Forex News

• USD/CAD holds firm as opposing pressure from the US Dollar and Oil prices keeps price action range-bound.
• Fading hopes for a US-Iran peace deal continue to keep geopolitical tensions elevated.
• Technically, the pair lacks bullish conviction while trading below the 100-day and 200-day SMAs on the daily chart.

USD/CAD fluctuates between minor gains and losses on Monday as the pair faces opposing pressure from a steady US Dollar (USD) and elevated Oil prices. At the time of writing, USD/CAD is trading nearly flat around 1.3672.

Earlier hopes for a near-term end to the US-Iran war faded after US President Donald Trump told reporters in the Oval Office on Monday that he would meet with his national security team to discuss the conflict and possible military options to pressure Iran into reaching a deal.

The comments came after Trump rejected Iran’s latest response to the US-backed peace proposal, calling it “totally unacceptable” in a Truth Social post on Sunday.

The lingering uncertainty surrounding a potential peace agreement is keeping a floor under the US Dollar, while ongoing disruptions to supply flows through the Strait of Hormuz continue to keep Oil prices elevated.

The Canadian Dollar (CAD) remains particularly sensitive to movements in Oil prices, given Canada’s status as a major crude exporter. Elevated energy prices tend to support the commodity-linked Loonie and help limit upside in USD/CAD, while technical indicators suggest the pair remains stuck in a weak consolidation phase.

Technical Analysis:

On the daily chart, USD/CAD is holding below both the 100-day Simple Moving Average (SMA) at 1.3719 and the 200-day SMA at 1.3813, which keeps the broader tone capped after the recent pullback from April highs. The Relative Strength Index (RSI) at around 48 is neutral and the Average Directional Index (ADX) near 22 signals only modest trend strength, suggesting consolidation rather than an impulsive move while price remains under these key moving averages.

On the topside, initial resistance is aligned at the 100-day SMA at 1.3719, with the 200-day SMA at 1.3813 acting as the next barrier if buyers attempt a recovery. On the downside, the first notable support sits at the horizontal level near 1.3550, where a break lower would expose a deeper corrective phase, while holding above this floor would keep the pair confined to a broad range beneath the daily moving average cluster.

(The technical analysis of this story was written with the help of an AI tool.)

• USD/JPY rises after renewed Middle East tensions support demand for the US Dollar.
• Trump rejected Iran’s latest peace proposal, calling it “totally unacceptable.”
• Investors now focus on Tuesday’s US CPI report.

The USD/JPY pair elevates near the 157.10 region on Monday, with the US Dollar (USD) strenghtening after United States (US) President Donald Trump rejected Iran’s latest peace proposal, calling it “totally unacceptable.”

At the time of writing, the pair trades at 157.18, up 0.33% in the day after recovering from an opening bearish gap.

At the same time, the USD continued to benefit from resilient United States labor-market data released last week, which reinforced expectations that the Federal Reserve (Fed) may keep interest rates elevated for longer. However, traders remained cautious ahead of Tuesday’s US Consumer Price Index (CPI) report, which could significantly influence market expectations for future Fed policy decisions.

A stronger-than-expected inflation reading could push US Treasury yields higher and provide fresh support for the Greenback, while softer CPI data may increase pressure on the USD and allow the JPY to strengthen further through safe-haven demand and lower yield expectations.

Short-term technical analysis:

On the four-hour chart, USD/JPY trades at 157.12. The pair holds above the 20-period Simple Moving Average (SMA) at 156.76, keeping a mild topside bias in place even as it remains well beneath the 100-period SMA at 158.24, which continues to cap the broader recovery. The Relative Strength Index (RSI) at 53.8 leans slightly positive, suggesting moderate bullish momentum but not an extended condition.

On the topside, initial resistance emerges at 157.14, followed by a nearby barrier at 157.22 before the more meaningful 100-period SMA around 158.24. On the downside, immediate support is seen at 157.04, with a secondary floor at 156.99; a break below these levels would expose the 20-period SMA at 156.76 as the next key support zone.

(The technical analysis of this story was written with the help of an AI tool.)

Rabobank’s Senior FX Strategist Jane Foley notes Japanese wage data have improved, with unions securing solid ‘shunto’ wage hikes and real wages rising again, supporting the Bank of Japan’s (BoJ) desired virtuous cycle. However, Foley highlight risks from the Iran war, potential Hormuz disruption, and weakening consumer confidence, while a government panel urges the BoJ to consider funding conditions even as Governor Ueda stresses still very accommodative real yields.

