Forex News
- Gold regains positive traction as a partial Israel-Hezbollah ceasefire prompts some USD selling on Tuesday.
- The uncertainty over US-Iran peace talks and Fed rate hike bets support the USD, capping the bullion.
- Traders look forward to this week’s release of the US NFP report for a fresh directional impetus.
Gold (XAU/USD) clings to modest intraday gains through the first half of the European session on Tuesday, though it lacks follow-through buying and remains below the previous day's swing high. A partial ceasefire between Hezbollah and Israel eases fears of a broader regional conflict, undermining the safe-haven US Dollar (USD) and providing a goodish lift to the bullion. However, the uncertainty around US-Iran peace talks, along with inflation fears and prospects for interest rate hikes, should limit deeper USD losses and cap the yellow metal.
US President Donald Trump announced on social media on Monday that Israel has agreed to pull back any troops that were preparing to attack Beirut and its suburbs controlled by Hezbollah. Furthermore, Trump also communicated with Iran-aligned Lebanese militant group Hezbollah through intermediaries and secured a pledge that it would not attack Israel. A limited de-escalation of the conflict fails to assist the USD to build on the previous day's move up. However, mixed signals about US-Iran negotiations to end a three-month-old war act as a tailwind for the buck.
Iran warned that it would suspend negotiations with the US following fresh strikes and an Israeli military operation in Lebanon. However, Trump asserted that peace talks were ongoing with Iran, adding that he will have an agreement to extend the ceasefire and reopen the Strait of Hormuz over the next week. Nevertheless, investors remain on edge and opt to wait for further progress in US-Iran peace talks. In the meantime, expectations that elevated energy prices would prompt major central banks, including the US Fed, to stick to their hawkish outlook should cap the non-yielding Gold.
Market participants now look to the US economic docket – featuring the release of JOLTS Job Openings – for some impetus later during the North American session. The focus, however, will remain glued to the closely-watched US Nonfarm Payrolls (NFP) report on Friday and drive the USD demand. Apart from this, further developments surrounding the Middle East crisis should infuse volatility across the global financial markets and produce some meaningful trading opportunities around the Gold. The fundamental backdrop, meanwhile, seems tilted in favor of the XAU/USD bears.
XAU/USD 4-hour chart
Gold struggles to capitalize on intraday gains amid bearish technical setup
From a technical perspective, the precious metal holds within a downward-sloping parallel channel and trades beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart, retaining a bearish bias. The structure suggests sellers remain in control despite a modest stabilization in momentum indicators. In fact, the Relative Strength Index (RSI) hovers near a neutral 49. That said, the Moving Average Convergence Divergence (MACD) has slipped slightly into negative territory, hinting at waning bullish attempts.
Hence, any subsequent move up is more likely to confront initial resistance around at $4,615.35, followed closely by the 200-period SMA at $4,619.67, before the channel top near $4,655.17 comes into view. A sustained break above this cluster would be needed to ease the current downside pressure. On the downside, the main support is defined by the lower boundary of the descending channel at $4,320.15, where a decisive break would reinforce the broader bearish pattern and open the door to deeper losses.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Societe Generale analysts expect the National Bank of Poland (NBP) to keep its policy rate unchanged at 3.75%, with a status quo stance likely through the second half of 2026 and early 2027. Inflation is currently within target, while growth has improved. Money markets, however, are pricing in around 75 basis points of tightening over the next year.
Stable policy against modest tightening pricing
"In Poland, we expect the NBP to leave its policy rate unchanged at 3.75% today. Our base case is for status quo throughout 2H and early 2027."
"Inflation is within the bank’s target range of 1.5%-3.5%. Headline CPI is running at 3.1% yoy and core at 3.0% in May. 1Q GDP expanded by 0.6% qoq and 3.5% yoy."
"Finance minister Domanski welcomed the friendlier inflation data and the upward revision to growth, praising the domestic economic resilience."
"Money markets are pricing in about 75bp of tightening by the NBP in twelve months compared to 71bp of easing in Hungary."
"The question now is whether the HUF and local bonds can outperform the PLN deep into 2H?"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/JPY consolidates its recent strong move higher to over a one-month high.
- Economic risks stemming from Mideast tensions continue to weigh on the JPY.
- Intervention fears and a modest USD downtick cap further gains for spot prices.
The USD/JPY pair extends its sideways consolidative price move through the first half of the European session on Tuesday and currently trades around the 159.70-159.75 region, or over a one-month top. Economic concerns stemming from the Middle East continue to undermine the Japanese Yen (JPY) and act as a tailwind for the currency pair.
However, speculations that Japanese authorities will step in again to prop up the domestic currency hold back the JPY bears from placing aggressive bets. Furthermore, a partial ceasefire between Hezbollah and Israel eases fears of a broader regional conflict and dents the US Dollar's (USD) reserve currency status, which contributes to capping the USD/JPY pair.
The overnight move above the 61.8% Fibonacci retracement level of the April-May downfall was seen as a fresh trigger for bulls against the backdrop of the recent solid bounce from the 200-day Exponential Moving Average (EMA). Moreover, momentum indicators suggest that the outlook is still constructive and backs the case for appreciation for the USD/JPY pair.
