Forex News
New Zealand's Gross Domestic Product (GDP) grew by 0.8% QoQ in the first quarter (Q1) of 2026, compared with a 0.5% expansion (revised from 0.2%) in the fourth quarter of 2025, Statistics New Zealand showed on Thursday. This reading came in weaker than the expectation of a rise of 0.9%.
The first-quarter GDP expanded by 1.5% YoY, compared with a rise of 1.5% (revised from 1.3%) in Q4 of 2025, while beating the estimation of a 1.1% growth.
Market reaction to New Zealand’s GDP data
At the time of writing, the NZD/USD pair is down 0.96% on the day at 0.5775.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
- USD/JPY climbs above 160 as Yen pressure deepens.
- Warsh stresses inflation fight, offering little forward policy guidance.
- Fed SEP lifts rate median, boosting Dollar appeal.
The Japanese Yen depreciated against the US Dollar on Wednesday after the US Federal Reserve delivered a hawkish hold, with most officials expecting one rate hike towards the end of the year, while the new Fed Chair, Warsh, reiterated the Fed’s commitment to achieving the 2% inflation goal. At the time of writing, the USD/JPY trades at 160.66 after bouncing off the daily low of 160.11.
Yen weakens as Fed dots revive US yield advantage
Fed Chair Kevin Warsh provided little insight into the future policy path during his press conference, noting that he had not submitted economic projections. Nonetheless, he stressed that inflation remains well above the Fed’s 2% target and said policymakers are unanimous in their commitment to restoring price stability.
About the policy statement, Warsh said it was designed to present the facts rather than signalling forward guidance. He also revealed plans to form task forces focused on communications, the balance sheet, data sources, productivity, employment, and inflation, among other areas, as part of a review of the Federal Reserve’s current framework.
On the US central bank dual mandate, Warsh said policymakers are not facing a “cruel choice” between achieving price stability and maximum employment. However, he acknowledged that the central bank still has more work to do to bring inflation back under control.
Fed’s monetary policy statement shortened
In its statement, the Fed eliminated forward guidance. The Fed recognized that the economy continues to grow strongly despite uncertainties surrounding the Middle East conflict and noted that the jobs market remains stable, with the unemployment rate remaining nearly unchanged.
Furthermore, “Inflation remains elevated relative to the Committee’s 2 per cent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”
The Fed’s Summary of Economic Projections (SEP) indicated that the median forecast is for the Fed Funds Rate to finish at 3.8%, up from 3.4% in March. US GDP is expected to expand by 2.2% by the end of 2026, while Core PCE, the Fed’s preferred inflation measure, is projected at 3.3%, which is 1.3% above the Fed’s 2% target.
USD/JPY Price Forecast: Technical outlook
The USD/JPY rallied by 0.14%, with the advance capped by investor fears of a possible Bank of Japan (BoJ) FX market intervention. The rise of US Treasury yields drove the pair higher, a headwind for the Yen, which is usually undermined by currencies with a wider interest rate differential, favouring the latter.
On the upside, the first resistance is 161.00. A breach of the latter will expose the 161.50, ahead of 162.00. On the downside, the first support would be the June 15 low of 159.73, ahead of the 50-day Simple Moving Average (SMA) at 159.04.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- GBP/USD fell to its lowest level of the session after the June Federal Reserve decision.
- Softer than expected UK inflation had already put the Pound on the back foot.
- The Bank of England's rate decision on Thursday is the next major catalyst.
The British Pound (GBP) spent Wednesday absorbing blows from both sides of the Atlantic. Softer than expected UK inflation set a heavy tone in the morning, and Kevin Warsh's hawkish first Federal Reserve (Fed) decision finished the job in the evening. GBP/USD had been drifting near 1.3400 into the announcement and then collapsed close to 140 pips, tearing through 1.3350 and the 1.3300 handle to a session low near 1.3250 before steadying just below the figure.
The inflation miss that started it
The morning's Consumer Price Index (CPI) gave the Pound its first knock, with the May reading rising just 0.2% on the month against expectations of 0.4% and core annual inflation easing to 2.6% from a forecast 2.7%. Headline annual inflation held at 2.8%, so this was a miss rather than a collapse, but it was enough to nudge Bank of England (BoE) cut expectations and leave Sterling soft into the US session.
Then the Fed turned the screw
The Federal Open Market Committee (FOMC) held its target range at 3.50% to 3.75% on a unanimous 12 to 0 vote, a stark change from April's fractured 8 to 4 split, and deleted the easing bias. The Summary of Economic Projections (SEP) supplied the shock, lifting the median 2026 federal funds projection to roughly 3.8% from 3.4% and flipping the next move from a cut to a hike, after the 2026 Personal Consumption Expenditures (PCE) inflation projection blew out to 3.6% from 2.7%.
