Forex News
- EUR/USD holds losses at six-week lows around 1.1600 on Wednesday.
- Fading hopes of a negotiated end to Iran's war and high Oil prices are weighing on the Euro.
- Eurozone HICP data is expected to confirm the inflationary pressures stemming from Iran's war.
The Euro (EUR) consolidates losses against the US Dollar (USD) on Wednesday, trading at six-week lows around 1.1600 at the time of writing, after retreating from the 1.1660 area on Tuesday. Oil prices remain above $100 as the US and Iran ramp up threats, boosting the safe-haven USD and keeping the common currency on the defensive.
US President Donald Trump said on Tuesday that the US might attack Iran in two ot three days if Tehran does not sign a peace deal, and Vice President JD Vance affirmed that the US remains “locked and loaded” to restart the military action. Iran’s Foreign Minister, Abbas Araghchi, warned of “many more surprises” if the US renews its hostilities against the Islamic Republic.
Meanwhile, the blockade of the Strait of Hormuz approaches its third month, strangling the global supply of Oil, Gas, and other key commodities, and boosting Crude prices. Brent is trading near $108.00 per barrel on Wednesday, levels that put the Eurozone’s Oil-importing economies against the wall and are hammering the Euro.
In the economic docket, German Producer Prices Index (PPI) confirmed the inflationary pressures stemming from Iran’s war, with the yearly PPI accelerating to 1.7% in April from -0.2% in March. Later on the day, the Eurozone Harmonised Index of Consumer Prices (HICP) is expected to confirm that price pressures accelerated to 3% year-over-year in April from 2.6% in March
In the US, the focus will be on the minutes of April’s Federal Reserve meeting, which are expected to show some hawkish tweak. The bank left interest rates on hold amid a widely split committee, with one member voting for a rate cut and three calling for removing the “easing bias” line from the bank’s statement.
Technical Analysis: Bears remain in control
EUR/USD shows a bearish near-term bias after losing about 1.6% in a bit more than a week, with no sign of an upcoming recovery other than a bullish divergence in the 4-hour Relative Strength Index (RSI), which trades near 27, up from heavily oversold levels earlier this week. The Moving Average Convergence Divergence (MACD) histogram hovers around the zero line, suggesting a lack of strong corrective forces for now.
Upside attempts are being limited below Monday's low at the 1.1610 area, which is closing the path towards a support-turned-resistance, roughly between 1.1650 and 1.1670. On the downside, session lows are at 1.1590, but there is no clear support area in sight until April's bottom in the 1.1510-1.1525 area.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Producer Price Index (MoM)
The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).
Read more.Last release: Wed May 20, 2026 06:00
Frequency: Monthly
Actual: 1.2%
Consensus: 1%
Previous: 2.5%
Source: Federal Statistics Office of Germany
Economic Indicator
Producer Price Index (YoY)
The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).
Read more.Last release: Wed May 20, 2026 06:00
Frequency: Monthly
Actual: 1.7%
Consensus: 1.5%
Previous: -0.2%
Source: Federal Statistics Office of Germany
Deutsche Bank analysts highlight a sharp selloff in US Treasuries, with 30‑year yields reaching post‑2007 highs and 10‑year yields at their highest since early 2025. Rising real yields and higher Fed hike probabilities underpin the move, while they warn that renewed strikes on Iran could reignite bond market fears reminiscent of April 2025.
Curve records and geopolitical risk
"Back to bonds and this upward pressure on yields was clear around the world yesterday, but it was US Treasury yields that saw the biggest jump, with new records across the curve."
"Most significantly, the 30yr yield (+5.8bps) hit a post-2007 high of 5.18%, whilst the 30yr real yield (+4.0bps) hit a post-2008 high of 2.86%."
"For shorter maturities, the records weren’t quite so big, but the 10yr yield (+7.9bps) still rose to 4.67%, the highest since January 2025."
"And with investors bringing forward their rate hike expectations, the 2yr yield (+7.4bps) also hit its highest since February 2025, at 4.12%."
"The worrying thing would be that with this base in yields formed, where would yields go if strikes resumed on Iran?"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CHF gains positive traction for the second straight day amid the prevailing USD buying interest.
- Geopolitical uncertainties and rising bets for a rate hike by the Fed lift the USD to a six-week high.
- The mixed technical setup warrants some caution before positioning for any further appreciation.
