Forex News

• DJIA futures rebound from an early dip back above 51,000, just shy of Monday's record territory.
• Iran suspends mediator talks over Israel's offensive in Lebanon, while Trump and Rubio insist negotiations are still alive.
• Oil eases after Monday's spike even as Tehran threatens to fully close the Strait of Hormuz.
• JOLTS job openings blow past forecasts ahead of a data-heavy week capped by Friday's payrolls.

Dow Jones Industrial Average (DJIA) futures spent the overnight session doing their best impression of a market that has decided geopolitics no longer matter. After sliding toward 50,800 in early European trade, futures snapped higher and pushed back above 51,000, briefly tagging highs above 51,100 before easing into the US open. That kept the contract within touching distance of Monday's cash close, when the S&P 500 notched another record and the Nasdaq Composite led on a tech bid that simply ran over the Oil spike. The VIX sat near 16. For a tape staring down a fracturing ceasefire and a threatened closure of the world's most important Oil chokepoint, the complacency is hard to miss.

Tehran walks, Washington waves it off

The split screen is the story. On Monday, Iranian state media said Tehran had suspended talks and the exchange of texts through mediators in protest at Israel's expanding offensive in Lebanon, framing Lebanon as a precondition of the April ceasefire it now says has been violated on all fronts. By Tuesday, two semiofficial agencies reported that communication with mediators had stopped entirely after Israel threatened to bomb Beirut. Washington's version is unrecognizable. President Donald Trump posted that talks were back on at a rapid pace, said he had turned around a little glitch, and claimed Iran had not told the US it was walking. Then Benjamin Netanyahu said Israel would keep striking southern Lebanon as planned and his defense minister denied any Lebanon ceasefire existed. Three governments, three narratives, and a market that has chosen the most convenient one.

Rubio sells diplomacy to a skeptical Hill

Into that gap stepped Secretary of State Marco Rubio, testifying before the Senate Foreign Relations Committee on Tuesday in his first public appearance since the war began. His message: talks are alive, and Tehran has agreed to negotiate parts of its nuclear program it refused to touch a month ago. The framing was telling. Talks with Iran, he said, are not like talks with Switzerland and require the use of intermediators, a convenient way to explain how the US can insist negotiations continue even as Iran says it has stopped speaking to those very mediators. Rubio pointed to the Pakistan-brokered track in Islamabad, reopening the Strait of Hormuz, limited sanctions relief, and reviving nuclear talks under strict conditions. Lawmakers from both parties pressed him on the missing endgame. The optimism is doing a lot of work, and the tape is taking it at face value.

Oil blinks, equities yawn

The cleaner read on risk is in the Oil pit, and even there the fear is fading. Brent crude jumped more than 7% intraday on Monday on the Hormuz threat before paring to around 5%, then slipped back toward $94 on Tuesday, with West Texas Intermediate near $92. That is a market betting the closure threat is leverage rather than reality. Equities never even flinched, which is the part worth flagging. A record close on the day Iran suspends talks and warns of a full Hormuz shutdown is either supreme confidence in US diplomacy or a market that has stopped pricing tail risk.

JOLTS reheats the labor story

The macro calendar gives the bulls something firmer to lean on. The Job Openings and Labor Turnover Survey (JOLTS) for April landed at 7.618 million against a 6.88 million consensus, a hot print that says labor demand is not cracking. The week loads up from here: Wednesday brings the red-band Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), ADP payrolls and the Fed's Beige Book, and Friday delivers Nonfarm Payrolls (NFP), with consensus at a soft 85K against 115K prior and unemployment holding at 4.3%. With Oil still elevated year-on-year and the labor market refusing to roll over, the data leaves the Fed little room to lean dovish, which equities continue to ignore.

Levels to watch

The 51,000 handle is the line in the sand. Holding above it keeps the bid intact and the record-chase alive, with 51,100 the upside trigger. Lose 51,000 and the early-session 50,800 zone comes back into play, with the real test being whether a genuine escalation, an actual Hormuz closure or a Lebanon flare-up, finally forces the complacency trade to unwind. Until then the lean stays with the bulls, but it is built on trust in a story Tehran is openly contradicting.

Dow Jones 5-minute chart

• The New Zealand Dollar trades without a clear direction near 0.5930 amid persistent geopolitical uncertainty.
• Middle East tensions support demand for the US Dollar and weigh on risk appetite.
• The Reserve Bank of New Zealand’s hawkish stance continues to help limit downside pressure on the currency.

NZD/USD trades around 0.5930 on Tuesday at the time of writing, virtually unchanged on the day, after giving back part of the gains recorded earlier this week. The pair is struggling to find a clear direction as investors remain cautious amid conflicting developments in the Middle East, a factor that continues to influence market sentiment.

