Forex News
- DXY churned into 101.00 after the June FOMC Minutes landed without a tradeable surprise, holding a 100.95 to 101.27 session range.
- A few policymakers argued for a rate hike at the June meeting itself, and half the dot plot now projects at least one increase by year-end.
- The easing bias is gone, the statement has been pared to a bare pledge on price stability, and the Fed's own dealer survey and market pricing still point in opposite directions.
The US Dollar Index spent Wednesday travelling in circles, grinding around 101.00 after the Minutes of the June 16-17 Federal Open Market Committee (FOMC) meeting crossed the wires at 18:00 GMT, capping a session in which traders had already faded another round of Middle East friction. The muted price action undersells the document. A unanimous 12-0 vote to hold the target range at 3.50% to 3.75% papers over a Committee that agrees on very little beyond the decision itself.
Read more: FOMC Minutes leans toward higher-for-longer narrative
One vote, three arguments
Every voter backed June's hold, and the post-meeting statement shrank to a few terse lines anchored by a bare commitment to delivering price stability. The Minutes reveal what that unity cost: a few participants saw a live case for raising the target range at the meeting itself, and settled for the hold as a matter of timing rather than conviction.
The year-end projections split the room far more evenly than the vote. Many participants placed the appropriate federal funds rate within or slightly below the current range by December, while many others put it above; the June dot plot put 9 of 18 submissions behind at least one hike this year, against 8 holds and a single cut. Several participants added that they do not regard the current stance as restrictive at all.
The Committee also declined to repeat the language that had signalled an easing bias, a deletion most participants explicitly favoured, and the Chair announced five independent task forces to re-examine how monetary policy is conducted. Pair that with a Chair who spent last week in Portugal declining to offer forward guidance, and the picture is an institution rewriting its reaction function mid-cycle rather than one quietly preparing to cut.
Four percent inflation does the hawks' arguing for them
Staff estimates put headline Personal Consumption Expenditures inflation at 4.1% in May with the core measure near 3.4%, and participants traced the climb to tariff pass-through, supply disruptions from the Strait of Hormuz closure, and demand pressure from the artificial intelligence (AI) buildout. Several flagged that price pressures have broadened across transportation, airfares, petrochemicals, and agricultural inputs, which is precisely the sort of breadth that makes supply-shock inflation harder to wave through.
Risks to the inflation outlook were still judged as tilted to the upside, and the staff repeated that persistence after five years above target remains a salient risk. The scenario work carried the same asymmetry: most participants sketched worlds in which inflation stays elevated on AI demand, the Middle East, or tariffs, and almost all of them concluded that policy firming would be warranted there. The June projection round already leans that way, marking 2026 headline inflation up to 3.6% from March's 2.7%.
Markets have started trading the argument
The pricing detail buried in the Minutes is the cleanest tell for positioners. Going into the June meeting, the Fed's own survey of dealers had the funds rate on hold into early 2027 with a cut pencilled in for the second quarter, while market pricing carried a hike by mid-2027 instead. Three weeks later the market has stopped waiting; pricing now assigns roughly one-in-three odds to a July hike, favours a move by September, and traces a funds path toward 4% by year-end.
Rate differentials did the Greenback's heavy lifting over the intermeeting window, with the two-year Treasury yield rising by more than its advanced-economy counterparts as the broad Dollar appreciated modestly. The offsets are real: pricing still carries at least one further hike apiece from the European Central Bank and the Bank of England this year, and a soft June payrolls report keeps traders from chasing the hawkish repricing much further.
Wednesday's muted reaction, set against a dot plot already revised hawkishly in June, reads as confirmation rather than news; the firming optionality was in the price before the Minutes spelled it out. The calendar tightens from here, with June's Consumer Price Index print due on July 14 at 12:30 GMT ahead of the July 28-29 FOMC decision. Another 4% headline reading would promote the firming scenarios from contingency planning to base case, and the Dollar tends to notice a promotion.
US Dollar Index technical levels
Resistance: The session high at 101.27 caps the day, with three separate intraday rallies stalling beneath 101.30 across Wednesday's trade. A close through that shelf clears the road toward the 101.50 round handle, the near-term ceiling flagged across sell-side desks this week.
Support: The 101.00 handle is the immediate battleground and Wednesday's settlement. Below it, the 100.95 session low is the level that matters; losing that base opens a run toward 100.50, with little obvious structure in between on the intraday tape.