The USD/CHF pair attracts some follow-through buyers for the second straight day and retests the three-week top during the early European session on Wednesday. Spot prices now look to build on over one-week-old uptrend further beyond the 0.7900 mark amid a bullish US Dollar (USD).
Persistent geopolitical uncertainties, along with hawkish US Federal Reserve (Fed) expectations amid inflation fears, helps the USD Index (DXY), which tracks the Greenback against a basket of currencies, in preserving its recent gains to a six-week high. Bulls, however, seem hesitant and opt to wait for the release of FOMC Minutes before positioning for any further appreciating move.
From a technical perspective, the Moving Average Convergence Divergence (MACD) histogram has turned modestly positive and backs the constructive outlook. However, spot prices location below the 200-day Exponential Moving Average (EMA) and a mid-range Relative Strength Index (RSI) around 58 suggest only tentative upside momentum within a broader capped environment.
Hence, any subsequent move up beyond the 50% Fibonacci retracement level of the March-May fall is likely to confront near a dense overhead cluster that starts with the 0.7915-0.7920 horizontal zone and the 61.8% Fibo. at 0.7936. This is followed by the 200-day EMA near 0.7956 and then the 78.6% retracement at 0.7984, with the swing high of 0.8045 acting as a stronger barrier if gains extend.
On the downside, initial support sits at the 50.0% retracement around 0.7902, ahead of the 38.2% retracement at 0.7868, with further floors at the 23.6% Fibo. near 0.7827 and the 0.7759 anchor, where a deeper pullback could seek a more solid base.
(The technical analysis of this story was written with the help of an AI tool.)
USD/CHF daily chart
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed May 20, 2026 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
- The Oil price corrects to near $101.80, while its outlook remains broadly firm.
- US President Trump delivers fresh threats of military attacks on Iran.
- The Fed will likely deliver at least one interest rate hike this year.
West Texas Intermediate (WTI), futures on NYMEX, trade almost 1.5% lower to near $101.80 during the European trading session on Wednesday. The Oil price drops despite uncertainty surrounding the reopening of the Strait of Hormuz - a critical passage to almost 20% of global energy flows - remains intact.
On Tuesday, a spokesperson from Qatar’s Foreign Ministry said that communication between leaders in the region is ongoing and with conflict parties to prevent a return to escalation, while warning that normal traffic on Hormuz has not resumed yet.
Meanwhile, the negotiations deadlock between the United States (US) and Iran doesn’t appear to be resolving soon, following fresh military threats from Washington. US President Donald Trump said on Tuesday that Washington may have to give Iran another big hit in the coming few days, if it doesn’t agree to a deal, Bloomberg reported.
Going forward, the Oil price’s upside could be restricted by growing expectations that the Federal Reserve (Fed) will raise borrowing rates this year. According to the CME FedWatch tool, the odds of the Fed delivering at least one interest rate hike this year is 56.3%, a significant turnaround from two interest rate cuts anticipated before the onset of the Middle East war.
WTI technical analysis
WTI US Oil trades lower at around $101.80 at the press time. However, the oil price maintains a bullish near-term bias as it holds above the 20-day Exponential Moving Average (EMA) at roughly $98. The price action staying comfortably over this dynamic support suggests that pullbacks are being bought, while the Relative Strength Index (RSI) around 57 keeps a constructive, yet not overbought, momentum backdrop.
On the downside, initial support is seen at the 20-day EMA near $98, where a break would hint at a deeper correction toward $90.00. As long as WTI holds above this moving average and momentum remains positive, the path of least resistance stays higher, with the market likely to treat dips as opportunities rather than signaling a clear top. Looking up, the oil price aims to revisit an over two-month high of $107.35.
(The technical analysis of this story was written with the help of an AI tool.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
UOB strategists Quek Ser Leang and Lee Sue Ann maintain a negative stance on EUR/USD after the pair broke below 1.1600 and closed lower around 1.1604. They now focus on 1.1570 as the key downside level, with potential extension toward 1.1540, while noting that a break above 1.1665 would signal stabilising Euro weakness in the short term.
Euro downside bias toward key supports
"24-HOUR VIEW: EUR dropped to a low of 1.1607 on Monday and then rebounded. When EUR was at 1.1655 yesterday, we highlighted that “there is room for EUR to rebound further, but any advance is expected to face strong resistance at 1.1685.” Our assessments turned out to be incorrect, as EUR fell to a low of 1.1591, closing 0.44% lower at 1.1604. After the rebound, the subsequent decline, though relatively sharp, did not gather much momentum. That said, there is scope for EUR to dip below 1.1590 and potentially test 1.1570 before the risk of another rebound increases. Resistance is at 1.1630, followed by 1.1645."
