Forex News

• EUR/USD drifts to session lows near 1.1750 on Tuesday but maintains its upside bias intact.
• Eurozone economic sentiment deteriorated beyond expectations in April.
• Investors remain cautious ahead of the second round of US-Iran peace talks.

The Euro (EUR) extends losses against the US Dollar (USD) on Tuesday, reaching session lows a few pips above 1.1750 at the time of writing after failing to extend Monday’s gains past 1.1790. A gloomy ZEW Economic Sentiment Survey released earlier on the day has increased bearish pressure on the common currency, highlighting the negative impact of the US-Iran war.

Data released by the ZEW Institute on Tuesday revealed that institutional investors' sentiment about the German economy has plunged to -17.2 in April, its weakest reading since December 2022, well below the -5 forecasted by market analysts, following a -0.5 reading in March. The feeling about the current economic situation also declined, to -73.7 in April, from -62.9 in March.

Likewise, the Eurozone Economic Sentiment has dropped to -20.4, also its weakest reading since December 2022. The market was expecting a moderate improvement to -3.6 from last month's -8.5 print.

Concerning the geopolitical situation, the Wall Street Journal reported on Monday that Tehran conveyed to regional mediators its willingness to send a delegation to Pakistan. Iranian authorities had threatened to pull out of the peace process on Monday, in retaliation for the seizure of an Iranian cargo vessel by the US military.

Beyond that, Reuters cited an anonymous US source, affirming that “things are moving forward”, altogether, feeding a moderate market optimism.

Technical Analysis: Sideways consolidation below 1.1800

EUR/USD maintains its upside trend from the late-March lows intact, but recent price action shows some hesitation ahead of the 1.1800 area. Technical indicators in the 4-hour chart are also hinting at a weakening upside momentum.

The Relative Strength Index has been moving back and forth around the 50 midline, pointing to a lack of clear bias. The Moving Average Convergence Divergence (MACD) remains at its slightly negative levels, showing a fading upside pressure rather than a decisive bearish turn, at least for now.

Bulls have been capped at 1.1790 area earlier on Tuesday, which is closing the path towards Friday's highs near 1.1850 for now. On the downside, immediate support is located at Monday's lows near 1.1730, followed by the upward-sloping trendline, now around 1.1705. A clear break below this area would open the way towards a cluster of support levels between 1.1645 and 1.1675, which held bears on April 8, 9, 10, and 13.

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

Commerzbank’s Christoph Rieger highlights Kevin Warsh’s confirmation hearing as a key event for US rates, with potential for far-reaching changes to Federal Reserve balance sheet operations. He expects the proposals to be technically complex but impactful across the yield curve, money markets, cross-currency funding and swap spreads. Banks are seen as likely beneficiaries if they assume more Fed-like functions.

Warsh agenda could reshape US rates

"More relevant could be Kevin Warsh's confirmation hearing before the Senate Banking Committee. A formal vote is not expected as the Republican Senator Tillis has not given up his opposition, which means the Committee is short one vote for advancing the nomination to the Senate floor."

"Tillis is unlikely to drop his veto before the DoJ charges against Powell are resolved. However, after today's hearing the committee could move immediately to a vote when the DoJ issue is resolved, keeping chances alive for Warsh to be sworn in before Powell's term expires on 15 May."

"In terms of content, the hearing could add colour to the profound fundamental changes Warsh wants to implement as Fed chair. As argued in last week's AotC, the proposals may sound technical, but they can have far-reaching consequences for various actors and market segments."

"The yield curve should steepen."

"In money markets, the measures should allow more repo volatility and generally higher market rates relative to the administered rates."

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

ING’s Chris Turner highlights strong foreign demand for Eurozone assets, with EUR280bn of equities and debt bought in the first two months of the year, which may be marginally supportive for the Euro (EUR). He notes that markets largely rule out an April European Central Bank (ECB) hike but price a June move, which ING also expects. Turner adds that EUR/USD trades in a tight range but could rise if Kevin Warsh sounds dovish.

Foreign demand and ECB expectations

"Last week's Balance of Payments figures released by the ECB showed continued strong foreign buying of eurozone asset markets in February."

