Forex News
BNY Strategist Geoff Yu argues that European rate markets still discount too many hikes for the European Central Bank (ECB), Bank of England (BoE) and Swiss National Bank (SNB) despite an improvement in global risk sentiment following the U.S.–Iran ceasefire. He highlights that current futures pricing remains well above levels at the start of the year and sees better risk-reward in pushing out hikes and even reintroducing cuts, particularly for the SNB.
Markets overestimate European tightening path
"Risk sentiment is rallying strongly as the U.S. and Iran reach a temporary ceasefire, but not all asset classes are responding equally. If we characterize improvement in risk sentiment as an easing in financial conditions, then the usual manifestations should be stronger equities, lower yields and a drop in policy rate expectations. As European markets opened, pricing (via December 2026 futures) for the European Central Bank (ECB), Bank of England (BoE) and Swiss National Bank (SNB) reacted as expected, reducing targets for year-end benchmark rates as energy prices dropped sharply."
"However, current pricing remains well above levels at the beginning of the year, including up to 80bp for the BoE and over 50bp for the ECB. Swiss rates are still expected to move above zero by year-end. By all accounts, we believe pricing is far removed from policy objectives."
"The ECB is quite split, with some members warning that the central bank would need to act even before second-round effects came through. Consequently, it is striking that BoE and ECB rate pricing dropped by almost the same amount as ceasefire news filtered through, given how different policy stances are."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold prices hold steady as markets assess uncertainty surrounding the fragile US-Iran ceasefire.
- US economic data shows steady inflation but softer growth momentum.
- Technically, XAU/USD trades range-bound between key moving averages, signaling a neutral near-term bias
Gold (XAU/USD) remains range-bound on Thursday as markets closely monitor developments surrounding the fragile ceasefire in the Middle East. At the time of writing, XAU/USD is trading around $4,750 after climbing to a three-week high above $4,800 a day earlier, as doubts over the durability of the US-Iran truce emerge.
Ceasefire doubts rise as Iran flags violations
Iran's Parliament Speaker, Mohammad Bagher Ghalibaf, said that three parts of the ceasefire agreement had already been violated. His comments came after Israeli strikes on Lebanon. Iran says Lebanon is part of the ceasefire, while the US and Israel argue it is not. Tehran has warned it could pull out of the agreement if attacks on Lebanon continue.
Markets now await US-Iran negotiations, with the first round of talks scheduled for Saturday in Pakistan, with the goal of achieving a permanent ceasefire and reopening the Strait of Hormuz. Iran’s President Masoud Pezeshkian warned that attacks on Lebanon would undermine the ceasefire and render negotiations meaningless.
In the meantime, US President Donald Trump posted on Truth Social that US forces would “remain in place, and around, Iran, until such time as the REAL AGREEMENT reached is fully complied with.”
Rising oil and geopolitics complicate Fed rate path
Uncertainty over whether the two-week ceasefire will hold is weighing on market sentiment, with Crude prices rebounding after a sharp pullback, keeping inflation concerns alive and complicating the Federal Reserve’s (Fed) interest rate path.
Meanwhile, the Fed's Minutes from the March meeting, released on Wednesday, highlighted a two-sided view. “Most participants,” said that a prolonged conflict in the Middle East could weaken labor market conditions, which may warrant additional rate cuts. At the same time, “many participants” flagged the risk of inflation staying elevated for longer, especially if Oil prices continue to rise, which could call for rate hikes.
Traders showed a muted reaction to the latest US economic data. Core Personal Consumption Expenditures (PCE) inflation rose by 0.4% MoM in February, in line with expectations, while the annual rate eased to 3.0% from 3.1%. Meanwhile, the final Q4 Gross Domestic Product (GDP) growth was revised down to 0.5% from 0.7%.
Attention now turns to the US Consumer Price Index (CPI) data due on Friday, with economists expecting the headline CPI to rise by 0.9% MoM, up from 0.3% in February, while annual inflation is seen accelerating to 3.3% from 2.4%.
Technical analysis: XAU/USD holds above 100-day SMA
In the daily chart, XAU/USD oscillates between its key moving averages, holding above the 100-day simple moving average (SMA) at $4,673.84 but remaining below the 50-day SMA at $4,914.57, which leaves the near-term tone broadly neutral after the recent pullback. The Relative Strength Index (RSI) at 49.33 is effectively flat around the midline, while the Average Directional Index (ADX) at 29.46 hints at a moderate but not dominant trend, suggesting price may continue to consolidate within this band until a decisive break emerges.
