Forex News
- The Reserve Bank of Australia is expected to hike interest rates to 4.35%.
- Eyes on RBA Governor Bullock’s press conference and hints on additional hikes ahead.
- The Australian Dollar trades near multi-year highs, bullish momentum fades.
The Reserve Bank of Australia (RBA) is having a monetary policy meeting this week and will deliver its decision on Tuesday. Market participants expect the Board to deliver a 25 basis points (bps) interest rate hike, the third consecutive one. If markets are right, the Official Cash Rate (OCR) will then reach 4.35% from the current 4.1%.
As usual, policymakers will release a statement that should shed some light on the discussion that led to the decision. Governor Michele Bullock will then hold a press conference, in which she could provide additional information about officials' assessment of the current macroeconomic situation and their perspectives for the upcoming months.
Ahead of the announcement, the Australian Dollar (AUD) trades with a soft tone amid escalating concerns about the Iran war, pushing investors into safer assets.
RBA rate hike is a done deal amid energy-driven inflation risks
The Middle East war remains the main market driver. In fact, the RBA’s expected decision has plenty to do with the war. True, the first 2026 rate hike was driven by stubborn inflation and a tight labor market. Policymakers anticipated back then that inflation would be above target “for some time.”
What RBA officials could not anticipate was that inflation would jump to 4.6% YoY in March, its highest in over two years, due to soaring Oil prices resulting from the war in Iran.
The RBA has little else to do to address higher price pressures, yet the hike won’t solve the problem. At the same time, it will create an issue for the millions of Australian households facing increased mortgage costs, a long-standing, unresolved issue in the local economy. That’s a double whammy for households that already deal with skyrocketing gas prices.
The RBA can hike rates at every single meeting in 2026, but it won’t solve the underlying problem. Still, it will create a bigger one that may have a wider impact on the local economy.
At the end of the day, the February hike was about local inflation. The next and the upcoming ones are solely a result of the Iran war. That means that, as long as the conflict continues, there is no light at the end of the tunnel.
Commerzbank strategists note that the Overnight Index Swap (OIS) market is pricing in a 74% chance of a third consecutive 25bp hike, and a total of 64bp by year-end. “The main reason is due to elevated inflation, which is expected to stay above the 2-3% target band, driven by higher fuel costs and resilient domestic demand.”
Still, accompanied by a hawkish upgrade to the accompanying statement, the Aussie is likely to find near-term support and rise And the accompanying statement should reflect mounting Board concerns about the long-term effects of the Iran war. Back in March, officials noted that most members feared that inflation expectations could become unanchored without prompt action and agreed that further tightening would likely be needed.
How will the Reserve Bank of Australia’s decision impact AUD/USD?
A rate hike has already been priced in, which means it should have a limited impact on the AUD. However, if the rate hike is accompanied by a hawkish upgrade to the accompanying statement, the Aussie is likely to find near-term support and rise. A dovish tone should put pressure on the AUD, but it is unlikely.
Valeria Bednarik, Chief Analyst at FXStreet, notes: “The AUD/USD pair trades around 0.7180, easing from last week’s peak at 0.7227, its highest since June 2022. The US Dollar (USD) is temporarily benefiting from fresh concerns about a new Middle East war, although back–and–forth headlines keep major pairs within familiar levels. The near-term picture hints at fading bullish potential, but the case for a steeper decline seems limited, with slides towards the 20-day Simple Moving Average (SMA), currently at around 0.7130, attracting buyers. A slide through it could open the door for another leg south towards 0.7090, where the next round of buyers await.”
Bednarik adds: “A hawkish RBA outcome could push the AUD/USD pair towards the mentioned multi-year high, with gains beyond it exposing the 0.7270 price zone. Additional gains are unlikely solely on the RBA’s decision, but more likely linked to war-related headlines.”
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Economic Indicator
RBA Monetary Policy Statement
At the end of each of the Reserve Bank of Australia (RBA) eight meetings, the RBA’s board releases a post-meeting statement explaining its policy decision. The statement may influence the volatility of the Australian Dollar (AUD) and determine a short-term positive or negative trend. A hawkish view is considered bullish for AUD, whereas a dovish view is considered bearish.
Read more.Next release: Tue May 05, 2026 04:30
Frequency: Irregular
Consensus: -
Previous: -
Source: Reserve Bank of Australia
Iran's Foreign Minister Abbas Araghchi said that the current situation in the Strait of Hormuz makes it “clear that there’s no military solution to a political crisis”.
“As talks are making progress with Pakistan’s gracious effort, the U.S. should be wary of being dragged back into a quagmire by ill-wishers. So should the UAE,” Araghchi said in a post on X. “Project Freedom is Project Deadlock,” he added.
