Forex News
- EUR/USD edges higher near 1.1570 as USD loses safe-haven appeal.
- Hopes of a ceasefire offset President Trump’s threats to Iran to reopen the Strait of Hormuz, improving risk sentiment.
- The Greenback is no longer benefiting from its safe-haven status as risk dissipated on the ceasefire news.
The EUR/USD pair is trading near the 1.1570 price zone on Monday as the US Dollar (USD) loses momentum amid relative easing concerns about the Iran war.
The Greenback is no longer benefiting from safe-haven flows in the second half of the American session, as growing ceasefire hopes in the Middle East are offsetting earlier risk-off demand. Diplomatic efforts reportedly involving regional intermediaries have helped calm markets, reducing the urgency to seek safety in the USD.
Over the weekend, United States (US) President Donald Trump maintained a hardline stance, warning that failure to reopen the Strait of Hormuz would have severe consequences. He threatened to destroy Iran’s power plants and bridges if the Strait is not reopened by the deadline he set on Tuesday.
At the same time, recent developments suggest that hopes for a ceasefire are emerging, which have somewhat softened the impact of Washington’s ultimatum. Reports indicate that diplomatic channels potentially involving regional intermediaries are being explored to stabilize the situation and ensure the passage of maritime traffic through the Strait. This has helped cap further upside in USD, preventing a more aggressive move lower in EUR/USD.
Finally, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers Index (PMI) eased to 54 in March from 56.1 in February, coming in short of expectations of 55 and putting additional pressure on the USD.
Short-term technical analysis:
On the 4-hour chart, EUR/USD trades at 1.1555. The near-term bias is mildly bullish as price holds above the 20-period Simple Moving Average (SMA) and challenges the 100-period SMA cluster, signaling improving demand after the recent consolidation. The 20-period SMA has turned higher above 1.1540, while the flatter 100-period SMA just below the spot rate offers a nearby pivot, reinforcing a developing upward tilt rather than a clear trend. The Relative Strength Index (RSI) near 54 stays above the 50 midline, indicating modest positive momentum that supports a grind higher rather than impulsive upside.
Immediate support emerges at 1.1538, where prior horizontal support aligns close to the 100-period SMA, and a break below this area would expose the next supports at 1.1518 and 1.1506. As long as the pair holds above 1.1538, buyers retain the advantage and can keep pressure on initial resistance at 1.1571. A sustained move above 1.1571 would open the way toward higher levels, while failure to clear this barrier followed by a drop through 1.1538 would shift the focus back to the lower supports and neutralize the current bullish bias.
(The technical analysis of this story was written with the help of an AI tool.)
BNY’s Bob Savage focuses on rising FX intervention and fragile sentiment in Asia-Pacific (APAC) as higher Oil and geopolitical risks pressure regional currencies. The Reserve Bank of India (RBI) has tightened FX rules to curb Indian Rupee (INR) depreciation, while Indonesian Rupiah (IDR), Philippine Peso (PHP) and South Korean Won (KRW) are flagged as most vulnerable. Persistent foreign outflows and underheld positions in several currencies suggest continued volatility and lagging performance in risk-on phases.
Intervention rises as regional FX weakens
"Sentiment remains fragile amid rising FX and equity volatility, driven primarily by geopolitical risks and elevated crude oil prices. Persistent foreign capital outflows are adding pressure to regional currencies and amplifying equity market swings."
"Notably, March saw record foreign net selling in South Korea, Taiwan, and India."
"The Reserve Bank of India has responded with aggressive macroprudential measures to curb INR depreciation, including capping banks’ FX Net Open Positions and restricting onshore dealers from offering INR NDF contracts."
"These steps underscore growing urgency to safeguard financial stability before depreciation pressures become disorderly. Regionally, IDR, PHP, and KRW remain the most vulnerable, with currencies trading near all-time lows against the USD."
"Rising hedging demand is evident in positioning data: iFlow scored holdings show IDR and INR have shifted from significantly overheld into underheld territory, while TWD remains deeply underheld. We advise caution in FX markets, as currencies may lag in any risk-on environment, with adverse terms-of-trade dynamics continuing to act as a drag."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold holds firm on Monday as the US Dollar softens on improving market sentiment around the US-Iran war.
- Diplomatic efforts to end the war support risk appetite, while Oil pulls back from recent highs.
- Technical outlook improves as XAU/USD stabilizes above the 100-day SMA on the daily chart, with momentum indicators turning higher.
Gold (XAU/USD) consolidates modest gains on Monday as the US Dollar (USD) softens amid improving market sentiment, with traders reacting to fresh diplomatic developments aimed at ending the US-Iran war. At the time of writing, XAU/USD is trading around $4,684, rebounding from an intraday low near $4,600.