On the topside, immediate resistance is reinforced by the 50-day SMA at $4,914.57; a daily close above this barrier would reopen the path toward the prior highs and shift the bias back in favor of the bulls. On the downside, initial support is seen at the 100-day SMA near $4,673.84; a sustained drop below this latter level would expose XAU/USD to a deeper correction and signal that sellers are regaining control.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner note that the US Dollar (USD) has stabilised after Iran said the ceasefire was violated, but still see scope for renewed weakness. They highlight that Federal Reserve (Fed) minutes reinforced two‑sided risks and leave room for dovish repricing in Fed expectations.
Fed risks and Gulf headlines steer Dollar
"Iran said yesterday that the ceasefire had been violated, helping the dollar recover a small portion of losses. That serves as a reminder that the situation remains highly uncertain and that small bouts of re‑escalation are still possible even if the conflict moves towards a broader resolution."
"On the macro side, the Federal Reserve minutes yesterday caused a small hawkish reaction – with swap rates now embedding only 7bp of easing by year-end after touching 15bp earlier yesterday. The main highlight of the minutes, in our view, was however the reinforcement of two-side risks stemming from the war, with faster cuts discussed as an option should job losses outpace inflation. We see room for dovish repricing in Fed expectations from here – a dollar negative."
"Headline trading still dominates. Evidence that traffic through the Strait of Hormuz is picking up could add pressure on the dollar, but a more durable move would likely require signs that the ceasefire evolves towards a lasting arrangement. Otherwise, markets may start to grow nervous again once the two‑week ceasefire nears expiry."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/USD rises for a fourth straight day as the US Dollar weakens after the US-Iran ceasefire, despite lingering uncertainty.
- Traders remain cautious over the durability of the ceasefire after Iran said three points of the agreement had already been violated.
- US data shows mixed signals, with inflation easing but growth slowing.
The Euro (EUR) trades on the front foot against the US Dollar (USD) on Thursday as the Greenback remains under pressure following the US-Iran ceasefire and hopes for de-escalation. At the time of writing, the pair is trading around 1.1676, extending gains for the fourth straight day.
The Euro’s strength appears to be driven largely by US Dollar dynamics. However, the pair lacks strong follow-through buying as uncertainty over the durability of the ceasefire keeps investors cautious, preventing traders from placing aggressive bearish bets on the US Dollar.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.93, holding firm after sliding to a one-month low near 98.50 on Wednesday.
Meanwhile, traders showed little reaction to the latest US economic data as geopolitical tensions continued to dominate market sentiment. Core Personal Consumption Expenditures (PCE) inflation rose by 0.4% MoM in February, in line with expectations, while the annual rate eased to 3% from 3.1%.
The final Q4 Gross Domestic Product (GDP) growth was revised lower to 0.5% from 0.7%. Initial Jobless Claims came in at 219K, above expectations of 210K.
The data suggest that the Federal Reserve's (Fed) preferred inflation gauge eased slightly in February but remains well above the 2% target, signaling a slow disinflation process and supporting the case for the Fed to remain on hold.
At the same time, softer GDP growth points to some cooling in economic activity, highlighting the challenge for policymakers between controlling inflation and supporting growth at a time when labor market risks are tilted to the downside.
Attention now turns to the US Consumer Price Index (CPI) data due on Friday, with economists expecting the headline CPI to rise by 0.9% MoM, up from 0.3% in February, while annual inflation is seen accelerating to 3.3% from 2.4%.
On the geopolitical front, markets now await US-Iran talks scheduled for Saturday in Pakistan, with uncertainty lingering over the ceasefire after Iran said three points of the agreement had already been violated following Israeli strikes on Lebanon. Iran’s President Masoud Pezeshkian warned that attacks on Lebanon would undermine the ceasefire and render negotiations meaningless.