Meanwhile, US President Donald Trump on Monday warned Iran that it will be “blown off the face of the earth” if it targets US ships that are protecting commercial vessels transiting the strait.
Key quotes from Iran's Araghchi
Events in Hormuz underscore there’s no military solution to political crisis.
With progress in talks aided by Pakistan’s efforts, US and UAE should be wary of being pulled back into quagmire by ill-wishers.
Market reaction
Crude oil prices attract some buyers following the news headline. At the time of writing, the West Texas Intermediate (WTI) is up 2.40% on the day at $101.95.
(This story was corrected on May 4 at 23:50 GMT to say that the West Texas Intermediate (WTI) is up 2.40% on the day at $101.95, not go down.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Iran attacked the United Arab Emirates (UAE) with a barrage of missiles and drones after the United States (US) launched a major operation to wrest control of the Strait of Hormuz, Reuters reported on Monday.
The UAE said it had come under attack from Iran for the first time since the fragile ceasefire took hold in early April, as the Associated Press reported.
The UAE Defence Ministry stated that its air defences had engaged 15 missiles and four drones fired by Iran. Authorities in the eastern emirate of Fujairah said one drone sparked a fire at a key oil facility, wounding three Indian nationals.
Market reaction
Crude oil prices attract some buyers following the news headline. At the time of writing, the West Texas Intermediate (WTI) is up 2.40% on the day at $101.95.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- EUR/USD softens to near 1.1690 in Tuesday’s early Asian session.
- Iran launched missiles and drones at the UAE after several attacks on commercial ships.
- ECB’s Nagel said central bank may need to hike rates in June.
The EUR/USD pair trades in the negative territory around 1.1690 during the early Asian session on Tuesday. The Euro (EUR) weakens against the US Dollar (USD) amid rising tensions in the Middle East after Iran attacked the United Arab Emirates (UAE). Traders will keep an eye on the US April ISM Services Purchasing Managers Index (PMI) report, which is due later on Tuesday.
CNBC reported on Monday that the UAE came under attack from Iranian drones and missiles, while the US said it sank Iranian boats in the Strait of Hormuz. US President Donald Trump warned Iran that it will be “blown off the face of the earth” if it targets US ships that are protecting commercial vessels transiting the strait. Fears of an exacerbated or prolonged war could boost a safe-haven currency such as the Greenback and create a headwind for the major pair.
Across the pond, hawkish remarks from the European Central Bank (ECB) policymakers might help limit the shared currency’s losses. Bundesbank President Joachim Nagel said on Monday that the ECB may need to raise interest rates in June if the inflation outlook does not improve significantly in the coming weeks.
The ECB kept rates unchanged last week. According to the statement, the central bank said the inflation outlook was largely unchanged, adding that "the upside risks to inflation and the downside risks to growth have intensified.”
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
- GBP/JPY trapped between 50- and 100-day SMAs near 212.00.
- Bullish momentum persists as long as price holds above 209.64.
- Break above 213.00 targets 214.01 and 215.00 resistance levels.
The GBP/JPY fell by some 0.23% during Monday’s session as the safe-haven appeal of the Japanese Yen weighed on the pair, which continues to digest price action in the aftermath of Japanese authorities' intervention in the FX markets. At the time of writing, the cross-pair trade is at 212.72, near the 50-day Simple Moving Average (SMA) of 212.79.
GBP/JPY Price Forecast: Technical outlook
The momentum in the cross-pair remains bullish, with buyers stepping in once GBP/JPY tested the 100-day SMA at 211.93 and the 50-day SMA at 212.79. Although price action is capped within the two previously mentioned levels, as long as spot prices remain above the March 31 cycle low of 209.64, buyers could remain hopeful of higher prices.
For a bearish continuation, sellers must clear the 100-day SMA. Once surpassed, the next stop is the March 16 daily low of 210.81, followed by the 209.64 cycle low registered on March 29.
On the flip side, if GBP/JPY clears the 213.00 figure, buyers could re-engage and challenge the April 17 low-turned-resistance at 214.01 ahead of the 215.00 psychological level.
