Forex News
ING’s Chris Turner notes that Gulf tensions and broadening inflation pressures are keeping investors wary of short US Dollar (USD) positions. He highlights firm short-dated US yields as markets price a stagflationary oil shock and a potentially more hawkish Federal Reserve (Fed). Turner points to US Dollar Index (DXY) upside levels and says today’s Michigan survey inflation expectations could further support the Dollar.
Gulf risks and inflation support Dollar
"For today, the uncertainty over events in the Gulf probably means investors will not want to go home short dollar balances."
"Given the absence of Federal Reserve speakers due to the blackout period and away from social media posts on the Gulf, today's US focus will be on the final release of data from the University of Michigan Consumer Sentiment Survey."
"Any upward revision here could unnerve the Fed and lift short-dated US yields and the dollar."
"We also note that the 5Y5Y USD inflation swap has risen to 2.50% from 2.40% this week – the highest since early February."
"DXY looks biased to 99.15/20, above which it could fill a gap to 99.50."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Nordea’s Chief Analyst Jan von Gerich expects the European Central Bank (ECB) to leave policy rates unchanged at the April meeting while keeping all options open for June. He anticipates a hawkish communication tone that underpins market expectations for a June hike. Recent Purchasing Managers' Index (PMI) weakness, softer price data and still-contained inflation expectations allow the ECB to wait, but inflation concerns persist.
Hawkish hold with June hike risk
"The ECB is set to keep rates unchanged at the April meeting and to signal that all options are open for the June meeting."
"The communication is likely to strike a hawkish tone, supporting expectations of a hike in June."
"Overall, recent data developments still allow the ECB to wait for more information."
"However, genuine inflation worries were already evident at the March monetary policy meeting and are unlikely to have eased since."
"The no-pre-commitment Governing Council is unlikely to signal any clear intention to raise rates at the June meeting, but the tone of the communication is still set to be on the hawkish side."
"Swings in sentiment and expectations around the situation in the Middle East retain significant potential to change market pricing rapidly."
"A 25bp rate hike in June is not fully priced in, while a total of around 2.5 rate increases are priced in by year-end."
"We continue to see four hikes this year, though with risks tilted to the downside, which leaves upside potential relative to current market pricing."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Iran’s deputy president Esmaeil Saqab Esfahani has warned the United States (US) of “an eye for an eye” over oil strikes, according to the Mehr news agency, The Guardian reported. Esfahani threatened to attack the oil facilities of the countries from whose soil Iranian oil wells will be targeted.
Iran’s deputy president Esfahani added that Tehran’s negotiation team has “grabbed the enemy’s collar at the negotiating table”. He further added that Iranians shouldn’t worry about their energy supply as the “necessary arrangements” have been made.
Meanwhile, US Defense Secretary Pete Hegseth and the chair of the Joint Chiefs of Staff Dan Caine have announced that they will be hosting a press conference on Operation Epic Fury, the bombing of Iran at 08:00 AM ET (12:00 GMT).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Silver hits fresh 10-day lows below $74, on track for a nearly 7% weekly loss.
- Waning hopes of an immediate peace deal in the Middle East have boosted the US Dollar this week.
- XAG/USD clings to support around $74.60 with bears in control.
Silver (XAG/USD) trades lower for the second consecutive day on Friday, weighed by the US Dollar’s strength, as investors lose their hopes of a swift end to the Middle East conflict. The precious metal is trading at $74.65 at the time of writing, after hitting 10-day lows at $73.95 earlier on Friday, set for a nearly 7% decline this week.
Precious metals have remained on the defensive this week, amid the deadlock in the US-Iran peace process, which has pushed investors towards the safety of the US Dollar.
A fragile ceasefire remains on hold, but seizures of cargo vessels by the US and Iran have strained the relations between the two countries. These actions keep pushing back hopes of any early reopening of the Strait of Hormuz and maintain Crude prices at levels threatening to tip the global economy into recession.