Warsh rewrites the rulebook
Warsh then used his first press conference to telegraph a sweeping communications overhaul. He floated holding press conferences only when the Fed has something to say, warned markets to expect changes to the SEP and the central bank's reporting by year-end, and appears to have withheld his own dot, the package of a Chair determined to wean the Fed off forward guidance. Treasury yields rose and the Dollar firmed across the board as he spoke.
September, then January
Rate pricing turned decisively hawkish. According to the CME FedWatch tool, a first Fed hike is now priced for September, where a 25 basis point increase is the most likely single outcome, and the curve leans toward a second hike by January. With the next couple of meetings treated as near-certain holds, the question has shifted entirely to the pace of tightening, a powerful tailwind for the Dollar against the Pound.
The Bank of England has the last word
Unlike the US, the UK calendar is busy into the weekend, and Thursday belongs to the BoE. The decision at 11:00 GMT is expected to leave Bank Rate at 3.75%, so the vote split is the real event; the consensus looks for two members to back a hike against one previously, a hawkish drift that today's soft CPI may complicate. UK labour data lands earlier on Thursday and retail sales close the week on Friday, giving Sterling plenty of domestic risk even as the US goes quiet.
Resistance: The 1.3300 handle the pair lost now caps the bounce, with 1.3350 the next barrier on any recovery.
Support: The session low near 1.3250 is the first floor, and a break there opens the 1.3200 handle.
Bias: Bearish, with the BoE the swing factor. A more hawkish vote split could spark a relief bounce, but soft UK inflation and a freshly hawkish Fed leave the path of least resistance lower while price holds below 1.3300.
GBP/USD 1-hour chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- AUD/USD fell sharply to its lowest level of the session after the June Federal Reserve decision.
- New projections flipped the 2026 rate path from a cut to a hike.
- Rate traders now price a first Fed hike as soon as September.
The Australian Dollar went into Kevin Warsh's first Federal Reserve (Fed) decision as a high-beta currency with no domestic shield, and it paid for it. AUD/USD had been holding above 0.7050 ahead of the announcement and fell close to 80 pips in the reaction, slicing through 0.7050 and briefly breaking the 0.7000 handle to a session low just beneath it before clawing back above the figure.
A hold that read like a warning
The Federal Open Market Committee (FOMC) kept the target range at 3.50% to 3.75% on a unanimous 12 to 0 vote, a sharp shift from April's four-way 8 to 4 split, and stripped the easing bias out of the statement. The Summary of Economic Projections (SEP) then did the damage, lifting the median 2026 federal funds projection to roughly 3.8% from 3.4% in March and flipping the next move from a cut to a hike, driven by a 2026 Personal Consumption Expenditures (PCE) inflation forecast that jumped to 3.6% from 2.7%.
Warsh rewrites the rulebook
Warsh used his debut press conference to signal a broad communications overhaul rather than to reassure. He suggested the Fed may hold press conferences only when it actually has something to say, told markets to expect changes to the SEP and the central bank's reporting by year-end, and appears to have withheld his own dot, all of it pointing to a Chair who wants to end forward guidance. The irony was not lost on traders, since the dot plot that just sank the Aussie may be among the tools he reworks.
September, then January
The rate market heard the message and moved. According to the CME FedWatch tool, a first hike is now priced for September, where a 25 basis point increase is the single most likely outcome, and the curve builds toward a second hike by January, where two hikes has become the most probable result. With the nearest meetings near-certain holds, the debate is no longer about cuts at all but about how fast the Fed tightens, a brutal backdrop for a risk-sensitive currency like the Aussie.
Nothing on the calendar to help
There is little relief coming from the data side. The US docket is largely spent for the week after the decision and the press conference, and the Australian calendar is just as thin, leaving the Aussie without a domestic catalyst to lean on. That hands the initiative to broad Dollar momentum and risk appetite, both of which now lean against it.
Resistance: The 0.7050 level the pair lost now caps rebounds, with the 0.7100 handle the next barrier should risk sentiment stabilize.
Support: The 0.7000 handle is the immediate battleground after the brief break beneath it, and a decisive failure there opens the way toward 0.6950.
Bias: Bearish. A hawkish Fed, a widening Dollar yield advantage and an empty calendar leave rallies toward 0.7050 looking like selling opportunities unless global risk appetite turns sharply higher.
AUD/USD 1-hour chart
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Here is what you need to know on Thursday, June 18:
The US Dollar Index (DXY) surged toward the 100.40 level on Wednesday after the Federal Reserve’s (Fed) June policy decision, in which the central bank left interest rates unchanged at 3.50%-3.75%, as widely expected, in Kevin Warsh’s first meeting as Fed Chair.
Despite the expected hold decision, the Fed struck a hawkish tone by removing its previous reference to “additional rate adjustments” from the statement, a shift markets interpreted as a move toward a more cautious, data-dependent stance.