Bias: Bullish while 100.95 holds, targeting a break of 101.27 and an extension toward 101.50; the five-minute Stochastic Relative Strength Index is curling higher from oversold near 25, and a Committee openly debating hikes gives Dollar dips a standing bid. A decisive break of 100.95 invalidates the call and shifts attention to 100.50.
Dollar Index 5-minute chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The June FOMC Minutes reinforced the Fed’s cautious approach as policymakers unanimously agreed to maintain interest rates unchanged while keeping a close eye on inflation risks.
Although officials agreed that downside risks to the labour market had eased somewhat, they generally continued to view upside risks to inflation as elevated. Several participants warned that persistent price pressures could stem from stronger AI-related investment, higher tariffs or renewed tensions in the Middle East, with staff projections revised to show higher inflation in both 2026 and 2027 than previously expected.
Importantly, a few policymakers judged that another rate hike could eventually become appropriate, although they still supported leaving policy unchanged at the June meeting. Almost all of those participants indicated that additional tightening would likely be warranted should inflation evolve along less favourable paths.
The Minutes also revealed a subtle but meaningful shift in the Committee's communication. Most participants favored removing language that suggested an easing bias and a majority favored shortening the post-meeting statement, arguing that it should instead emphasize the Fed’s commitment to achieving its dual mandate and restoring price stability.
While staff modestly downgraded the GDP outlook relative to April, the discussion suggests policymakers remain considerably more concerned about inflation persistence than slowing growth, reinforcing the view that the bar for rate cuts remains high.
Bottom line
The Minutes delivered a hawkish hold. Policymakers continue to see inflation as the dominant risk, several officials still believe further tightening could become necessary, and the Committee appears keen to distance itself from any perception that rate cuts are imminent. From a market perspective, the release supports the higher-for-longer narrative and should remain supportive of the US Dollar and Treasury yields while weighing on rate-sensitive assets.
Market reaction
The Greenback remains under pressure on Wednesday, pushing the US Dollar Index (DXY) to challenge the 101.00 region. In the meantime, investors continue to assess the FOMC Minutes while closely following developments from the geopolitical landscape.
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 | -0.09% | -0.30% | 0.26% | -0.20% | -0.05% | -0.43% | -0.00% | |
| EUR | 0.09% | -0.21% | 0.37% | -0.11% | 0.05% | -0.34% | 0.09% | |
| GBP | 0.30% | 0.21% | 0.57% | 0.10% | 0.25% | -0.13% | 0.28% | |
| JPY | -0.26% | -0.37% | -0.57% | -0.47% | -0.30% | -0.70% | -0.28% | |
| CAD | 0.20% | 0.11% | -0.10% | 0.47% | 0.15% | -0.24% | 0.18% | |
| AUD | 0.05% | -0.05% | -0.25% | 0.30% | -0.15% | -0.39% | 0.01% | |
| NZD | 0.43% | 0.34% | 0.13% | 0.70% | 0.24% | 0.39% | 0.41% | |
| CHF | 0.00% | -0.09% | -0.28% | 0.28% | -0.18% | -0.01% | -0.41% |
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 FOMC Minutes of the June 16-17 meeting at 17:15 GMT.
- The FOMC Minutes are expected to show further insight about the first Federal Reserve meeting with Kevin Warsh as chairman.
- The Fed is likely to provide a reduced version of the minutes amid Warsh’s reluctance to provide forward guidance.
- Investors will be attentive to growth and inflation expectations to assess the bank’s policy plans.
The United States (US) Federal Reserve (Fed) will release the Minutes of the June 16-17 Federal Open Market Committee (FOMC) meeting on Wednesday at 18:00 GMT. The Minutes should shed more light on the Fed’s hawkish hold delivered at Kevin Warsh’s first meeting as Fed Chair. Even so, doubts remain about how much the minutes will reveal, given Warsh's refusal to provide forward guidance.
The US central bank left the Fed Funds rate unchanged in the 3.50%-3.75% range, as widely expected, although the statement’s language showed a hawkish tilt that surprised markets and provided some support to the US Dollar (USD).
The committee approved the decision unanimously, putting an end to market speculation about the divergences within the governing council. Beyond that, the statement highlighted resilient activity and above-target inflation, adding to the case for interest rate hikes in the near term.
