtaba Khamenei] is involved in negotiations with Washington.

Meanwhile, investors shift their focus to monetary policy announcements from a number of global central banks, which will start with the Bank of Canada’s (BoC) monetary policy decision next week. The majority of global central banks are either expected to tighten monetary conditions or guide one, as inflationary pressures have increased globally due to higher energy prices.

WTI technical analysis

WTI US Oil trades almost flat at around $93.10, keeping a soft bearish bias as it holds below the 20-day Exponential Moving Average (EMA) at $93.51. The failure to reclaim this short-term EMA suggests rallies are being capped, while the 14-day Relative Strength Index (RSI) around 48 indicates fading momentum rather than an oversold condition, leaving scope for further downside extension if selling resumes.

On the downside, the $90.00 level is the immediate support zone, and the next notable cushion emerges from the broader upward support trend line, which comes in around the $84 area, where dip-buying interest could reappear. On the topside, immediate resistance is defined by the 20-day EMA at $93.51; a daily close above this level would be needed to ease the current bearish tone and open the door for a corrective recovery toward $100.00.

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

ING analysts Warren Patterson and Ewa Manthey note that Oil prices remain closely linked to Middle East developments, with flows through the Strait of Hormuz still disrupted. They highlight continued draws in US crude inventories and thinning global stocks, arguing this leaves upside risk to Oil prices into the third quarter as any recovery in regional supply is expected to be slow and gradual.

Middle East risks and US draws

"Re-escalation in the Persian Gulf pushed oil prices higher yesterday, with fresh attacks once again casting doubt over a resumption of energy flows through the Strait of Hormuz. There also appear to be mixed messages about the progress in negotiations between the US and Iran."

"Every day that passes without a resumption of oil flows leaves the market increasingly vulnerable. This increases the pressure to strike a deal."

"However, even if we see an imminent restart of oil flows through the Strait of Hormuz, the recovery will be slow and gradual. This suggests inventories are likely to continue to tighten into the third quarter, leaving upside risk to prices."

"Weekly inventory numbers from the EIA show that US commercial crude oil inventories fell by 7.97m barrels over the last week. This leaves the total inventory draw over the last month and a half at 32m barrels."

"While inventories do fall seasonally as refiners ramp up operating rates, the pace of decline has been faster than usual. When taking into consideration releases from the strategic petroleum reserve, total crude inventories fell by 15.97m barrels over the last week."

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

• The Australian Dollar gains ground after Australia’s Trade Balance unexpectedly returns to surplus territory.
• Australian exports rebound strongly, supporting the country’s economic outlook.
• Persistent Middle East tensions continue to underpin demand for safe-haven assets.

AUD/USD trades around 0.7135 at the time of writing on Thursday, up a modest 0.08% on the day, as the Australian Dollar (AUD) benefits from the release of stronger Australian trade data.

Data released by the Australian Bureau of Statistics showed that the Trade Balance returned to a surplus of A$1,791M in April, following a revised deficit of A$1,024M in the previous month.

In detail, exports rose 7.2% MoM in April after declining 2.5% in March. Imports increased 0.8%, compared with a 12.2% rise in the previous month. The rebound in external trade is seen as a positive signal for the Australian economy and could reinforce expectations that the Reserve Bank of Australia (RBA) will maintain a restrictive monetary policy stance for an extended period.

However, the Aussie’s upside remains limited by a geopolitical environment that continues to be marked by elevated uncertainty. Investors remain focused on developments surrounding the conflict in the Middle East. Iranian Foreign Minister Abbas Araghchi said on Wednesday that no tangible progress had been made in negotiations aimed at ending the hostilities, despite ongoing contacts with Washington.

Meanwhile, Lebanese President Joseph Aoun stated that he is awaiting responses from all parties regarding an agreement reached with Israel to implement a ceasefire. While these developments have provided a modest boost to risk sentiment, markets remain cautious amid the lack of meaningful progress in regional negotiations.