The New Zealand Dollar (NZD) remains sensitive to shifts in risk appetite. Hopes for diplomatic progress in the region are providing occasional support to risk-sensitive currencies, but the threat of a renewed deterioration in the situation is also sustaining defensive demand for the US Dollar (USD). This uncertainty is keeping traders on the sidelines ahead of several key US macroeconomic releases scheduled for this week.

The US Dollar is drawing support from its safe-haven status. Concerns surrounding negotiations between the United States (US) and Iran, as well as ongoing military operations in the Middle East, continue to maintain a geopolitical risk premium across financial markets. At the same time, expectations regarding the policy outlook of the Federal Reserve (Fed) remain a key driver for currency markets.

However, downside pressure on NZD/USD appears limited by New Zealand’s monetary policy outlook. The Reserve Bank of New Zealand (RBNZ) recently adopted a more hawkish tone, signaling that a 25-basis-point rate increase at its next meeting remains likely and indicating that the Official Cash Rate could rise further in the coming months. This stance continues to provide support for the New Zealand Dollar despite external headwinds.

Analysts at TD Securities believe, however, that the Kiwi’s upside potential may remain limited in the near term. The bank noted that most of the RBNZ’s tightening cycle now appears to be priced in by markets and that the lack of major New Zealand economic releases over the coming weeks could reduce bullish catalysts for the currency.

Against this backdrop, investors are likely to remain focused on global risk sentiment and upcoming US economic data.

• US JOLTS Job Openings rose to 7.618 million in April, but it wasn't enough to support the US Dollar.
• Markets continue to assess the Fed's interest rate outlook amid resilient labor market conditions.
• Australia's GDP and S&P PMI releases are next in line and could drive the next move in AUD/USD.

The AUD/USD pair elevated near the 0.7190 level on Tuesday as the US Dollar (USD) failed to find support following stronger-than-expected labor market data.

The latest Job Openings and Labor Turnover Survey (JOLTS) showed the number of United States (US) job openings rose to 7.618 million in April from a revised 6.887 million in March, significantly exceeding market expectations of 6.88 million. The reading marked the highest level since May 2024 and reinforced the view that the US labor market remains resilient despite elevated borrowing costs.

Looking ahead, traders will closely watch Australia's Q1 Gross Domestic Product (GDP) report and the upcoming S&P Global Purchasing Managers Index (PMI) releases.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7186, maintaining a constructive bullish bias as it remains above both the 100-period Simple Moving Average (SMA) at 0.7171 and the 20-period SMA at 0.7168. The cluster of underlying floors around 0.7177 and 0.7170 reinforces this near-term positive tone, while the Relative Strength Index (RSI) around 59 suggests solid but not overextended upside momentum.

On the topside, initial resistance aligns with the recent horizontal cap at 0.7187, and a sustained break above this barrier would open the way for further gains. On the downside, immediate support is seen at 0.7177, followed by the 100-period SMA near 0.7171 and the nearby 0.7170 horizontal level, with deeper protection emerging at the 20-period SMA around 0.7168 and the prior base at 0.7160.

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

ABN AMRO economists Bill Diviney and Rose Heaulme note that Eurozone headline inflation rose to 3.2% in May, with core inflation surprising at 2.5%. Energy remains the main driver, while food inflation eased. A sharp jump in services inflation, likely linked to transportation and airfares, is seen as narrowly focused but warrants monitoring. They still expect two ECB rate hikes by July.

Services-led upside surprise in May inflation

"Eurozone inflation picked up in line with expectations to 3.2% in May, from 3% in April, while core inflation surprised to the upside, rising to 2.5% (ABN/consensus: 2.4%) from 2.2%."

"The big upward surprise this month came from services inflation, which jumped 0.5pp to 3.5% in May – we had expected a smaller rise to 3.3%."

"As usual with the flash estimate, we don’t have the full breakdown of services inflation at this point, but piecing together clues from the individual country press releases suggests that it was mostly driven by transportation services, and within that – we suspect – airfares, given the outsized rise in jet fuel since the Iran conflict broke out (which at its peak rose at double the magnitude of Brent crude)."

"In any case, if the rise in services inflation is as narrowly focused as we suspect, it is not necessarily a concern at this point, but it bears close watching."

"Looking ahead, we expect inflation to remain well above the ECB’s 2% target for the remainder of this year."

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

• EUR/USD holds firm as traders react to conflicting US-Iran headlines.
• Euro finds support from hotter Eurozone inflation data and ECB rate hike expectations.
• The US Dollar stays supported as key sticking points in US-Iran negotiations remain unresolved.

