Forex News

TD Securities expects UK Retail Sales for February to decline, projecting -0.6% month-on-month versus the market’s -0.7% and January’s 1.8%. They bank attributes the pullback to fading idiosyncratic supports and adverse weather weighing on physical store traffic. Despite weaker monthly data, TD Securities judges overall consumer momentum in the UK to remain positive.

UK retail sales seen softening in February

"We expect UK retail sales to come in at -0.6% m/m in February (mkt: -0.7; prior: 1.8%), undoing some of the gains from the previous two months as idiosyncratic factors lose some of their influence."

"Adverse weather likely reduced foot traffic in physical stores, also leading to lower sales throughout the month."

"However, while monthly figures would indicate some mean reversion, consumer momentum should stay positive now that uncertainty related to the November Budget has diminished."

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

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that USD/CAD continues to grind higher as haven demand for the US Dollar dominates, with the pair trading well above an estimated fair value of 1.3543. Short-term technicals are bullish after a clean break above the 200-day moving average, with risks pointing toward the low 1.39s while support sits around 1.3790/00 and 1.3750/60.

CAD pressured as USD haven bid builds

"The CAD continues to drift lower as the dominant force of haven demand for the USD shapes overall FX trading. There is little the CAD can do to fight the trend, especially in an environment of low volume and low conviction trading."

"Fundamental factors have shifted a little against the CAD; front-end spreads have widened somewhat in the USD’s favour and Canadian terms of trade have softened modestly. But spot remains well above our estimated fair value of 1.3543 today."

"CAD losses have extended through the low 1.38 area (200-day MA at 1.3805 today) as the creeping USD bid persists. Trend momentum favours additional USD gains in the short-run, with the relatively easy advance through resistance in the mid-1.37s and (now) low 1.38s reflecting the firm USD undertone. Gains risk extending to the low 1.39s. Support is 1.3790/00 and 1.3750/60. "

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

• AUD/USD trades around 0.6920, holding near its lowest level since early February.
• The US Dollar is supported by safe-haven demand and rising US Treasury yields.
• Markets largely ignore the RBA’s hawkish tone, reinforcing the bearish outlook.

AUD/USD trades around 0.6920 on Thursday at the time of writing, down 0.35% on the day, and remains close to its monthly lows amid a bearish consolidation phase. The pair struggles to stage any meaningful rebound as the US Dollar (USD) continues to draw solid support.

Market sentiment remains fragile despite conciliatory remarks from US President Donald Trump, as Iran has rejected any prospect of negotiations and dismissed a ceasefire proposal. Persistent tensions in the Middle East, combined with additional US troop deployments, are fueling fears of further escalation. In this context, the US Dollar benefits from its safe-haven status, weighing on the Australian Dollar (AUD).

At the same time, the energy situation is adding to global inflationary pressures. The effective closure of the Strait of Hormuz is pushing Oil prices higher, reinforcing expectations that major central banks, including the Federal Reserve (Fed), will maintain a hawkish stance. This dynamic is driving US Treasury yields higher, further supporting the Greenback.

On the domestic front, comments from Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent failed to provide support to the currency. Although he highlighted inflation risks linked to rising energy prices and stressed the need to maintain restrictive monetary conditions, the market reaction remained muted. This lack of traction reflects growing concerns about the domestic economic outlook.

According to economists at Commerzbank, Australia is facing a stagflation dilemma, with slowing growth and energy-driven inflation pressures. They note that consumer confidence has dropped sharply while Services Purchasing Managers Index (PMI) indicators have slipped into contraction territory, complicating the central bank’s policy path. Markets still price in around a 54% chance of a rate hike in May, according to the economists.

Over the longer term, Rabobank maintains a more constructive view. The bank argues that Australia’s status as a net energy exporter could support its terms of trade in the current environment, potentially allowing AUD/USD to return to the 0.71 area over a three- to six-month horizon, and to 0.72 over twelve months.

In the near term, however, the combination of a resilient US Dollar driven by safe-haven flows, elevated US yields, and a lack of supportive domestic catalysts suggests that the bearish bias for the pair is likely to persist.

ING strategists Michiel Tukker and Benjamin Schroeder note that markets continue to price two to three European Central Bank (ECB) rate hikes in 2026, with April odds still elevated. They stress that the ECB must balance data dependence with managing expectations along the curve. They highlight Oil as a key variable and see risks of policy action to prevent a price spiral.

ECB walks tightrope on expectations

"Markets are appreciating US efforts to seek a deal, but without concrete steps, the overarching narrative of two to three ECB rate hikes this year remains unchanged. Even for April, market pricing still points to a 60% probability of a hike. The key variable to watch remains the oil price, and that hasn’t really moved much since the start of this week."