Wage progress meets demand and funding risks

"In late March, unions reported an average wage hike of 5.36% in the ‘shunto’ spring wage talks. Last week’s Japanese wage data release was softer than the market expected. That said, the report showed that real wages in March at 1.0% y/y, rose for the third consecutive month."

"While positive real earnings data should contribute to the BoJ’s aim of creating a virtuous cycle of stronger consumer demand, higher corporate profitability and better wage growth, the impact of the Iran war could threaten the improved outlook. Like other central banks, the BoJ will be worried about the demand destruction element stemming from the closure of Hormuz since higher inflation could threaten further improvements in real earnings."

"Indeed, Japanese consumer confidence has already taken a hit, edging lower in April having already tumbled in March. This morning, Bloomberg reported that a key panel from the Japanese government has urged the BoJ to consider the risks of worsening corporate funding conditions when formulating monetary policy. That said, Ueda has frequently pointed to the very low level of real yields in Japan as evidence of still very accommodative monetary conditions."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

HSBC economists argue Emerging Markets (EM) remain well positioned in 2026 as the US Dollar (USD) weakens and global policy easing supports a broadening of returns beyond US mega-cap tech. They highlight EM exposure to the tech and AI theme via South Korea and Taiwan, plus valuation discounts and under-allocation that could benefit from a multi-year Dollar decline.

EM supported by tech and valuation tailwinds

"Global equities saw broad-based gains on signs of easing geopolitical tensions, as oil prices retreated over the week. In the US, momentum in AI stocks and continued strong Q1-26 earnings propelled major indices, including the S&P 500, the Nasdaq and the “Magnificent Seven”, to record highs, with the Philly semiconductor index outperforming."

"Nevertheless, there are plenty of factors that can keep the broadening out trade alive in 2026. Central banks outside of the US may end up being more hawkish, keeping the dollar-down trend intact. Europe is rearming, which provides fiscal multiplier effects and a new source of earnings growth."

"Emerging markets (EM) also remain a well-recognised play on the tech and AI theme – given their heavy exposure to South Korea and Taiwan – which is reflected in their year-to-date performance. Simultaneously, the diversification appeal of EM is sustained by valuation discounts, global portfolio under-allocation, and the potential for a multi-year decline in the dollar."

"Meanwhile, this year’s surge in commodity prices is not entirely bad news. Markets in Latin America and Frontiers stand to benefit, alongside developed market energy and materials names."

"In short, the AI tide is still rising, but it’s lifting a much wider fleet of boats in 2026."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• EUR/USD steadies after a volatile weekly open as Middle East tensions keep markets cautious.
• Rising energy costs continue to cloud the Eurozone growth outlook and fuel inflation concerns.
• Traders await key US and Eurozone economic data for fresh clues on ECB and Fed monetary policy paths.

EUR/USD consolidates with minor losses after a volatile start to the week as traders assess evolving geopolitical developments in the Middle East, while price action remains driven by the US Dollar (USD) and Oil price dynamics. At the time of writing, the pair is trading around 1.1778 after recovering from an intraday low near 1.1748 and filling the bearish weekly opening gap.

Fading hopes for a near-term resolution to the US-Iran war are limiting downside pressure in the US Dollar, in turn capping upside attempts in the Euro (EUR). The Greenback had previously retreated toward pre-war levels on optimism that both sides could eventually reach a deal. However, both Washington and Tehran continue to reject each other’s proposals, with disagreements over Iran’s nuclear program remaining a key sticking point.

US President Donald Trump told reporters in the Oval Office on Monday that he would meet with his national security team to discuss the Iran war. Trump also warned that the ceasefire is “on massive life support” and described it as “weak.” He told Fox News that he is considering renewing “Project Freedom.”

Meanwhile, Oil prices continue to trade at elevated levels as the standoff in the Strait of Hormuz disrupts supply flows and fuels concerns about global inflation and slowing economic growth. The Eurozone remains particularly vulnerable given its heavy dependence on imported energy.

As the inflation outlook deteriorates due to rising energy costs, expectations for monetary tightening by major central banks have increased. Traders are now pricing in at least two interest rate hikes from the European Central Bank (ECB) by year-end, while markets expect the Federal Reserve (Fed) to keep rates unchanged through the rest of the year.