EUR/USD holds firm on Tuesday as traders react to conflicting headlines surrounding US-Iran negotiations. At the time of writing, the pair trades around 1.1639 after touching a daily high near 1.1655.

Iran's semi-official Fars News Agency, citing an informed source, reported that the exchange of messages between Iran and the United States has been suspended for at least a few days over the proposed memorandum of understanding (MoU).

The report contrasts with comments from US President Donald Trump, who said on Monday that negotiations with Iran are continuing “at a rapid pace.” Trump also told ABC News that he expects Washington and Tehran to reach an agreement within the next week to extend the ceasefire and reopen the Strait of Hormuz.

Meanwhile, US Secretary of State Marco Rubio said an Iran deal “could happen today, tomorrow or next week.” Rubio also said the first condition in negotiations is for Iran to reopen the Strait of Hormuz, while Tehran must also agree on the disposition of its highly enriched uranium.

The US Dollar (USD) remains supported as major sticking points in negotiations remain unresolved, reducing hopes for a near-term deal.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is consolidating minor losses above the 99.00 mark.

The Euro (EUR) also finds support from the preliminary Eurozone inflation data. The Harmonized Index of Consumer Prices (HICP) rose 3.2% YoY in May from 3% in April, matching forecasts. The core HICP accelerated to 2.5% from 2.2%.

The latest inflation data increased the likelihood of a rate hike at the upcoming European Central Bank (ECB) monetary policy meeting later this month. ECB policymaker Olli Rehn said on Tuesday that the ECB is preparing an “insurance hike” in June.

Meanwhile, US JOLTS Job Openings rose to 7.618 million in April from 6.887 million in March, beating market expectations of 6.88 million. Traders now turn their attention to the ADP Employment Change due on Wednesday and the Nonfarm Payrolls (NFP) report on Friday.

Ongoing Oil-driven inflation risks have strengthened expectations that the Federal Reserve (Fed) may keep interest rates unchanged this year. The upcoming US labor market data could play a key role in shaping those expectations.

• Trump’s intervention cools Middle East fears, supporting equity risk appetite.
• JOLTS Job Openings jump reinforces US labor resilience before key services data.
• BoE hawks warn inflation battle may require faster action.

The Pound Sterling (GBP) rises by about 0.19% on Tuesday against the US Dollar (USD) as traders remain optimistic about a peace deal between the US and Iran despite ongoing geopolitical uncertainty. The GBP/USD pair trades at around 1.3470 after bouncing off daily lows of 1.3446.

GBP/USD gains as softer Oil offsets resilient US jobs data

The financial markets remain focused on geopolitics. The intervention by US President Donald Trump in the Israel-Hezbollah conflict tempered investors' fears, which are driving US equity markets to retest all-time highs. Therefore, Oil prices fell, as shown by the US crude Oil benchmark, the West Texas Intermediate (WTI), which was down 0.40% at $92.07.

Nevertheless, traders are still cautious due to the fragility of the ceasefire between the US and Iran.

Data from the US showed that the labor market remains resilient, as the Job Openings and Labor Turnover Survey (JOLTS) rose in April to its highest level in nearly two years. Vacancies rose to 7.618 million from 6.887 million in March, exceeding forecasts of 6.88 million. Worth noting that layoffs fell to 1.7 million, or 1.1%.

The data reassures Federal Reserve (Fed) policymakers of the solidity of the labor market. Cleveland Fed Beth Hammack said that “job data points to stability” and that the “unemployment rate is around full employment levels.” She remains highly concerned about inflation, saying that the Fed may need to act “soon” if inflation doesn’t abate.

Across the pond, Bank of England (BoE) policymakers crossed the wires. Megan Greene was hawkish, saying that she sees a growing case for rate hikes, saying that “the speed of the response is arguably just as important as its size.”

Earlier, Governor Andrew Bailey said the public must be confident that the central bank will drive inflation to its 2% target.

In the meantime, money markets had priced in a less hawkish BoE, with traders expecting the bank to hold borrowing costs steady at the June 18 meeting. However, towards the end of the year, investors had already priced in 40 basis points of easing, according to Prime Terminal data.

On Wednesday, the UK schedule will feature the BoE Monetary Policy Report Hearings. In the US, investors will eye Factory Orders, the ISM Services PMI, and the Fed’s Beige Book.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3475, holding a mildly bullish near-term bias as it remains above the latest triple simple moving average (SMA) proxy around 1.3449 and continues to respect the broader upward-support trend structure originating near 1.3159. The pair is still trading beneath the key downward resistance trend-line break area at 1.3600, suggesting upside is capped for now, while the 14-day Relative Strength Index, hovering just above 50 around 50.9, hints at modest but not overstretched bullish momentum.