Market participants are now turning their attention to upcoming US data releases, with Initial Jobless Claims due on Thursday ahead of Friday’s May Nonfarm Payrolls (NFP) report. Economists expect the US economy to have added 85K jobs while the Unemployment Rate is forecast to remain unchanged at 4.3%, figures that could influence expectations for the future policy path of the Federal Reserve (Fed).

• EUR/USD bounces up from 1.1600 and reaches 1.1630 to reverse Tuesday's losses.
• A ceasefire between Israel and Lebanon has hit the safe-haven US Dollar on Thursday.
• Eurozone Retail Sales declined beyond expectations in April.

The Euro (EUR) is rallying against a weaker US Dollar (USD) in Thursday’s European trading session, reversing Wednesday’s losses and returning to the 1.3630 area at the time of writing. A moderate improvement in market sentiment following news of a ceasefire in Lebanon has offset the weak Eurozone Retail Sales report released earlier in the day.

The safe-haven US Dollar is struggling on Thursday, following reports of an agreement between Israel and Lebanon to implement the ceasefire, which is pending confirmation by Hezbollah. This agreement is seen as the first step to disentangle the stalemate in Iran and advance towards a durable peace in the region.

A moderate market optimism is keeping the safe-haven US Dollar under pressure and buoying the Euro, which has been unfazed by a 0.4% decline in Eurozone Retail Sales in April. The final data overshoots market expectations of a 0.3% drop, although the upward revision of March’s figures –to a 0.8% increase from the 0.1% drop previously estimated– has contributed to cushioning the negative impact on the common currency.

Technical Analysis: The Euro keeps wavering within range

The broader technical picture, however, remains little changed. The EUR/USD trades at 1.1631, holding in a broadly neutral stance with price action trapped within the last two and a half weeks' trading range, between 1.1570 and 1.1660.

Technical indicators in 4-hour charts are mixed, endorsing the neutral view. The Relative Strength Index (RSI) is right above the 50 midline, while the Moving Average Convergence Divergence (MACD) remains slightly negative.

Upside attempts are likely to find significant resistance at the 1.1660 area, which has been capping bulls since mid-May. Above that level, the next targets are the May 14 high, at 1.1720, and May's peak, in the 1.1790 area.

On the downside, the 1.1600 round level has contained bears this week, guarding the path towards the range bottom, at the 1.1570 level (May 21 low). A confirmation below this level would put April's bottom at the 1.1505-1.1525 on the bears' focus.

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

The Eurozone Retail Sales data for April declines at a faster pace of 0.4% in April, compared to the 0.3% contraction expected. In March, the Retail Sales data, a key measure of consumer spending, rose by 0.8%, revised sharply higher from 0.1% decline. On an annualized basis, the consumer spending measure grew by 1%, faster than 0.3% estimates, but slower than the previous reading of 2.1%, revised higher from 1.2%.

Though Eurozone monthly Retail Sales have contracted sharply, there has been a sharp upside move in the Euro (EUR) during the European trade. As of writing, EUR/USD trades 0.25% higher to near 1.1630. This could be the outcome of a ceasefire announcement between the US-Iran alliance army and Iran-backed Hezbollah in Lebanon.

What do weak Eurozone Retail Sales data mean for EUR/USD?

The Eurozone Retail Sales data reflects the households’ spending power of the old continent. Soft Retail Sales exhibit weakness in the overall demand and prompt the need for loose monetary conditions by the European Central Bank (ECB), a scenario that is unfavorable for the Euro (EUR).

However, market participants expect the ECB to tighten monetary conditions in the near term, in an attempt to counter rising inflationary pressures due to elevated oil prices.

Technical Analysis: EUR/USD trades inside Descending Triangle pattern

EUR/USD trades higher at around 1.1630 at press time. The pair keeps a mild bearish tone as it holds below the 20-period exponential moving average (EMA) at 1.1648.