"So while US TIC data does not show any outright sales of US long-term assets, the strong demand for eurozone assets suggests that, at the margin, the euro could be benefiting from new funds being put to work."

"The market now sees very little chance of an ECB hike later this month but a 68% chance of a hike in June."

"We expect the ECB to deliver a June hike to impress its inflation-fighting credibility on markets."

"EUR/USD is trading in a tight 1.1750-1.1800 range, but could move to 1.1850 if Kevin Warsh says something dovish."

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

• WTI Oil prices remain steady below $86, after retreating from $88.50 highs on Monday.
• Hopes of a US-Iran peace deal are keeping Crude prices below the $100 level.
• The EIA affirms that the Iran war has created the worst energy crisis in history.

The US benchmark West Texas Intermediate (WTI) Oil is trading at $85.75 per barrel at the time of writing on Tuesday, practically flat on the daily chart, after having pulled back from Monday’s highs at $88.50. Market hopes of a resolution of the US-Iran conflict are keeping Crude Oil subdued this week.

The Wall Street Journal reported on Monday that Iran said to mediators that it will send a delegation to the second round of peace talks with the US in Pakistan. Tehran threatened to withdraw from the peace process on Monday, after the US military seized an Iranian cargo vessel that attempted to cross the Strait of Hormuz.

Separately, Reuters has cited an anonymous US official assuring that “things are moving forward”, and that the US President Donald Trump could attend in person or virtually if a deal were to be signed.

Meanwhile, the Strait of Hormuz, a key waterway for about 20% of the global Oil supply and nearly 30% of Gas production, remains closed. The head of the International Energy Agency (IEA), Fatih Birol, stated on Tuesday that the US-Israel war against Iran is creating the worst energy crisis in history, worse than the crises in 1973, 1979 and 2022 combined.

Later on Tuesday, the American Petroleum Institute (API) is expected to release its weekly Oil report. The market consensus anticipates a 1 million barrel net draw in Crude stocks during the week of April 17, following a 6.1 million increase over the previous week.

Silver prices (XAG/USD) fell on Tuesday, according to FXStreet data. Silver trades at $78.85 per troy ounce, down 1.10% from the $79.73 it cost on Monday.

Silver prices have increased by 10.93% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 60.66 on Tuesday, up from 60.46 on Monday.

(An automation tool was used in creating this post.)

TD Securities’ James Rossiter notes that Oil prices are stabilizing slightly above $90 per barrel, with Brent trading in a $90–100 range since the ceasefire began. He highlights that market participants appear comfortable with Oil around current levels, while uncertainty over Middle East developments and the Strait of Hormuz remains a key focus for traders.

Brent holds in $90–100 range

"Our base case assumption for oil prices to sit slightly above $90/bbl appears to be playing out for now."

"Indeed, the dynamics of the tensions appears to suggest a certain degree of comfort around—but not much above—this level."

"Brent oil prices have remained range-bound between $90-100/bbl since the ceasefire began."

"Whether the Strait of Hormuz remains open or closed (or seemingly both at once) remains a key focus."

"Markets seem to be converging on the view that energy prices will settle near their current levels."

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

• The Indian Rupee drops against the US Dollar as the RBI withdraws partial curbs aimed at supporting the domestic currency.
• The US and Iran will likely resume peace talks on Tuesday evening or Wednesday morning.
• Investors await Kevin Warsh’s confirmation hearing later in the day.

The Indian Rupee (INR) extends Monday's losses against the US Dollar (USD) on Tuesday. The USD/INR pair rises further to near 93.50 as the Indian currency faces selling pressure, following the Reserve Bank of India (RBI) rolling back partial measures that were meant to diminish the impact of one-way excessive moves against the domestic currency.

On late Monday, the RBI announced that it withdrew curbs on state-run banks, which were restricting them from offering non-deliverable forwards (NDFs) to resident and non‑resident users and dropped curbs that prevented users from rebooking foreign exchange derivative contracts, Reuters reports.