XAG/USD clings to support at a Fibonacci retracement level near $74.70
XAG/USD broke the bottom of the upward-trending channel from late March lows earlier this week, and the impulsive bearish candle from a previous support area around the $78.50 level on Thursday's daily chart confirms that sellers have taken control.
Technical indicators show significant bearish pressure, which is keeping upside attempts subdued for now. The Relative Strength Index (RSI) is nearing oversold conditions but not yet there, while the Moving Average Convergence Divergence (MACD) readings remain negative, reinforcing downside pressure.
Sellers have found some support at the 38.2% Fibonacci retracement of April's rally, at $74.60. Further down, the area between April 12 lows, at $72.61, and the 50% Fibonacci retracement, right above $72.00, emerges as the next target. On the topside, a previous support area at $75.60 is likely to act now as resistance ahead of Wednesday's high, at the mentioned $78.60 area.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann expect AUD/USD to remain in a consolidation phase after a brief dip to 0.7111 and close around 0.7130. Intraday, the pair is seen holding between 0.7110 and 0.7160, while over the next one to three weeks a slightly wider 0.7080–0.7180 band is expected to contain price action. Longer term, their bias remains lower.
Consolidation holds despite recent pullback
"24-HOUR VIEW: Yesterday, we indicated that AUD “is likely to trade between 0.7130 and 0.7180.” However, AUD dropped to 0.7111 before recovering quickly to close at 0.7129 (-0.45%). The brief decline did not lead to any clear increase in downward momentum, and we continue to expect AUD to trade in a range today, most likely between 0.7110 and 0.7160."
"1-3 WEEKS VIEW: In our most recent narrative from Monday (20 Apr, spot at 0.7130), we highlighted that “the current price movements are likely part of a range-trading phase between 0.7060 and 0.7210.” Since then, AUD traded in a relatively quiet manner. We continue to expect rangetrading, but a narrower range of 0.7080/0.7180 is likely enough to contain the price movements for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The Indian Rupee weakens further against the US Dollar amid higher oil prices.
- The selling pressure from FIIs in the Indian stock market has increased.
- Investors expect the Fed to hold interest rates steady next week.
The Indian Rupee (INR) slides further against the US Dollar (USD) on Friday, extending its losing streak for the fifth trading day. The USD/INR pair trades firmly near the weekly high of 94.38 as the Indian currency continues to underperform in the wake of higher energy prices and the resumption of significant foreign selling in the Indian stock market.
In addition to the above-mentioned headwinds for the Indian Rupee, the upbeat US Dollar is also supporting the USD/INR pair. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near the 10-day high of around 99.00.
Investors fear prolonged Hormuz closure
Higher oil prices amid the suspension of oil flows through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, by Iran as part of retaliation against the United States (US), have undermined the Indian Rupee.
During the press time, the WTI Oil price holds onto weekly gains at around $95.00. Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, underperform in a high oil price environment.
Investors doubt that the Hormuz will open soon, as Iran has not yet agreed to resume peace talks with the US, blaming Washington for the continuous blockade of Iranian sea ports.
Meanwhile, a report from CNN has shown that US military officials are developing new plans to target Iran’s capabilities in the Strait of Hormuz in the event the current ceasefire with Iran fails.
FIIs remain net sellers in last four trading days
So far this week, FIIs have remained net sellers in all four trading days and have offloaded their stake worth Rs. 8,311.99 crore. Foreign investors have resumed selling after a brief pause in the last three trading days of the previous week. Elevated oil prices have dimmed the interest of overseas investors in the Indian stock market amid concerns over India Inc.'s forward earnings and the expectations that the government would trim its capital expenditure to offset obligations towards rising energy prices.
Investors shift focus to the Fed policy
Going forward, the major trigger for global markets will be the monetary policy announcement by the Federal Reserve (Fed) on Wednesday. The Fed is widely anticipated to leave interest rates unchanged in the range of 3.50%-3.75% and warn of upside inflation risks in the wake of higher energy prices. Investors will pay close attention to cues regarding whether the Fed plans to hike interest rates anytime this year.