The pair is consolidating inside the Descending Triangle pattern, and the Relative Strength Index (RSI) at around 46 hints at soft downside bias rather than outright selling pressure.

On the topside, immediate resistance is seen at the 20-day EMA at 1.1648, followed by the descending trend-line barrier near 1.1656, and a daily close above this cluster would be needed to ease the current downside pressure and extend the upside towards 1.1700. On the downside, initial support is provided by the rising trend line coming in around 1.1575, where a break would open the door to a deeper pullback towards 1.1500.

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

Brown Brothers Harriman’s (BBH) Elias Haddad notes the US labor market is stabilizing and inflation is gaining traction, with ISM surveys and the Fed Beige Book reinforcing this view. Haddad highlights that a 25 bps Fed funds rate hike to 3.75-4.00% by year-end is now heavily priced and supportive for the Dollar, while upcoming Revelio Labs employment data will be watched for confirmation.

Fed pricing underpins stronger Dollar

"The Fed Beige Book reinforced the case that the US labor market is stabilizing and inflation is gaining traction. According to the Beige Book “Employment showed little to no change across eleven Districts, while one District experienced modest growth…Prices increased at a moderate to strong pace overall, with most Districts reporting higher inflation than the previous report.”"

"The ISM May surveys corroborated the Beige Book’s findings. The Prices Paid indices signaled inflation risks remain skewed to the upside while the Employment gauge was stable under the 50.0 boom/bust threshold."

"A Fed funds 25bps rate hike by year-end to a target range of 3.75-4.00% is increasingly likely (75% priced-in) and supportive of a firmer USD."

"Dallas Fed president Lorie Logan (FOMC voter) said yesterday, “I'm increasingly concerned that higher interest rates could be necessary later this year to fully restore price stability.” Logan was one of the three regional Fed presidents (the other two are Beth Hammack and Neel Kashkari) that did not support the inclusion of an easing bias in the April 29 post-meeting statement."

"Fed speakers today include: Richmond Fed President Tom Barkin (2027 voter), Fed Vice Chair for Supervision Michelle Bowman, San Francisco Fed President Mary Daly (2027 voter), and Kansas City Fed President Jeff Schmid (non-voter)."

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

• USD/CAD pulls back to 1.3900 from eight-week highs at 1.3925.
• A moderate optimism after the Israel-Lebanon ceasefire deal has hit the safe-haven USD on Thursday.
• The Canadian Dollar remains 0.8% down on the week with US and Canadian employment data on tap.

The Canadian Dollar (CAD) keeps losing ground against the US Dollar (USD) on Thursday, but it has reversed most of the daily losses, as news of a deal between Israel and Lebanon has boosted hopes of progress in the US-Iran peace plan. The USD/CAD pair is trading just above 1.3900 at the time of writing, down from eight-week highs of 1.3925 but still up 0.8% on the week.

Lebanon’s President Joseph Aoun said earlier on Thursday that he is awaiting responses from all parties to an agreement reached with Israel to implement the ceasefire. Investors have reacted with moderate optimism to the news, although risk appetite remains subdued amid a lack of progress in the US-Iran peace process.

US data feeds hopes of Fed tightening

In the macroeconomic domain, recent US data have been Dollar-supportive. On Wednesday, the ADP Employment Change report showed a stronger-than-expected increase in net jobs in May, while the US ISM Services Purchasing Managers’ Index (PMI) revealed healthy business activity and strong price pressures. These figures strengthen the case for a Federal Reserve (Fed) rate hike in the near-term, if inflationary pressures remain at high levels.

The focus on Thursday is on US initial Jobless Claims, although the highlight of the week is Friday’s Nonfarm Payrolls report, which is expected to show that the US economy created 85K new jobs in May and that the Unemployment rate remained steady at 4.3%.

At the same time, Statistics Canada will release May’s Canadian labour market numbers. In this case, net employment is seen increasing by 10K in May, following a 17.7K decline in April, while the Unemployment Rate is expected to remain unchanged at 6.9%.