ECB policymaker Martin Kocher told NZZ on Monday that the Eurozone recovery is “threatened” as inflation risks rise amid the Middle East conflict. He said the ECB would “stay alert and act promptly and decisively if needed.” When asked whether the ECB could raise interest rates at its next meeting, Kocher said that “unless the situation improves markedly, a rate hike will be inevitable soon.”

Traders now await a busy slate of economic data releases, with the US Consumer Price Index (CPI) report and Germany’s inflation data due on Tuesday, followed by the US Producer Price Index (PPI) and the Eurozone’s preliminary Q1 GDP data on Wednesday.

MUFG economists highlight that the Swiss Franc (CHF) has underperformed as the Swiss National Bank (SNB) leans against currency strength and downplays current inflation. However, they caution that a prolonged closure of the Strait of Hormuz and sustained energy shock could force a more hawkish shift, with markets already pricing a higher probability of an SNB hike by year-end.

SNB stance may shift with energy shock

"As in Sweden, inflation in Switzerland was running well below the SNB’s target before the energy price shock took hold. Initially, the SNB’s policy focus has been on the downside risks to inflation stemming from a stronger CHF, driven by safe-haven demand following the Middle East conflict. As a result, the SNB has continued to signal a much greater willingness to intervene in the FX market to weaken the currency."

"This timely and forceful pushback has contributed to the CHF’s underperformance since the conflict began. SNB Governor Martin Schlegel has also attempted to downplay the rise in headline inflation to 0.6% in April, up from 0.3% in March, stating that there has been “hardly any change” in medium-term price pressures. This view is, for now, supported by core inflation, which slowed to an annual rate of 0.3% in April."

"However, if the Strait of Hormuz remains closed for an extended period and leads to a more prolonged energy price shock, the SNB’s relatively dovish policy stance is likely to shift. This could open the door to rate hikes and a greater tolerance for a stronger CHF to contain upside inflation risks. Indeed, the Swiss rates market has already begun to price in a higher probability of an SNB rate hike by the end of this year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Societe Generale economist Kunal Kundu expects India’s April headline Consumer Price Index (CPI) inflation to rise to 3.9% year-on-year from 3.4% in March, driven by food-and-beverages and fuel components. He highlights conflict-related energy shocks, supply-chain stress in vegetables and edible oils, and emerging pipeline risks from fertilisers, El Niño-linked weather and low dam storage as key upside threats to India’s inflation outlook.

Food, fuel and weather risks lift CPI

"We expect India’s headline CPI inflation for April to print at 3.9% yoy, a notable step-up from 3.4% yoy in March. We attribute this rise to conflict-related price pressures and a renewed firming in food-and-beverages (F&B) and fuel-linked components after a benign stretch. While inflation would still be within the RBI’s tolerance band, the upward drift reflects the first clear pickup that emerged in March, largely driven by these two channels."

"The near-term narrative begins with food, given its outsized weight in the CPI basket and the fact that recent month-to-month volatility has been led by perishables and key cooking inputs. There is a visible firming in select vegetables (e.g., tomatoes and cauliflower), and there is a meaningful risk that broader supply-chain stress could begin to filter into the overall food bill. Historically, when vegetable and edible oil prices rise in tandem, the impulse tends to become more broad-based within food (fresh and processed), reinforcing food inflation as a key propagation channel into headline CPI."

"We expect the April CPI print to offer a clearer read on the energy impulse, even though India’s administered fuel pricing may mute immediate retail transmission. That said, while the operation Epic Fury may be over, true economic pain will manifest in the months ahead. Over time, however, inflationary effects can still surface through (i) LPG and household fuel adjustments, and (ii) higher freight and input costs that gradually feed into goods and services pricing."

"Beyond immediate food/fuel prints, we are monitoring pipeline risks, notably fertilisers and imported agricultural input prices, as these would likely shape inflationary expectations of households over the coming month. This is especially relevant as the economy faces triple whammy of i) costly and sparse availability of fertilisers, ii) heatwave and potential monsoon failure exacerbated by among the strongest El Niño seen in recent history and iii) a sharply lower water storage capacity in major dams."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

US President Donald Trump is meeting with his national security team on Monday, considering the possibility of resuming military action against Iran, as Tehran’s response fell short of complying with Washington’s demands, three officials said to Axios.

According to Axios, US officials expressed that Trump wants a deal to end the conflict, but Iran’s response put back the military option on the table.