Kevin Warsh and his unexpected hawkish edge
The Fed met expectations in June and left its benchmark interest rate on hold for the sixth consecutive time, with the new chairman’s hand evident in the reduced monetary policy statement. The main takeaway of June’s meeting, however, was Kevin Warsh’s willingness to remove forward guidance, in clear contrast to his predecessor, Jerome Powell’s style, to allow the central bank further flexibility in setting monetary policy.
Warsh, however, was swift to tackle investors’ concerns about the central bank’s independence, showing an “unambiguous” commitment to deliver price stability, which the market took as a hawkish signal.
The bank’s statement also confirmed Warsh’s plans to implement radical changes in key areas of the central bank, including communication, data sources, and the framework of the central bank's inflation studies, which might also alter the bank’s monetary policy stance in the medium term.
As an immediate consequence of the new house style, the bank is expected to deliver a slimmer, less informative version of the Minutes with no clear hints about the bank’s rate path beyond the economic and inflation outlook.
With this in mind, investors will cautiously analyse the Minutes against the framework of last week’s disappointing Nonfarm Payrolls (NFP) report. June’s Payrolls showed a sharp slowdown in net employment creation, at 57K against expectations of a 110K increase, following three months of strong data, which prompted investors to push back hopes of Fed rate hikes.
Beyond that, concerns about inflation have eased since last month’s meeting. The latest US inflation figures remain well above the 2% target, but the easing tensions in the Middle East have brought Crude Oil prices back to pre-war levels. This is likely to cool price pressures over the coming months, and might grant Warsh with valuable leeway to postpone rate hikes.
When will FOMC Minutes be released and how could they affect the US Dollar?
The FOMC will release the Minutes of the June 16-17 policy meeting at 18:00 GMT on Wednesday.
Investors’ bets on Fed rate hikes have receded from the highs witnessed before last week’s NFP report, but money markets are still pricing at least a 25-basis-point rate hike over the next six months, which keeps the US Dollar buoyed.
The CME Group’s FedWatch tool still shows a 58% chance of a rate hike in September and nearly an 80% chance that the bank will tighten its monetary policy before the year-end. In this context, a clear message from the bank to contain inflationary pressures might reassure Fed tightening bets and provide a fresh boost to the US Dollar.
Downside risks from the US Dollar, in this case, would come from comments that play down the risk of second-round effects on inflation and link current higher prices to the energy shock.
USD moves, in any case, are likely to be limited, as recent developments in the Middle East and last week’s labour figures have altered the scenario, and investors are likely to await further US economic releases to better assess the Fed’s rate hike calendar.
The US Dollar Index (DXY) has been wavering on both sides of the 101.00 level so far this week, trading within a corrective channel from last week’s highs at the 101.80 area. Momentum indicators highlight a mixed bias, with the Relative Strength Index (14) just below 50 and the Moving Average Convergence Divergence (MACD) near zero hinting at a lack of clear bias, although the broader trend remains bullish.
Immediate resistance emerges at the mid-range of the 101.00s, which held bulls in early July, closing their path towards the 2026 peak of 101.80. On the downside, bears would have to breach the area between the 38.2% Fibonacci retracement of June’s rally and the July 2 low, in the 100.50-100-60 area, to confirm a deeper correction, aiming for the June 11 high around 100.30. Further down, the 78.6% Fibonacci retracement meets the June 15 low, just below 99.40.
(The technical analysis of this story was written with the help of an AI tool.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed Jul 08, 2026 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
ABN AMRO’s Georgette Boele reports that the Reserve Bank of New Zealand lifted its policy rate by 25 bp to 2.5% and signalled more tightening is likely. Despite some easing in energy prices, the bank sees persistent inflation pressures and scope for further reduction in stimulus. With markets pricing additional hikes, ABN AMRO expects modest upside for the New Zealand Dollar versus the US Dollar.
RBNZ hikes and signals further tightening
"This week, the Reserve Bank of New Zealand raised its policy rate by 25bp to 2.5%."
"It also said that, with inflation still above target and economic activity expected to strengthen, further reduction in monetary stimulus is likely to be needed to bring inflation back to the 2% target midpoint."
"Future OCR decisions will depend on incoming data, price-setting behaviour and the strength of economic activity, and how these factors affect medium-term inflation pressures."
"The market is pricing in almost 40bp of additional rate hikes this year."
"As a result, we expect modest upside for the New Zealand dollar against the US dollar."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold’s next catalyst is jobless claims report.