US-Iran will likely resume peace talks

The risk appetite of financial market participants has improved significantly, as Iran has agreed to return to the table with the United States (US) to resume talks regarding a permanent ceasefire.

A report from The Wall Street Journal (WSJ) has shown that Iran has told regional mediators that it would send a negotiating team to Islamabad on Tuesday for the second round of talks with the US. However, there has been no official confirmation by Tehran.

While Washington had already confirmed that Vice President (VP) JD Vance is leaving for Islamabad and will lead the team in negotiations with Tehran, which will likely take place on either Tuesday night or Wednesday morning.

On Monday, market sentiment turned risk-averse after Iran refused to sit down again with the US, while accusing it of violating ceasefire terms. Iran's foreign ministry spokesperson Esmail Baghaei said that there is “no plan for a second round of negotiations with the US for now."

FIIs remain net sellers on Monday

While strength in global markets reflects confidence that the US and Iran would lead to a permanent ceasefire soon, the sentiment of overseas investors toward the Indian stock market continues to remain lackluster.

On Monday, Foreign Institutional Investors (FIIs) remained net sellers in the Indian stock market after raising a little stake in the April 15-17 period. FIIs sold shares worth Rs. 1,059.53 crore on the first trading day of the week. In the last three trading days of the previous week, FIIs purchased shares worth Rs. 1,731.71 (Rs. 577.24 crore on average).

Warsh’s testimony and US Retail Sales data awaited

In Tuesday’s session, investors will focus on the speech of US President Donald Trump’s nominee Kevin Warsh for the Federal Reserve’s (Fed) new chairman in his confirmation hearing and US Retail Sales data for March, which will be published at 12:30 GMT.

The Retail Sales data, a key measure of consumer spending, is estimated to have grown 1.4% on a monthly basis against February’s reading of 0.6%. Investors will monitor the data to get cues regarding the overall demand for households.

Technical Analysis: USD/INR aims for sustainability above 93.50

USD/INR trades higher at around 93.50 at the press time. The near-term tone of the pair turns bullish, as it returns above the 20-day Exponential Moving Average (EMA), which is at 93.08.

The Relative Strength Index (14) continues to wobble inside the 40.00-60.00 zone, reflecting a sideways trend.

Looking up, the spot could attempt further recovery towards 94.00 if it manages to sustain firmly above the 20-day EMA. On the downside, the price could return to the March 3 high at 92.46 if it fails to hold above the average.

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

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• EUR/JPY moves little following the release of German ZEW Survey figures.
• Germany’s ZEW Economic Sentiment plunged to -17.2 in April, far below forecasts and down from March’s -0.5.
• Nikkei reported that the BoJ is expected to leave interest rates unchanged in April.

EUR/JPY remains steady after modest gains registered in the previous day, trading around 187.20 during the Asian hours on Monday. The currency cross holds ground as the Euro (EUR) moves little following the release of German ZEW Survey data.

German ZEW Survey - Economic Sentiment plunged to -17.2 in April, far below the -5 forecast and down from -0.5 in March. The Current Situation index also deteriorated sharply to -73.7, missing estimates of -70.0 and declining from -62.9 previously. Meanwhile, the Eurozone ZEW Economic Sentiment index also weakened markedly, falling to -20.4 versus expectations of -3.6.

European Central Bank (ECB) Vice President Luis de Guindos said during the European trading session on Tuesday that the central bank views private credit as a key source of risk to financial stability, alongside elevated market valuations and loose fiscal policy in some countries, according to Reuters.

The EUR/JPY cross may continue to appreciate as the Japanese Yen (JPY) could remain under pressure amid increasing uncertainty over the Bank of Japan (BoJ) policy outlook. The BoJ is expected to revise inflation forecasts higher while lowering growth projections, reflecting rising energy costs and broader headwinds stemming from the Iran conflict.

According to a report from Nikkei, the BoJ is expected to leave interest rates unchanged at 0.75% in the monetary policy announcement on April 28. Other reports also suggest that the central bank is assessing the economic impact of the Middle East conflict, although it may signal a resumption of policy normalization as early as June.