Technical Analysis: USD/INR holds firmly above 20-day EMA
USD/INR trades higher above 94.20 at the press time, holding a constructive bullish bias as spot remains firmly above the 20-period Exponential Moving Average (EMA) at 93.3565. The positioning over this short-term trend line suggests buyers retain control, while the Relative Strength Index (14) near 59 shows positive but not overstretched momentum, hinting that the advance could extend as long as the pair defends its underlying supports.
On the downside, initial support is seen at the 20-period EMA at 93.3565, which underpins the current structure and is likely to attract dip buyers on shallow pullbacks. A daily close below this dynamic floor would weaken the immediate bullish tone and expose deeper retracements, whereas holding above it keeps the door open for further gains toward the all-time high at around 95.20.
(The technical analysis of this story was written with the help of an AI tool.)
Swiss National Bank (SNB) Chairman Martin Schlegel said at the SNB's General Meeting during the European trading hours on Friday that the central bank has unrestricted room to maneuver on policy rate and made forex interventions.
Additional remarks
Middle East conflict will lead to subdued economic growth in Switzerland.
Will adjust monetary policy if necessary.
Higher energy prices will lift Swiss inflation.
Given the conflict in Middle East, our willingness to intervene in forex markets has increased.
Market reaction
There seems to be a slight positive response by the Swiss Franc (CHF) after SNB Schlegel's remarks. As of writing, USD/CHF is amrginally down to near 0.7860.
SNB FAQs
The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
Societe Generale analysts observe that USD/JPY has formed a small base above its 50‑day moving average after an earlier failed breakout. The pair is again attempting to break out of its multi‑year range, with the 2024 high near 162 and projections around 163.20/163.70 as key hurdles, while the 50‑day moving average near 158/157.50 remains crucial support.
Pair re-tests multi-year range highs
"USD/JPY attempted a breakout above the upper boundary of its multi‑year range, but the move lacked follow‑through. This led to the formation of a small base above the 50‑DMA."
"The pair is now once again attempting to break out from this range, suggesting that the uptrend may be resuming. The 2024 high near 162 and projection around 163.20/163.70 represent the next hurdles. The 50‑DMA near 158/157.50 remains a key support zone."
"Support 158.50, resistance 160.50"
"Fourth day of higher highs lifts spot towards 160.00, on alert for spot checks in NY. FinMin Katayama warns of decisive action to curb speculative activity."
"Japan FinMin Katayama reiterates readiness for bold FX intervention, can take decisive, strong action against speculative activities based on agreement with US."
"CPI rose to 1.5% yoy in March from 1.3% in February. Core up 1.8% vs 1.6%, yet to reflect oil price surge."
"Japan to start second round of crude oil releases from national reserves from May 1."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Deutsche Bank strategists highlight that Brent Oil continues to climb as US-Iran tensions persist and the Strait of Hormuz remains effectively closed. Brent futures across the curve have pushed to multi‑week highs, with US gasoline and inflation swaps also rising. Markets are increasingly pricing a more prolonged period of high energy prices.
Geopolitics sustain higher energy prices
"From a market perspective, that means oil prices continue to grind higher, with Brent crude rising +3.10% yesterday and another +0.97% overnight to $106.09/bbl."
"Back to yesterday and oil's gains extended across the futures curve."
"The 6-month Brent future (+2.34%) reached a 3-week high of $86.74/bbl as investors geared up to facing a more prolonged period of high energy prices."
"The pressures were even more visible in downstream products with US wholesale gasoline prices (+3.10%) reaching their highest level since 2022."
"This was echoed in near-term inflation swaps as well, with the 1yr Eurozone inflation swap (+16.2bps) surging up to 3.35%, whilst the 1yr US inflation swap (+8.6bps) rose to 3.32%, with the latter now only 6-7bps below its high on March 20."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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