"Still, market pricing, especially for April, appears aggressive against the backdrop of President Christine Lagarde suggesting on Wednesday morning that the ECB would not act until it had enough information and could look through a short price shock, underscoring the differences to the 2022 situation."

"A more forceful reaction by the ECB could still follow to nip any price spiral in the bud. This is what the market is pricing – and it gels with the relative stability of longer-dated (forward) inflation swaps. But the market is also looking for a partial reversal as indicated by the hump, e.g. in the Euribor futures strip."

"At this stage, the ECB is engaged in a balancing act of managing market expectations and the curve. If it sounds too doveish, the risk is that the long end runs away as inflation expectations become unmoored. If it sounds too hawkish, growth concerns take over."

"At some point, even meeting market expectations might be required to keep the balance – and buy time."

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

• Gold edges lower on Thursday as uncertainty around US-Iran negotiations keeps markets on edge.
• Rising Oil prices are fueling inflation concerns, strengthening expectations of higher-for-longer interest rates.
• Technically, XAU/USD remains under pressure below the 100-day SMA, maintaining a short-term bearish bias.

Gold (XAU/USD) edges lower on Thursday, snapping a two-day winning streak as uncertainty surrounding US-Iran negotiations to end the conflict keeps markets on edge, with price action largely driven by hawkish global interest rate expectations stemming from an Oil-driven inflation shock.

At the time of writing, XAU/USD trades around $4,444, down roughly 1.38% on the day, retreating from Wednesday’s high near $4,602.

US-Iran talks remain unclear

While the United States (US) pushes for a diplomatic breakthrough, Iran has rejected a proposed 15-point plan, stating that any agreement would be on its own terms and only once its conditions are met, including security guarantees and recognition of its authority over the Strait of Hormuz.

Iran’s refusal of a proposed deal is increasing the risk of a prolonged conflict, especially with reports of additional US troop deployments to the region. Meanwhile, US President Donald Trump’s five-day pause on planned strikes is set to end later this week, keeping uncertainty high.

Further complicating the outlook, US President Donald Trump said in a Truth Social post that Iranian negotiators were “begging” for a deal and warned there may be “no turning back” if a diplomatic resolution is not reached.

Liquidity demand and higher rate expectations pressure Gold

Despite ongoing geopolitical tensions, Gold has struggled to attract sustained demand, with the metal currently down over 15% from the March peak of $5,419, after briefly falling more than 20% from that high earlier this week.

Analysts suggest that traders are increasingly selling Gold to move into cash, primarily US Dollars (USD), to cover losses or margin calls in other assets amid heightened volatility across global markets. This shift toward liquidity is adding pressure on the precious metal.

At the same time, rising Oil prices are fueling inflation concerns, prompting expectations that central banks may keep interest rates elevated for longer or even consider tightening if price pressure persists. Higher interest rates tend to weigh on Gold by reducing its appeal as a non-yielding asset.

Markets now expect the Federal Reserve (Fed) to keep rates on hold through 2026, rather than earlier expectations for at least two cuts. This repricing has pushed US Treasury yields higher, further limiting upside in the yellow metal.

Looking ahead, traders will continue to monitor geopolitical developments for any signs of progress in US-Iran negotiations. However, given the current backdrop, upside in Gold is likely to remain capped unless a clear breakthrough leads to lower Oil prices and eases expectations for higher-for-longer interest rates.

Technical analysis: Bearish bias persists below 100-day SMA

From a technical perspective, XAU/USD near-term bias remains bearish after facing rejection at the 100-day Simple Moving Average (SMA) on the daily chart, following a rebound from the 200-day SMA earlier this week, which keeps the broader uptrend intact.

The Relative Strength Index (RSI) hovers in the low 30s after slipping below this level on Monday, showing persistent bearish momentum with only tentative signs of stabilization. Average True Range (ATR) has picked up from earlier lows, indicating that the latest leg lower unfolds with expanding volatility, which reinforces the downside risk in the short term.

On the upside, a sustained move above the 100-day SMA near $4,622 could ease bearish pressure and allow XAU/USD to test the 50-day SMA around $4,964, ahead of the $5,000 psychological level. A break above $5,000 would signal a return to a bullish bias.

On the downside, immediate support lies at Tuesday’s low near $4,306, followed by the 200-day SMA around $4,112.