On the downside, immediate support is seen around the 1.3475 area, with the clustered triple SMA support near 1.3449 reinforcing this nearby floor; a break below there would expose the upward trend-line break region at 1.3354, ahead of the more distant structural base drawn from the 1.3159 area. On the topside, initial resistance is defined by the downward resistance trend line around 1.3600, and a daily close above this barrier would be needed to reopen a more convincing advance in the broader uptrend.

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

Megan Greene, a member of the Bank of England's (BoE) Monetary Policy Committee (MPC), warned on Tuesday that United Kingdom (UK) households and businesses appear more sensitive to rising inflation than in the past, emphasizing that the risks of failing to act against persistent inflation outweigh the risks of tightening policy unnecessarily.

Key takeaways:

UK households and businesses are arguably more sensitive to increases in inflation than in previous periods.

In a scenario where energy prices generate stronger second-round inflation effects, Greene said interest rates may need to be raised.

Greene argued there is a benefit to acting sooner on rates, noting that the speed of the policy response can be just as important as its magnitude.

She said she places a relatively high weight on stabilizing prices compared with supporting economic output.

Greene added that the risk of acting against inflation, even if it proves less persistent, is less severe than the risk of failing to act.”

RaboResearch says Sweden’s weak Q1 GDP was driven by lower government spending but partly offset by household consumption and inventories. It argues that soft CPI and CPIF readings may understate underlying price pressures, especially as VAT cuts distort the data, while Riksbank minutes point to hawkish concern over upside inflation risks.

Soft data mask underlying inflation pressures

"The contraction in Swedish Q1 GDP was mostly due to a 2.1% q/q drop in government spending. The positive contribution due to inventory build-up is also a concern. That said, encouragingly household spending grew 0.6% q/q in Q1 with real disposable income increasing by 1.0% y/y."

"The Bloomberg survey also forecasts that Swedish CPI inflation will be just 0.8% y/y this year. The combination of softer Q1 GDP growth and CPI inflation on first look would appear to justify a steady policy outlook from the Riksbank. However, just as the breakdown of the GDP data is not as bad as the headline number suggests, price pressures in Sweden may be building at a faster pace than the official data indicate."

"The release of final April Swedish CPI inflation data confirmed a surprisingly soft reading of -0.1% y/y for the headline rate, flat for the ex-energy reading and 0.8% y/y for the CPIF inflation measure. The Bloomberg survey suggests that this is expected to rise to 1.3% y/y in May. The Riksbank targets CPIF inflation at 2%."

"Last September it was announced that the government would halve VAT on food products as part of its 2026 budget to reduce the impact of inflationary pressures on consumers. This followed some sticky CPI inflation readings last summer. The reduction in VAT on food took effect in April."

"While the data appeared to justify last month’s decision by the Riksbank to leave rates unchanged, the release of the minutes of the meeting contained some hawkish commentary. Deputy Governor Seim saw “significant upside risks to inflation going forward” due to the impact of the Iran war, though she favoured keeping rates on hold in May. In her view, “if the shock risks leading to wider and more persistent effects on inflation, we should restrain demand appropriately.”"

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

The National Bank of Poland (NBP) met the broad consensus among market participants and held interest rates steady, adopting a cautious tone on Tuesday, saying that future data would guide policy choices but also that inflation concerns are very much alive.

The central bank kept rates at 3.75%, but policymakers said the next measures would depend on how the economic outlook unfolds, leaving the bank firmly in wait-and-see mode for now.

In addition, the NBP cited a number of variables that might complicate the inflation picture, including fiscal policy, robust wage growth and laws impacting fuel costs, all of which could put consumer prices under upward pressure.

Furthermore, rate setters also said that the larger global environment remains a danger to the Polish economy, with increased geopolitical uncertainty being a significant factor for holding rates.

One interesting inclusion was the NBP’s reminder that it remains prepared to intervene in the FX market if necessary, a signal that policymakers are keeping a close watch on Zloty (PLN) volatility.

FX impact: The Polish currency gathers some pace following the bank’s decision, enough to prompt EUR/PLN to leave the area of daily highs near 4.2370 and slip back to the 4.2340 zone, just below its key 200-day SMA.

Bottom line: The NBP is in no rush to signal its next move. While rates remain unchanged, policymakers continue to see inflation risks on the horizon and appear determined to retain maximum flexibility as they assess incoming data and an increasingly uncertain geopolitical environment.