Ceasefire talks between US and Iran support risk sentiment
According to Axios, the US and Iran, along with regional mediators, are discussing a potential 45-day ceasefire that could help end the war, citing four US, Israeli and regional sources with knowledge of the talks.
Separately, Reuters reported that both Washington and Tehran have received a plan for a two-step deal to end hostilities, which could come into effect as early as Monday and reopen the Strait of Hormuz.
Meanwhile, Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, said Tehran has formulated its diplomatic response to the US and will announce it in due course, according to SNN.
These developments follow weekend remarks from US President Donald Trump, who threatened to carry out strikes on power plants and other civilian infrastructure if the Strait of Hormuz is not reopened and no deal is reached by Tuesday, 8:00 p.m. Eastern Time.
Oil eases but remains elevated, keeping inflation risks alive
While markets remain cautious about whether a final deal will be reached, ongoing diplomatic efforts are helping ease immediate tensions. In response, Oil prices have pulled back slightly from recent highs, though they remain elevated compared to pre-war levels, keeping inflation risks and concerns about global economic growth in focus.
Against this backdrop, markets are increasingly expecting major central banks, particularly the Federal Reserve (Fed), to keep interest rates higher for longer, or even raise them. This is limiting Gold’s upside, as higher yields reduce the appeal of the non-yielding metal, even as geopolitical tensions would normally support it.
In the near term, market moves are likely to hinge on incoming US economic data, Fed signals and geopolitical developments.
On the data front, the ISM Services Purchasing Managers Index (PMI) for March came in at 54, down from 56.1 in February and below expectations of 55.
The US economic calendar this week includes the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) Price Index, which will provide further insight into the inflation outlook and the Fed’s monetary policy path, following last week’s stronger-than-expected Nonfarm Payrolls (NFP) report.
Technical analysis: XAU/USD gains traction as momentum indicators turn positive
From a technical perspective, the outlook for XAU/USD is improving, with momentum indicators showing early signs of recovery. On the daily chart, the pair is attempting to stabilize above the 100-day Simple Moving Average (SMA) at 4,654, which is now acting as immediate support.
A sustained hold above this level could pave the way for a move toward 4,800, marking Friday’s high, followed by the 50-day SMA near 4,944, which may cap further gains.
The Relative Strength Index (RSI) has stabilized just below the 50 mark after recovering from oversold territory, suggesting fading downward pressure but not yet a clear bullish resurgence.
Meanwhile, the Moving Average Convergence Divergence (MACD) line has turned higher above its signal line and is gradually moving back toward the zero line, pointing to improving momentum.
On the downside, a break below the 100-day SMA could expose the 4,350 region, near last week’s low, with further support seen at 4,100, corresponding to the March swing low.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- USD/JPY edges lower as the US Dollar weakens on improving sentiment around US-Iran ceasefire talks.
- Japanese Yen finds modest support, while intervention risks build near the 160.00 level.
- Oil-driven inflation concerns keep BoJ tightening bets intact, while Fed rate-cut expectations fade.
USD/JPY trades with a slightly softer tone on Monday as the Japanese Yen (JPY) finds modest support amid a broadly weaker US Dollar (USD), with traders assessing fresh geopolitical developments, including reports of potential ceasefire talks between the United States and Iran.
At the time of writing, USD/JPY is little changed at around 159.45. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99.84, down nearly 0.34% on the day.
Optimism over a potential de-escalation in the US-Iran war is building, with reports pointing to ongoing diplomatic efforts. According to Axios, the US and Iran, along with regional mediators, are discussing a possible 45-day ceasefire that could help end the war.
Separately, Reuters reported that both Washington and Tehran have received a proposal for a two-step deal to end hostilities, which could take effect as early as Monday and may include reopening the Strait of Hormuz.
While the situation remains uncertain, Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, said Tehran has formulated its diplomatic response to the US and will announce it in due time, according to SNN.
Unless a clear resolution is reached, Oil prices, inflation risks and growth concerns are likely to remain front and center, shaping the monetary policy outlook across major economies.
In Japan, rising Oil prices may reinforce inflation and keep the Bank of Japan (BoJ) on a gradual tightening path. However, as a net energy importer, higher energy costs could also weigh on economic growth and limit the pace of further rate hikes. Markets are currently pricing in around a 70% chance of a rate hike at the April meeting, with expectations for two hikes by year-end.
Meanwhile, intervention risks remain elevated as USD/JPY trades close to the 160.00 level, with Japanese authorities having repeatedly signaled their readiness to act against excessive currency volatility.