- Trump says Iran deal is over, reigniting war-premium fears.
- Rising Oil and Treasury yields pressure non-yielding bullion.
Gold (XAU/USD) price dives over 1.30% on Wednesday as tensions in the Middle East bolstered the Greenback after US President Donald Trump said that the agreement to end the war with Iran was “over.” At the time of writing, XAU/USD trades at $4,059 after hitting a four-day low of $4,021.
XAU/USD falls as Oil spike revives Fed tightening risks
The yellow metal is feeling the strength of the US Dollar (USD) and also of rising US Treasury yields. US President Trump’s doubts about making a deal with Iran increased the chances of a resumption of attacks, exerting pressure on Oil prices.
Western Texas Intermediate (WTI), the US crude Oil benchmark, gains over 3%, with the barrel quoting at $74.50 at the time of writing. This boosted the Greenback as high energy prices pose the risk of high inflation, fueling bets for higher interest rates. The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, is up 0.10% at 101.20.
US Treasury yields are up, with the 10-year T-note rising almost 8.5 basis points, yielding 4.589%, a headwind for the non-yielding metal.
The swaps markets have priced in 27 basis points of Federal Reserve (Fed) tightening by the end of the year. Nonetheless, for the July meeting, traders expect the Fed to hold rates, as odds are at 65% versus a slim 35% chance of a rate hike, according to Prime Terminal.
Traders will next watch for the release of the Fed’s last meeting minutes, the first led by Kevin Warsh. On Thursday, the US economic calendar includes the release of Initial Jobless Claims for the week ending July 4.
Wall Street Banks adjust their Gold forecasts
Bank of America lowered its 2026 Gold price forecast by 14% to $4,360 due to a hawkish Fed but still sees $5,000 as attainable after the tightening cycle.
XAU/USD price forecast: Gold price remains bearish, eyes on $4,000
Price action shows that Gold remains downward biased, with the yellow metal falling to a new lower low for the third straight day in the week, an indication of sellers’ strength. The Relative Strength Index (RSI) confirms that bears are gaining traction, with the index pointing lower toward oversold territory.
Traders should be aware that Bullion’s daily chart shows the formation of a ‘death cross,’ an indication that in the medium and long term, further downside is seen.
For a bearish continuation, Gold must remain below $4,100. Once achieved, the next stop would be the day's low at $4,021, followed by the $4,000 milestone. On further weakness, the next stop is the year-to-date (YTD) low of $3,941, followed by the October 28, 2025, daily low of $3,886.
To shift to a bullish trend, Gold needs to break convincingly above $4,250 and target $4,300. Key resistance levels include the 50-day SMA at $4,372 and the 200-day SMA at $4,491, with $4,500 also within reach.
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.
- Silver remains below 200-day SMA, confirming bearish technical structure.
- RSI approaches oversold territory, signaling persistent downside momentum pressure.
- Break below $56.61 exposes $55.79 and $54.39 support.
Silver prices collapse nearly 2.50% on Wednesday as risk aversion drives traders towards buying the US Dollar, to the detriment of precious metals. At the time of writing, the XAG/USD trades at $58.41 after waking at around $61.03.
XAG/USD Price Forecast: Technical outlook
Silver is still downward biased, extending the series of successive lower highs and lower lows, besides its trading below the 200-day Simple Moving Average (SMA) at $70.19.
The Relative Strength Index (RSI) is bearishly biased as the index approaches oversold territory.
For a bearish continuation, if XAG/USD dives below the June 30 daily low of $56.61, this clears the path towards $55.79, the June 26 swing low. Below this level, the next area of interest is the November 13, 2025, daily low-turned-support at $54.39, ahead of the $50.00 figure.
On the upside, buyers must clear the latest cycle high of $63.28, the July 6 high, followed by the June 22 daily peak at $67.17, ahead of the $70.00 figure.
XAG/USD Price Chart - Daily
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.
- WTI climbs to a two-week high as renewed US-Iran tensions revive supply concerns.
- Iran threatens to close the Strait of Hormuz following the latest escalation.
- EIA reports the first US crude inventory build in eleven weeks.
West Texas Intermediate (WTI) trims part of its earlier gains on Wednesday but remains supported as supply risks resurface amid escalating tensions in the Middle East.
At the time of writing, WTI trades around $73.60, up 2.20% on the day after climbing to an intraday high of $75.73, its highest level in two weeks.