In fact, the Moving Average Convergence Divergence (MACD) trades in positive territory with a modestly positive histogram, while the Relative Strength Index (RSI) near 60 reinforces the bullish tone without yet signalling overbought conditions. This set the stage for a move towards the recent swing high at 160.70 that bulls need to clear to extend the advance.
On the downside, initial support is seen at the 78.6% Fibo. retracement at 159.51, followed by the 61.8% level at 158.57 and the 50.0% retracement at 157.92, where dips could attract buying interest. Deeper losses would expose the 38.2% retracement at 157.26 and the 23.6% level at 156.45, ahead of a stronger demand area defined by the 200-day EMA at 155.69.
(The technical analysis of this story was written with the help of an AI tool.)
USD/JPY daily chart
Japanese Yen Price Last 7 Days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 7 days. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.29% | 0.51% | 0.30% | -0.15% | -1.02% | 0.36% | |
| EUR | 0.02% | 0.31% | 0.56% | 0.30% | -0.13% | -0.98% | 0.38% | |
| GBP | -0.29% | -0.31% | 0.26% | -0.02% | -0.39% | -1.28% | 0.08% | |
| JPY | -0.51% | -0.56% | -0.26% | -0.22% | -0.66% | -1.52% | -0.17% | |
| CAD | -0.30% | -0.30% | 0.02% | 0.22% | -0.45% | -1.35% | 0.08% | |
| AUD | 0.15% | 0.13% | 0.39% | 0.66% | 0.45% | -0.85% | 0.48% | |
| NZD | 1.02% | 0.98% | 1.28% | 1.52% | 1.35% | 0.85% | 1.40% | |
| CHF | -0.36% | -0.38% | -0.08% | 0.17% | -0.08% | -0.48% | -1.40% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- GBP/USD appreciates as the US Dollar loses ground on easing risk aversion following a partial Israel-Hezbollah ceasefire.
- President Trump announced that Israel agreed to halt troop deployment to Hezbollah-controlled Beirut.
- BoE Governor Bailey signaled no rush to raise interest rates, citing weak UK growth and the unpredictable Iran war.
GBP/USD gains ground after registering minor losses in the previous day, trading around 1.3470 during the European hours on Tuesday. The pair appreciates as the US Dollar (USD) loses ground on easing risk aversion due to a partial ceasefire between Hezbollah and Israel.
US President Donald Trump announced on social media on Monday that Israel has agreed to pull back any troops that were preparing to attack Beirut and its suburbs controlled by Hezbollah. Furthermore, Trump also communicated with Iran-aligned Lebanese militant group Hezbollah through intermediaries and secured a pledge that it would not attack Israel.
However, the US Dollar may regain its ground amid increased risk aversion due to ongoing geopolitical uncertainties. Iran's Tasnim news agency indicated that Tehran has halted indirect negotiations with the United States. Iran and its "Resistance Front" allies, spanning Yemen, Lebanon, and Iraq, have established an agenda to completely block the critical Strait of Hormuz and activate additional fronts, including the Bab el-Mandeb Strait, as a means to punish Israel and its supporters.
Axios reported on X that Iran deployed additional naval mines in the strait last week. These combined developments pose a severe obstacle to a swift resolution of the crisis, which has already effectively shut down the Strait of Hormuz, a vital chokepoint for global oil and liquefied natural gas supplies.
Bank of England (BoE) Governor Andrew Bailey signaled on Friday that the central bank is in no rush to raise interest rates, citing weak domestic economic growth and the highly unpredictable outcome of the war in Iran. In response to this cautious stance, money market futures have adjusted their expectations; according to Reuters, markets are currently pricing in 32 basis points of tightening for the year, which guarantees one quarter-point rate hike and reflects roughly a 30% chance of a second.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
Danske Research Team notes that Brent crude briefly traded above USD 97 before easing below USD 95 as Iran–US ceasefire negotiations fluctuated. They highlight reports that OPEC+ may modestly lift July output, but see limited price impact unless exports rise. The rebound in Oil has already pushed global yields higher and influenced major FX pairs.
Brent swings on Iran and OPEC+ headlines
"In the Oil market, Brent crude reversed much of last week's ceasefire-driven decline, briefly trading above USD 97/bbl, after Iran reportedly halted negotiations with the US over continued fighting in Lebanon."
"Prices later eased after President Trump said negotiations with Tehran were continuing and signalled expectations of a deal to extend the ceasefire and reopen Hormuz 'over the next week'. Trump also claimed Israel and Hezbollah had agreed to stop shooting, helping Brent slip back below USD 95/bbl."
"In OPEC+, several member countries are reportedly leaning towards a modest 188,000 bpd increase in their July oil output target at Sunday's meeting, mirroring the June hike excluding the UAE."
"However, with production still well below target due to export cuts and the SOH [Strait of Hormuz] closure, the move is unlikely to affect oil prices unless it results in higher realised exports."
"A rebound in the oil price set the tone in FX and fixed income markets yesterday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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