GBP/JPY Price Chart – Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | 0.03% | -0.02% | -0.01% | 0.02% | 0.04% | -0.03% | |
| EUR | -0.02% | 0.02% | -0.02% | -0.00% | -0.01% | 0.04% | 0.00% | |
| GBP | -0.03% | -0.02% | -0.02% | -0.03% | -0.02% | 0.04% | -0.00% | |
| JPY | 0.02% | 0.02% | 0.02% | -0.02% | -0.02% | 0.05% | -0.02% | |
| CAD | 0.01% | 0.00% | 0.03% | 0.02% | 0.00% | 0.07% | 0.03% | |
| AUD | -0.02% | 0.00% | 0.02% | 0.02% | -0.00% | 0.04% | 0.04% | |
| NZD | -0.04% | -0.04% | -0.04% | -0.05% | -0.07% | -0.04% | -0.02% | |
| CHF | 0.03% | -0.01% | 0.00% | 0.02% | -0.03% | -0.04% | 0.02% |
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).
Crude Oil came roaring back on Monday, with both major benchmarks tearing out of last week's dip on a wave of fresh geopolitical anxiety. Brent climbed back above $112 a barrel and pressed toward fresh weekly highs, while WTI clawed back above the $100 mark to trade near $103, both posting multi-percent intraday recoveries as Iran struck deep into the United Arab Emirates and the US Navy expanded its presence in the Strait of Hormuz. The move all but erased the late-week softness that had begun to suggest the fragile ceasefire might finally be stabilizing flows.
Notably, Brent has now traded into a fresh weekly high while WTI still lags beneath its late-April peak near $107, a familiar divergence when the supply shock skews toward seaborne Gulf barrels rather than US production. Heading into the new trading week, the same script is back in play that has driven prices roughly 50% higher since hostilities began in late February, along with a renewed sense that the worst may not yet be priced in.
Iran's missiles, Trump's blockade
The fresh catalyst on the Iranian side was a coordinated barrage on the UAE, with the Gulf state's defense ministry confirming it engaged 12 ballistic missiles, three cruise missiles, and four drones launched from Iranian territory. A fire at the Fujairah Oil hub, attributed to a drone strike, sharpened the picture of regional infrastructure as a live target. Tehran's military followed up with a blunt warning for the US to "keep out of Hormuz", hours after Washington formally launched Project Freedom, a naval operation involving guided-missile destroyers and more than 100 aircraft and unmanned platforms tasked with escorting neutral commercial vessels through the strait.
President Donald Trump also reportedly rejected an updated Iranian proposal that would have seen the strait reopened in exchange for the lifting of the US blockade on Iranian ports, signaling the naval squeeze stays in place until a broader nuclear deal is reached. Trump's rhetoric has continued to harden, with the President framing the blockade as more effective than the bombing campaigns earlier in the war and arguing that Iranian leadership is buckling under the economic pressure. With Iran refusing to release the chokepoint and Trump refusing to ease it, the deadlock is unresolved and the supply backdrop is, if anything, deteriorating.
What can break the supply chokehold
Heading into the week, the structural picture remains the strongest tailwind for prices. Goldman Sachs has estimated that the closure of Hormuz and attacks on energy infrastructure have stripped roughly 14.5 million barrels per day from global production, while the International Energy Agency has labeled the disruption the largest in oil market history. Chevron (CVX) CEO Mike Wirth warned Monday that fuel shortages are becoming a genuine concern in pockets of the global market, and Exxon Mobil (XOM) CEO Darren Woods told investors on the company's earnings call last week that traders have not yet absorbed the full impact of the closure. Against that, demand is showing cracks, with Goldman flagging that April global consumption may have run as much as 3.6 million barrels per day below February levels, with weakness concentrated in jet fuel and petrochemicals.
The question for the next several sessions is whether any incremental peace-process headline out of Pakistan, where mediators are still circulating an Iranian proposal Trump has called insufficient, can puncture the bid, or whether a single further escalation, be it another tanker strike or a US response to Monday's UAE attack, sends Brent back toward the $120 mark touched in late April. For now, the path of least resistance is higher, and the burden of proof sits squarely with the de-escalation camp.
Brent Crude Oil, 1-hour chart
WTI Crude Oil, 1-hour chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- Risk aversion lifted the Dollar as Iran tensions rattled global markets.
- Rising Treasury yields and strong Factory Orders pressured non-yielding Gold.
- Traders now await ISM Services PMI and Friday’s Nonfarm Payrolls.
Gold price tumbles more than 2% on Monday as tensions in the Middle East pushes the Greenback higher, while US Treasury yields soar sharply as investors discount no interest rate cuts by the Federal Reserve in 2026. At the time of writing, the XAU/USD trades at $4,521 after reaching a daily high of $4,639.
Bullion tumbles as Operation Freedom, Fed caution hit demand now
Risk aversion is taking over financial markets as the end of the ceasefire between the US and Iran looms. The US Navy began Trump’s Operation Freedom to escort commercial shipping vessels through the Strait of Hormuz. Tehran retaliated, launching attacks against the UAE and sending speedboats to halt sailing through the Strait of Hormuz.