Shipping through the Strait of Hormuz had been gradually normalizing after last month's interim peace agreement between the United States and Iran. However, the latest flare-up has reversed that optimism, bringing the geopolitical risk premium back into Oil markets.
Iran's Press TV, citing an informed source, reported that Tehran would close the Strait of Hormuz in the event of any fresh attacks.
The warning followed renewed fighting between the United States and Iran overnight after the Islamic Revolutionary Guard Corps (IRGC) attacked commercial vessels transiting the strategic waterway earlier this week.
Earlier on Wednesday, US President Donald Trump declared that the ceasefire deal with Iran was “over” during the NATO Summit in Ankara, Turkey. However, Reuters later reported that Trump did not repeat those remarks, citing a source familiar with the talks.
Meanwhile, the US Energy Information Administration (EIA) reported that US commercial crude Oil inventories increased by 2.998 million barrels in the week ended July 3, against market expectations for a 1.9 million-barrel draw. The build ended a ten-week streak of declining crude stockpiles.
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/GBP logged its seventh decline in eight sessions on Wednesday, printing a fresh one-year low at 0.8519 before settling near 0.8520.
- Markets moved to fully pricing a Bank of England hike by year-end after the White House declared the ceasefire with Iran over and Crude Oil turned higher.
- A week of above-average hawkish European Central Bank rhetoric bought the Euro nothing, with pricing for a September hike fading toward even odds.
The Euro's slide against the Pound has now consumed seven of the last eight trading sessions, and the reflex explanation of a soft single currency gets the attribution backwards. Sterling has done most of the work here: the Pound just closed out its best week in three months, printed a one-year high against the Euro, and managed both midway through a leadership transition with no confirmed Prime Minister and no named finance minister. The cross is falling because the Pound is being repriced upward, not because the Euro is falling apart.
A Bank of England hike went from coin flip to certainty in three sessions
Interest rate expectations moved decisively in the Pound's favour inside a single week. Markets priced roughly a 70% chance of a Bank of England (BoE) hike by year-end on Monday, nudged that to 76% on Tuesday, then moved to full pricing after the White House declared the ceasefire with Iran over at the North Atlantic Treaty Organization summit in Ankara. Fresh strikes sent Brent Crude Oil to a two-week high, an inflation problem a gas-heavy United Kingdom cannot wave through.
The domestic backdrop was tilting hawkish before the geopolitics intervened. June's hold at 3.75% carried a 7-2 vote, with the chief economist and an external member preferring a move to 4.00%, one dissent more than April's split. Services inflation is running at 3.7% against a 2.8% headline print, the Governor has ruled out near-term cuts, and the Monetary Policy Committee's most hawkish external member booked three speaking slots inside two days this week.
A leadership vacuum would normally command a currency risk premium, yet Sterling has refused to pay one. Andy Burnham remains the frontrunner for the premiership and has yet to name a finance minister, with Ed Miliband circulating as the likely pick, while markets take reassurance from signals that the incoming leadership will keep the existing fiscal rules. Even Tuesday's Financial Stability Report, with its warnings on equity leverage and cyber risk, left the Pound unmoved.
The European Central Bank talked hawkish all week and the market shrugged
The Euro's side of the ledger is not dovish on paper. The European Central Bank (ECB) delivered its first hike since 2023 in June, lifting the deposit rate to 2.25% and revising its 2026 inflation projection up to 3.0% on the energy shock. This week's speaker circuit pressed the same message, with Monday's executive board remarks scoring well above the speaker's own hawkish average and a Governing Council member long counted among the doves surprising hawkish on Tuesday.
Wednesday brought a third above-average hawkish reading, this time paired with a reminder that policy typically looks through one-off energy price shocks, and the Euro barely registered the remarks. June's flash inflation estimate cooled, and the urgency went with it; pricing for a September follow-up has drifted toward a coin flip from the three additional hikes markets carried into June's meeting. Rhetoric without a data trail behind it is being faded, and the Euro is wearing the result.
Monday's data run handed the doves their material. Producer prices ran hot at 5.9% on the year against a 5.7% consensus, but retail sales missed on the month and Sentix investor confidence, while improving sharply, stayed negative at -3.1. An economy the ECB itself expects to grow 0.8% this year is a thin platform for a hiking cycle, however loudly the hawks audition for one.