In the United States, market expectations have shifted sharply since the start of the US-Iran war. Investors now expect the Federal Reserve (Fed) to keep interest rates on hold through 2026, a notable shift from earlier expectations of at least two rate cuts this year.
On the data front, the ISM Services Purchasing Managers Index (PMI) for March came in at 54, down from 56.1 in February and below expectations of 55.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
TD Securities strategists Robert Both and Emma Lawrence highlight that Canadian rates are opening weaker, with yields tracking US moves and geopolitical tensions. They expect CAD employment to show only a modest rebound and see imported volatility dominating. The team remains biased long 2-year Canadas, watching Middle East developments and domestic data, including the March Labour Force Survey.
Rates track US as jobs rebound
"Canadian rates are opening weaker, with domestic yields 2-3 bps higher across the curve as we follow the US into the open after Friday's payrolls."
"Looking at the week ahead, with the busy US data calendar, we'd expect larger moves this week to be imported rather than domestic drivers."
"CAD employment on Friday could move the market, but geopolitical drivers may hold more weight later in the week if no agreement is reached by Tuesday night's deadline."
"However, the 5y auction will be in the backdrop as well, which will put some weight on duration this week."
"We continue to be biased long 2s, but we'll be keeping a close eye amidst geopolitical risk events for this week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The US ISM Services PMI missed consensus in March.
- The US Dollar remains under fresh selling pressure on Monday.
Fresh data from the Institute for Supply Management (ISM) showed on Monday the Services PMI easing a tad to 54 in March from 56.1, coming in short of expectations at 55 and signalling some loss of momentum in the sector.
Inflation pressures gathered traction, with the Prices Paid Index edging higher to 70.7 from 63. Hiring conditions are still soft, with the Employment Index falling to 45.2 from 51.8. Meanwhile, new business picked up some momentum, with the New Orders Index increasing to 60.6 from 58.6.
Market reaction
The Greenback remains well offered at the beginning of the week, motivating the US Dollar Index (DXY) to breach below the key 100.00 support to hit new two-day lows in the wake of the release.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.35% | -0.40% | -0.11% | -0.24% | -0.49% | -0.47% | -0.35% | |
| EUR | 0.35% | -0.04% | 0.20% | 0.12% | -0.16% | -0.14% | -0.02% | |
| GBP | 0.40% | 0.04% | 0.25% | 0.12% | -0.12% | -0.11% | 0.04% | |
| JPY | 0.11% | -0.20% | -0.25% | -0.12% | -0.40% | -0.38% | -0.25% | |
| CAD | 0.24% | -0.12% | -0.12% | 0.12% | -0.25% | -0.24% | -0.11% | |
| AUD | 0.49% | 0.16% | 0.12% | 0.40% | 0.25% | 0.00% | 0.15% | |
| NZD | 0.47% | 0.14% | 0.11% | 0.38% | 0.24% | -0.01% | 0.15% | |
| CHF | 0.35% | 0.02% | -0.04% | 0.25% | 0.11% | -0.15% | -0.15% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US ISM Services PMI report for March at 11:30 GMT.
US ISM Services PMI Preview
The United States (US) Institute of Supply Management (ISM) Services Purchasing Managers’ Index (PMI) data for March is scheduled to be published today at 14:00 GMT.
The ISM report is expected to show that the service sector activity expanded again, but at a moderate pace. The Services PMI is estimated to arrive at 55.0, lower than 56.1 in February. Investors will pay close attention to the Services PMI data as the related sector accounts for two-thirds of the US economy.
Apart from the Services PMI, investors will also focus on sub-components of data, such as Employment Index, New Orders Index, and Prices Paid.
Theoretically, weaker-than-projected US ISM Services PMI data boost dovish Federal Reserve (Fed) expectations in the near term. However, upbeat figures would do the opposite.
How could US ISM Services PMI data affect EUR/USD?
EUR/USD trades 0.25% at around 1.1544 during the late European trading session on Monday. In the daily chart, price holds between a descending resistance trend line from 1.1666 and an ascending support line from 1.1408, keeping the near-term bias neutral with a slight downside tilt as the pair trades just below the 20-day Exponential Moving Average (EMA) near 1.1566.
The 14-day Relative Strength Index (RSI) stays inside the 40.00-60.00 range, reflecting a contracting structure, which is typically followed by a volatility expansion.
Immediate resistance emerges at the 20-day EMA around 1.1566, with the descending trend line reinforcing a cap near 1.1600; a daily close above this zone would open the way toward the March 10 high at 1.1667. On the downside, initial support aligns with the rising trend line near 1.1500, and a break through this level would expose the price towards the March low at 1.1411.
(The technical analysis of this story was written with the help of an AI tool.)
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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