US President Donald Trump revealed that the “we’ve shut down seven small boats” was aimed at disrupting vessel movement. In the meantime, CNN revealed that the US and Israel could resume attacks on Iran within the next 24 hours.
As market mood soured, US equities fell, oil prices rallied, and the US Dollar recovered, up over 0.25% on the US Dollar Index (DXY). The DXY, which measures the performance of the buck’s value against a basket of six currencies, bounced off daily lows of 97.97 and is now at 98.46.
Bullion is falling amid US Dollar strength and rising US Treasury yields. The US 10-year T-note is up six basis points at 4.432%, a headwind for the non-yielding metal.
Fed expected to hold rates in June
The New York Fed President, John Williams, stated that monetary policy is “well positioned” to address uncertainty generated by external shocks, such as the Middle East conflict. He said that the future is uncertain and that “the risks to both sides of our mandate have increased.” When asked about the future of monetary policy, he said that the Fed is in no “position to provide strong guidance about where interest rates are likely to be in the next several meetings.”
Expectations that the Federal Reserve will keep rates unchanged at the June 17 meeting are at 96%, according to Prime Terminal, which would be led by the newly appointed Federal Reserve Chair Kevin Warsh.
In terms of data, US Factory Orders rose by 1.5% MoM in March, surpassing the expected 0.5% increase and up from 0.3% in February.
Ahead, the US economic docket would feature the release of the ISM Services PMI on Tuesday, with eyes set on the US Nonfarm Payrolls data.
XAU/USD technical analysis: Gold remains sideways with buyers struggling at $4,600
Gold remains neutrally biased, capped by key technical resistance and support levels, such as the 100-day Simple Moving Average (SMA) at $4,764 and the 200-day SMA at $4,287.
The Relative Strength Index (RSI) is aiming lower, an indication that sellers are gaining momentum.
If Gold drops below $4,500, the next support would be the March 26 daily low of $4,351, followed by the 200-day SMA. Down from there lies the March 23 swing low at $4,098, which, if breached, would change the trend to bearish, opening the door to a challenge of the $4,000 mark.
Conversely, if XAU/USD recovers above $4,550, buyers could test $4,600. On further strength, the next resistance is a downtrend line near the $4,700-$4,720 area, followed by the 100-day SMA at $4,764.
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.
- NZD/USD trades near 0.5870, pressured by broad US Dollar strength driven by safe-haven demand.
- Geopolitical tensions weigh on sentiment after an alleged Iranian attack on US boats.
- Focus on New Zealand employment data could influence the RBNZ outlook, while US data remains a key driver.
The NZD/USD pair is trading with a soft tone near the 0.5870 level on Tuesday, struggling to gain traction as the US Dollar (USD) remains broadly supported by safe-haven demand amid ongoing geopolitical tensions.
Market sentiment remains fragile after reports suggested that Iran allegedly attacked United States (US) boats, despite US officials denying these claims. This uncertainty continues to dampen risk appetite, favoring the Greenback and limiting any upward movement for risk-sensitive currencies like the New Zealand Dollar (NZD).
In New Zealand, traders are closely monitoring upcoming employment data, which could provide new insights into the health of the labor market and its implications for the Reserve Bank of New Zealand's (RBNZ) policy outlook. Any signs of resilience in this data could lend some support to the Kiwi; however, broader market sentiment will likely remain the primary influence.
Meanwhile, the USD is benefiting from its safe-haven status, as investors seek security amidst Middle East uncertainties. This trend comes ahead of a busy week for US economic data, including the ISM Services PMI and labor market indicators.
Short-term technical analysis:
On the four-hour chart, NZD/USD trades at 0.5874, maintaining a modest bearish bias as it remains capped by a cluster of nearby resistances. The 20-period Simple Moving Average (SMA) at 0.5882 and the 100-period SMA at 0.5884 sit just overhead, reinforcing the topside barrier carved out by a horizontal level at 0.5882 and a more distant resistance at 0.5899. The Relative Strength Index hovers around 46, indicating a lack of strong directional momentum and suggesting that sellers retain a slight advantage while the pair trades below these key moving averages.
On the topside, immediate resistance is clustered around 0.5882, where the nearby horizontal level aligns with the 20-period SMA, followed by the 100-period SMA at 0.5884 and then 0.5899. A sustained break above this band would be needed to ease the current bearish pressure, with any move beyond paving the way toward the distant resistance up at 0.5954. On the downside, initial support emerges at 0.5868, ahead of the more important floor at 0.5860; a decisive drop below this latter level would expose further weakness in the near term.
(The technical analysis of this story was written with the help of an AI tool.)
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