Two meetings will now arbitrate the differential
The calendar hands the argument back to the central banks themselves. The ECB decides on July 23 and the BoE follows on July 30, with the policy gap sitting near 150 basis points in the Pound's favour after opening the year closer to 225. Spring spent months narrowing that cushion; the last two weeks have flipped the direction of expected travel, and the cross has moved with it.
The crowding is now the trade's main vulnerability. A hike that is fully priced is a hike that can only disappoint, and there is more room for the BoE to underdeliver on July 30 than for the ECB to out-hawk a market that has stopped listening to it. Seven declines in eight sessions have left daily momentum stretched enough that any wobble in the rate story gets amplified on the way back up.
Technical levels and bias
Resistance: Wednesday's rejected spike at 0.8555 is the first ceiling ahead of the 0.8600 round figure, and the broader structure stays capped by the falling 50-day Exponential Moving Average (EMA) near 0.8628 with the 200-day EMA close behind at 0.8655.
Support: The fresh low at 0.8519 is all that stands before the 0.8500 handle, the last round-figure defence before the daily chart runs out of visible history.
Bias: Lower. A daily Stochastic Relative Strength Index reading near 7.55 is deeply oversold and warns of squeezes back toward 0.8550 or even 0.8600, but the trend, the rate differential, and the repricing behind both point the same way; rallies remain for selling below 0.8600 with the 0.8500 handle the next objective.
EUR/GBP daily chart
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.
- USD/JPY trades higher as the US Dollar stays supported by geopolitical risk and caution ahead of the FOMC Minutes.
- Trump’s comments that the Iran memorandum was “over” boosted risk aversion and helped lift the Greenback.
- Japan’s threat of intervention remains a key risk for USD/JPY.
USD/JPY trades higher near 162.50 on Wednesday, after nearing a four-decade high earlier in the day, as the US Dollar (USD) remains supported by geopolitical risk and caution ahead of the Federal Open Market Committee (FOMC) Minutes. The Japanese Yen (JPY) remains under pressure near multi-decade lows, keeping traders alert to possible intervention from Japanese authorities.
Support for the Greenback increased after United States (US) President Donald Trump announced that the interim memorandum of understanding with Iran was "over," indicating his unwillingness to engage with Tehran. This statement boosted safe-haven demand for the USD and caused a rise in oil prices, which heightens concerns over inflation and global risk sentiment.
The focus now shifts to the FOMC Minutes from the meeting held on June 16-17, which was the first under Fed Chair Kevin Warsh. If the tone is hawkish, it could reinforce the view that US interest rates may remain elevated for an extended period, which would support the Dollar and keep USD/JPY near recent highs.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 162.53, maintaining a bullish near-term bias as it holds above both the 20-period Simple Moving Average (SMA) at 162.06 and the 100-period SMA at 161.63. The pair is also supported by a nearby horizontal floor at 162.47, while a firm Relative Strength Index (RSI) reading around 60 suggests steady upside momentum rather than overbought excess.
On the downside, initial support is seen at 162.47, followed by layered demand at 162.34 and 162.08, with the 20-period SMA at 162.06 and the 100-period SMA at 161.63 reinforcing the broader bullish structure. On the topside, immediate resistance is located at the horizontal line around 162.70, and a clear break above this barrier would open the way for an advance toward the recent four-decade high at $162.84 reached on July 1.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Scotiabank strategists Shaun Osborne and Eric Theoret report that the US Dollar (USD) is trading mixed as renewed Iran tensions hit risk appetite, with stocks falling and Oil (Brent) jumping 6%. They argue markets are overreacting to June’s hawkish Federal Open Market Committee (FOMC) pivot, noting Chair Warsh’s criticism of the dots and his reluctance to front-run Federal Reserve (Fed) reform task forces, while 37 bps of tightening priced by December still looks excessive.
Iran tensions and FOMC expectations
"Risk appetite has slumped, with global stocks down sharply."
"The dollar picked up some support earlier in London trade following the president’s ceasefire comments, but gains are limited and the DXY is still trading at a small net loss on the day."
"Developments leave markets pondering whether this is a brief and temporary rupture in the peace process or a prelude to another sustained campaign against Tehran."
"That decision helped add to broader dollar gains that were accumulating since the early May rebound but we think the market is overreacting."
"Swaps have retraced some of the buildup of Fed hike expectations that developed in the wake of the June meeting but 37bps of tightening implied in OIS by Dec still looks way too rich."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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