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 | -0.11% | -0.12% | 0.38% | -0.14% | -0.04% | -0.38% | -0.16% | |
| EUR | 0.11% | 0.00% | 0.52% | -0.01% | 0.06% | -0.24% | -0.05% | |
| GBP | 0.12% | -0.00% | 0.49% | -0.02% | 0.05% | -0.26% | -0.05% | |
| JPY | -0.38% | -0.52% | -0.49% | -0.53% | -0.45% | -0.78% | -0.55% | |
| CAD | 0.14% | 0.00% | 0.02% | 0.53% | 0.11% | -0.24% | -0.02% | |
| AUD | 0.04% | -0.06% | -0.05% | 0.45% | -0.11% | -0.30% | -0.10% | |
| NZD | 0.38% | 0.24% | 0.26% | 0.78% | 0.24% | 0.30% | 0.20% | |
| CHF | 0.16% | 0.05% | 0.05% | 0.55% | 0.02% | 0.10% | -0.20% |
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).
Scotiabank strategists Shaun Osborne and Eric Theoret report that the Pound (GBP) is consolidating Wednesday’s strong rebound versus the US Dollar (USD), with domestic risk limited ahead of upcoming Bank of England (BoE) speeches and data. They see fundamentals and sentiment as supportive of GBP strength, with resistance noted above 1.3480 and upside technical targets at 1.35 and 1.3580 within a 1.3350–1.3450 near-term range.
Pound supported by improving sentiment
"The pound is up a fractional 0.1% vs. the USD with a modest gain that suggests consolidation following Wednesday’s impressive recovery rally."
"As with EUR, we see this week’s price action as a clear reflection of the geopolitical risk premium that is currently weighing on the pound, and an indication of the direction of travel if/when the market tone maintains its overall improvement."
"Fundamentals remain supportive of GBP strength and measures of sentiment confirm the fade in concerns about downside risk."
"Neutral/bullish – the RSI has pushed into bullish territory following a break above the neutral threshold at 50."
"The GBP did reach a fresh – albeit marginal – one month high in the upper 1.34s, however recent price action suggests material resistance above the 1.3480 level. With both the 50 and 200 day MA’s (1.3439 and 1.3414, respectively) broken, we now look to 1.35 and 1.3580 as the next major upside targets. We look to a near-term range bound between 1.3350 and 1.3450."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said on Thursday that central banks should hike interest rates if inflation expectations threaten to de-anchor and ignite an inflation spiral, per Reuters.
Key takeaways
"IMF-World Bank meetings next week will focus on how to weather shock of now-paused war in Middle East."
"Even most hopeful scenario downgrades growth forecast due to infrastructure damage, supply disruptions, loss of confidence."
"IMF can scale up support for countries through existing programs and there are more programs to come."
"We expect near-term demand for IMF support to rise to between $20 bln to $50 bln, given spillovers of the war."
"Supply shock caused by war will continue to ripple through economy with oil refinery shutdowns, product shortages."
"45 mln more people now facing food insecurity, bringing total number of those in hunger to over 360 mln."
"War shock triggering higher short-run inflation expectations, but longer-run expectations have not changed."
"Urging all countries to reject export controls, price controls that can further upset global conditions."
"Using deficit-financed stimulus would increase burden on monetary policy."
OCBC strategists Sim Moh Siong and Christopher Wong note that USD/CNH has fallen sharply on a stronger Chinese Yuan (CNY) fix and improved risk sentiment following the US-Iran ceasefire. They still expect a measured pace of CNH (Offshore Renminbi) appreciation but highlights key technical supports around 6.82 and below. Wong stresses close monitoring of the daily fix and the upcoming Trump-Xi meeting in Beijing.
RMB appreciation trend tests support
"USD/CNH fell sharply overnight, taking cues from a much stronger CNY fix (6.8680 vs. 6.8854 the day before). This is also the lowest USD/CNY fix since Apr 2023, reinforcing the trend of guided RMB appreciation since Apr 2025."
"Elsewhere, broader sentiment switched to risk-on, following the 2-week ceasefire deal and triggered an unwinding in safe-haven USD demand."
"While we continue to look for a measured pace of RMB appreciation, we would still watch the fix closely for any signs to moderate the pace or to increase the pace of appreciation especially as we inch closer to Trump-Xi meeting in Beijing on 14-15 May."
"USD/CNH last seen at 6.8335 levels."
"Immediate support around 6.8200/70 levels (double bottom). Decisive break out puts next support at 6.81, 6.79 levels."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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