• AUD/USD retraces to near 0.7150 as the US Dollar gains ahead of Kevin Warsh’s confirmation hearing.
• Kevin Warsh is known for opposing QE in the Fed’s balance sheet in his previous work at the central bank.
• Iran has not made any official confirmation to have another round of talks with the US.

The AUD/USD pair trades 0.35% lower around 0.7150 during the European trading session on Tuesday. The Aussie pair corrects after a sharp upside move on Monday, as the US Dollar (USD) rises ahead of the confirmation hearing of United States (US) President Donald Trump’s nominee, Kevin Warsh, as the Federal Reserve’s (Fed) next chairman at 14:00 GMT.

At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 98.25.

Kevin Warsh’s testimony at his confirmation hearing is expected to be significant for the US Dollar’s outlook, as it will indicate his ideology towards the Fed’s monetary policy outlook. In his previous work at the Fed, Warsh was known for having a preference for a strong US Dollar and opposing Quantitative Easing (QE) in the Fed’s balance sheet.

Meanwhile, an absence of official confirmation from Iran regarding its return to the table with the US to resume peace talks has also improved the safe-haven demand of the US Dollar. However, Washington confirmed that Vice President (VP) JD Vance will leave for Pakistan to attend ceasefire talks with Tehran.

AUD/USD technical analysis

AUD/USD trades lower at around 0.7150 during the press time. However, the price holds a constructive bullish bias as it extends above the 20-day Exponential Moving Average (EMA) at 0.7072 and continues to preserve the broader rising trend from the 0.69 area. The pair is consolidating near recent highs, and the uptrend support line projected from the 0.6585 base, with a key reference level around 0.6922, continues to underpin the advance.

Momentum remains supportive, with the 14-day Relative Strength Index hovering above 60.00, hinting that buyers still control the near-term tone without yet venturing into overbought territory.

On the downside, initial support is seen at the 20-day EMA at 0.7072 ahead of more substantial trend support aligned with the rising line near 0.6922. As long as price holds above these underlying levels, dips are likely to be absorbed, keeping the path of least resistance pointed higher. Looking up, the spot could aim to reclaim the multi-year high of around 0.7222. A decisive close above 0.7222 would expose the pair towards 0.7300.

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

• Fed Chair nominee Warsh will testify on Tuesday.
• Warsh's prepared remarks highlight his committment to Fed's independence.
• Investors are likely to remain focused on US-Iran news.

Kevin Warsh, United States (US) President Donald Trump's nominee to replace Jerome Powell as the next chair of the Federal Reserve (Fed), will testify before the Senate Banking Committee on Tuesday.

According to Warsh's prepared remaks released on Monday, he will tell lawmakers that he is "committed to ensuring that the conduct of monetary policy remains strictly independent."

Warsh will argue that a reform-oriented Fed can make a real difference and underscore that he is committed to "working with the administration and congress on non-monetary matters that are part of the Fed’s remit."

After delivering his prepared remarks, Warsh will respond to questions from the members of the Senate Banking Committee.

The CME FedWatch Tool currently shows that markets are pricing about a 60% probability of the Fed leaving the policy rate unchanged at 3.5%-3.75% at end-2026. Back in January, around the time when Warsh was officially nominated for the position, markets were forecasting three 25 basis points interest-rate cuts this year. Since then, expectations have changed dramatically, due to surging crude Oil prices feeding into inflation fears after the US and Israel carried out a joint operation against Iran.

Although Warsh is likely to be asked about potential policy-easing steps in the near future, he could refrain from offering any preferences, given the uncertainty surrounding the situation in the Middle East. Hence, the market reaction to Warsh's testimony could remain muted, with investors staying focused on US-Iran news.

US President Trump said on Monday that an extension to the US-Iran ceasefire, which is due to expire this Wednesday, was "highly unlikely." Although there are reports suggesting that the second round of talks between the US and Iran could take place before the deadline, Mohammed Bagher Ghalibaf, Iran’s chief negotiator and parliament speaker, said that they will not accept negotiations "under the shadow of threats,” and added that they have been preparing “to reveal new cards on the battlefield.”