"1-3 WEEKS VIEW: Tracking our negative EUR view since the middle of last week, we highlighted two days ago (18 May, spot at 1.1620) that “strong downward momentum continues to suggest downside risk for EUR.” We added, “a clear break below 1.1600 will shift the focus to 1.1570.” Yesterday, EUR broke below 1.1600 and reached a low of 1.1591. As stated, the focus is now at 1.1570. Overall, a breach of 1.1665 (‘strong resistance’ level previously at 1.1685) would indicate that the weakness in EUR is stabilising. Looking ahead, while further declines below 1.1570 are not ruled out, the tentative slowing in short-term momentum, alongside early signs of positive divergence, suggests that the downside could be relatively limited. The level to watch below 1.1570 is 1.1540."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD maintains its position after experiencing volatility as the US Dollar remains firm amid safe-haven flows.
- Risk aversion followed fresh threats from President Trump regarding potential military strikes to resume attacks on Iran.
- The PBOC held its Loan Prime Rates steady, keeping the one-year LPR at 3.00% and the five-year at 3.50%.
NZD/USD remains flat after experiencing volatility, hovering around 0.5830 during the Asian hours on Wednesday. The pair maintains its position with a bearish tilt as the US Dollar (USD) receives support from safe-haven flows.
This increase in risk aversion followed fresh threats from US President Donald Trump regarding potential military strikes on Iran. US President Donald Trump recently threatened to resume attacks on Iran in two or three days as part of a push for a deal to end the war. This came after a brief pause in planned hostilities following a new proposal by Tehran to end the US-Israeli conflict, per Bloomberg. Meanwhile, an Iranian official stated that the US threat of a massive assault would be met resolutely, asserting that Iran is fully prepared to confront any military aggression.
US inflation risks are also rising due to these war-driven energy price pressures, with earlier spikes in oil reinforcing expectations that the Federal Reserve (Fed) may need to maintain higher interest rates for longer or even tighten policy further. Traders are pricing in a 40.1% probability that the Fed will raise interest rates by 25 basis points (bps) by year-end, according to the CME FedWatch tool.
On the monetary policy front, Federal Reserve Bank of Philadelphia President Anna Paulson noted that current policy is mildly restrictive, which is helping to keep inflation pressures in check while maintaining a stable labor market. Paulson indicated that the current policy rate is suitable for applying downward pressure on inflation, though an appropriate rate increase remains possible if economic growth exceeds potential or if new inflation threats arise.
Traders weighed the People’s Bank of China’s (PBOC) decision to hold its benchmark lending rates steady, looking for clues on the economic outlook of New Zealand's top trading partner following a string of disappointing Chinese data on Monday.
The PBOC left its Loan Prime Rates (LPRs) unchanged for the 12th consecutive month in May, as widely expected. The one-year LPR, which anchors most corporate and household loans, remains at 3.00%, while the five-year LPR, the benchmark for mortgage pricing, was held at 3.50%.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
DBS Group Research economists Radhika Rao and Philip Wee assess how the recent surge in global crude prices and an exogenous energy shock are affecting India’s macro backdrop and the Rupee. They highlight constrained policy space, stagflation-lite risks and a weaker Rupee, while noting India’s stronger starting external position. DBS has raised its USD/INR forecast to a 95-100 range for the rest of 2026.
Under pressure against US Dollar amid energy shock
"The energy price shock has dealt two-fold impact on the economy, i.e., supply-side constraints (higher input costs, shortage of fuel supplies, shipping delays and weaker rupee), and demand-side effects (rising pump prices, slowing fuel consumption, and tougher economic environment stoked by higher inflation), besides likely El Niño impact on food and likely rural incomes."
"The policy space is relatively constrained after fiscal and policy stimulus were undertaken last year to offset tariff-related risks."
"Onset of a likely stagflation-lite shock also restraints the central bank from assuming an expansionary stance."
"Measures announced to date largely mirror steps undertaken in 2013 (taper tantrum) and 2022 (Russia-Ukraine crisis), with concurrent effort to strengthen both sides of the balance of payment equation - current account (through gold/silver curbs and lower energy demand as prices rise) and financing item i.e., capital account (attract inflows, likely other steps to boost non-FPI/FDI inflows)."
"We have lifted our USD/INR forecasts into a 95-100 range for the rest of 2026."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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