BNY’s Head of Markets Macro Strategy Bob Savage notes that the central bank of Germany, Bundesbank President Joachim Nagel has opened the door to an April European Central Bank (ECB) rate hike if Middle East‑driven energy prices elevate inflation risks. However, with Euro area M1 and M3 monetary aggregates pointing to moderating liquidity and weaker monetary momentum, Euro (EUR) remains caught between hawkish central bank rhetoric and softening fundamental data.

Nagel hawkish as data softens

"The surge in oil and gas prices, alongside disruptions linked to the Strait of Hormuz closure, is increasing upside risks to inflation in the energy-importing euro area."

"Bundesbank President Joachim Nagel said in a Reuters interview that the ECB could raise rates as soon as April, describing a hike as “an option” if rising energy prices from the Middle East conflict increase inflation risks."

"He noted policymakers would have sufficient data by the April 29-30 meeting to decide whether to act or wait, adding that the ECB should not dismiss tightening prematurely."

"Euro area M3 growth slowed to 3.0% y/y in February from 3.2%, while M1 growth slipped to 4.8% from 5.2%, signaling weaker monetary momentum."

"Overall, monetary dynamics point to moderating liquidity conditions alongside steady but subdued credit growth across the euro area economy. It remains to be seen how the conflict will impact credit behavior."

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

• US Dollar Index holds firm as US-Iran tensions keep the Greenback supported.
• Oil-driven inflation lifts yields as traders scale back Fed rate cut expectations.
• Steady Jobless Claims data offer little new impetus for the US Dollar.

The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, holds firm on Thursday as the US Dollar remains well supported amid ongoing geopolitical tensions surrounding the US-Israel war with Iran.

At the time of writing, the index trades near 99.75, remaining on the front foot for a third consecutive day.

Uncertainty around US-Iran talks continues after Iran rejected a proposed 15-point plan from Washington, saying any deal must be on its own terms. Tehran outlined key conditions, including a halt to hostilities, guarantees against renewed conflict, war reparations, a broader ceasefire, and recognition of its authority over the Strait of Hormuz, state-linked media Press TV reported on Wednesday.

While the United States maintains that talks with Iranian negotiators are ongoing, Iranian officials have publicly denied that any negotiations are taking place. At the same time, reports of additional US military deployments to the region are keeping the risk of a prolonged conflict elevated.

Separately, Axios reported on Thursday that US officials are evaluating several military options targeting key Iranian positions, including areas such as Kharg Island, Iran’s main oil export hub, and strategic locations around the Strait of Hormuz, including Larak Island and Abu Musa.

Against this backdrop, the US Dollar continues to gain traction. Rising Oil prices are fueling inflation concerns, prompting traders to scale back expectations for Federal Reserve (Fed) interest rate cuts, which have pushed US Treasury yields higher. As Oil is priced in USD, higher prices also tend to support demand for the Greenback.

Markets now expect the Fed to keep rates on hold through 2026, rather than earlier expectations for at least two cuts. However, a Reuters poll published on Thursday showed that 61 of 82 economists expect the Fed to leave rates unchanged in the next quarter.

Looking further ahead, economists are broadly split on the outlook for end-2026, with 28 expecting one rate cut and 37 anticipating two cuts.

On the data front, US Initial Jobless Claims came in at 210K for the latest week, in line with expectations but slightly higher than the previous reading of 205K. Meanwhile, the four-week average dipped slightly to 210.5K from 210.75K.

TD Securities’ Senior Commodity Strategist Daniel Ghali warns that Commodity Trading Advisors (CTAs) are likely to sell Gold unless prices stage a strong rebound in the coming week.

He argues Gold is behaving like a risk asset due to USD diversification flows and a wartime hit to official-sector surpluses. Ghali advises waiting for CTA long capitulation and highlights further potential unwinds of the debasement trade.

CTAs poised to liquidate Gold longs

"CTAs will sell gold in most scenarios. A big uptape is required over the coming week, only to prevent algos from selling most of their remaining longs."

"The war in the MidEast has inflicted significant damage to Gulf economies, but has also significantly reduced surpluses in East Asia, creating a rupture in official sector demand for the time being."

"This left the widespread participation from institutional investors vulnerable, fueling a cycle of liquidations with fewer outs. In turn, while participants assume that gold's sell-off has been a function of deleveraging, our estimates of quant fund leverage have not budged since Day 2 of the war, and our read-through instead points to a crack in the structure. "

"The scale of liquidations has been significant, but we remain far off capitulation. At the very least, look for CTA long capitulation before buying- the-dip, but we point to upcoming catalysts for a further unwind of the 'debasement trade' (fear trade) including the Supreme Court decision on Lisa Cook's trial."

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