Iran’s media reported that the regime rejected the US proposal, saying that it “meant Iran’s surrender to Trump’s excessive demands.”

The report revealed that the White House has different options. One is to resume Project Freedom; the second one is to resume “the bombing campaign and strike the 25% of targets the US military identified but hasn't hit yet.”

Another option, which is one Israelis want, is for Trump to order a special forces operation to get Iran’s enriched uranium inventory. However, Israeli officials said Trump is hesitant because it is a highly risky operation.

Market’s reaction to the headline

WTI Oil rose by almost $1 from around $98.87 to $99.83, as a resumption of hostilities puts pressure on Oil prices and pushes inflation higher.

• Gold recovers after opening the week with a bearish gap amid ongoing Middle East uncertainty.
• Oil-driven inflation fears continue to support the higher-for-longer interest rate narrative, weighing on the non-yielding metal.
• Technically, XAU/USD maintains a near-term bullish bias while holding above the Bollinger mid-band support.

Gold (XAU/USD) holds firm after filling the week’s bearish opening gap, supported by a softer US Dollar (USD). However, the precious metal lacks strong upside momentum as persistent uncertainty surrounding the US-Iran war continues to fuel Oil-driven inflation fears, maintaining pressure on central banks to keep borrowing costs elevated.

At the time of writing, XAU/USD is trading around $4,717 after touching an intraday high of $4,748.

Nuclear disagreements keep US-Iran talks deadlocked

US President Donald Trump told reporters in the Oval Office on Monday that he would meet with his national security team to discuss the Iran war. Trump also warned that the ceasefire is “on massive life support” and described it as “weak” after rejecting Iran’s latest response to the US-backed peace proposal, calling it “totally unacceptable” in a post on Truth Social.

Iranian state media said Tehran’s proposal included demands for US compensation for war damages and stressed Iran’s sovereignty over the Strait of Hormuz.

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said on Monday that Tehran was only trying to secure its rights and had offered “generous and responsible” suggestions to the US. Baghaei also said the proposal by his country was not excessive and accused Washington of making “unreasonable demands.”

Despite ongoing diplomatic efforts, talks remain unresolved over Iran’s nuclear program, raising uncertainty over how long the US-Iran war could continue. This has heightened fears of prolonged supply disruptions through the Strait of Hormuz, keeping a geopolitical risk premium embedded in Oil prices.

Gold struggles as higher-for-longer rate expectations weigh on sentiment

Soaring Oil prices are reinforcing expectations that major central banks, particularly the Federal Reserve (Fed), may have to keep interest rates higher for longer and could even consider raising rates again if inflation pressure intensifies.

Investors are now awaiting the upcoming US Consumer Price Index (CPI) data due on Tuesday, which could influence expectations for the Fed’s monetary policy path. Headline CPI is expected to rise 0.6% MoM in April, slowing from the 0.9% increase in March. On an annual basis, inflation is forecast to accelerate to 3.7% YoY from 3.3% previously.

According to the CME FedWatch Tool, traders largely expect the Fed to keep borrowing costs unchanged for the rest of the year, though markets are pricing in a small chance of a rate hike at the December meeting, with the probability standing around 20%.

A higher interest rate environment reduces the appeal of non-yielding assets like Gold because the precious metal does not offer any yield or interest. When borrowing costs remain elevated, investors often shift toward interest-bearing assets such as government bonds and other fixed-income instruments.

Against this backdrop, Gold’s upside remains capped. Still, downside pressure remains limited as ongoing geopolitical uncertainty supports safe-haven demand, while steady central bank, retail and investment buying continues to provide underlying support for the precious metal.

Technical analysis: Upper Bollinger-band caps recovery attempts near $4,750

Technical Analysis:

On the 4-hour chart, XAU/USD metal holds above the 20-period Bollinger Simple Moving Average (SMA) at roughly $4,707, keeping a near-term bullish bias intact as price pushes toward the upper band resistance near $4,751. A firm Relative Strength Index (RSI) around 63 suggests positive momentum but shy of overbought territory, while an Average Directional Index (ADX) near 25 hints at a trend that is present but not yet strongly directional.

On the topside, immediate resistance is located at the upper Bollinger Band around $4,751, where upside attempts could face profit-taking. On the downside, initial support emerges at the mid-Bollinger SMA near $4,707, with the lower band around $4,664 providing a deeper cushion if a corrective pullback unfolds.

(The technical analysis of this story was written with the help of an AI tool.)