Fed policymakers now see US Gross Domestic Product (GDP) growth at 2.2% in 2026, down from the 2.4% projected in March, while longer-run growth was left unchanged at 2.0%. The dot plot also reinforced a cautious policy outlook. The median projection for the federal funds rate at the end of 2026 rose to 3.8%, up from 3.4%, signaling that officials now see a possible rate hike this year.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.05% | 1.15% | 0.18% | 0.89% | 0.92% | 1.25% | 0.93% | |
| EUR | -1.05% | 0.10% | -0.83% | -0.18% | -0.14% | 0.22% | -0.11% | |
| GBP | -1.15% | -0.10% | -0.94% | -0.25% | -0.20% | 0.12% | -0.18% | |
| JPY | -0.18% | 0.83% | 0.94% | 0.68% | 0.72% | 1.01% | 0.77% | |
| CAD | -0.89% | 0.18% | 0.25% | -0.68% | 0.03% | 0.36% | 0.08% | |
| AUD | -0.92% | 0.14% | 0.20% | -0.72% | -0.03% | 0.34% | 0.06% | |
| NZD | -1.25% | -0.22% | -0.12% | -1.01% | -0.36% | -0.34% | -0.28% | |
| CHF | -0.93% | 0.11% | 0.18% | -0.77% | -0.08% | -0.06% | 0.28% |
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).
EUR/USD came under pressure near an eight-week low near 1.1500, as a stronger Greenback weighed on the pair. The Euro also remained cautious after European Central Bank (ECB) policymaker Olaf Sleijpen said that a repeat of 2022’s inflation problems appears less likely but cannot be excluded, adding that the key issue for Eurozone monetary policy is the risk of second-round effects.
GBP/USD fell sharply to a two-month low near 1.3270 amid broad US Dollar strength. Traders remain focused on the Bank of England (BoE) interest rate decision on Thursday, with the central bank expected to hold rates at 3.75%.
USD/JPY skyrocketed near a two-year high at the 160.80 region after the Fed decision. The pair benefited from renewed demand for the US Dollar as Warsh emphasized the need for more confidence that inflation is moving sustainably toward the 2% target.
AUD/USD lost ground near 0.7000 as improved risk sentiment offered some support to the Australian Dollar. Market mood improved partially after US President Donald Trump defended the ceasefire framework with Iran, saying the Strait of Hormuz had reopened and warning that bombing could resume if Tehran “acts up.”
West Texas Intermediate (WTI) Oil prices remained neutral near $75.40 per barrel, as data showed several Iranian Oil tankers had passed through the Strait of Hormuz following the US-Iran framework deal, raising expectations that Middle East supply could return to the market. However, geopolitical risks remain high, limiting the downside for crude.
Gold fell sharply near $4,240 as the US Dollar surged following the Fed decision. The precious metal remained supported by geopolitical uncertainty, but higher US yields and a more cautious Fed tone limited demand for the non-yielding asset.
What’s next in the docket:
Thursday, June 18:
- Switzerland SNB Financial Stability Report
- UK Employment Data (Apr/May)
- Switzerland SNB Interest Rate Decision
- Germany Buba Monthly Report
- UK BoE Interest Rate Decision
- US Initial Jobless Claims
- US Philadelphia Fed Manufacturing Survey (Jun)
- New Zealand Westpac Consumer Survey (Q2)
- New Zealand Trade Balance (May)
- UK GfK Consumer Confidence (Jun)
- Japan National CPI (May)
- Japan BoJ Monetary Policy Meeting Minutes
Friday, June 19:
- Germany PPI (May)
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.
- Warsh offers little guidance, keeping inflation fight firmly central.
- Fed dots lift rate path, pressuring non-yielding Gold.
- Dollar jumps to eight-week highs after hawkish policy message.
Gold (XAU/USD) price reverses course and collapses to two-day lows of $4,219 as the US Federal Reserve (Fed) tilts hawkish, expecting tighter policy amid inflation that has remained above the 2% goal on the debut of new Fed Chair Kevin Warsh. At the time of writing, XAU/USD trades at $4,236, down more than 2%.
XAU/USD slides as hawkish SEP lifts Dollar and yields
Fed Chair Kevin Warsh offered little forward guidance during his press conference, acknowledging that he did not submit economic projections, including his outlook for the future path of interest rates. Still, he stressed that inflation remains well above the Fed’s 2% target and emphasized that FOMC members are united in their commitment to restoring price stability.
Commenting on the policy statement, Warsh said it was intended to present the facts rather than signal a particular policy direction. He also revealed plans to establish task forces focused on communications, the balance sheet, data quality, productivity, employment and inflation, among other areas, to reassess the Fed’s existing policy framework.
Addressing the Fed’s dual mandate, Warsh said policymakers are not facing a “cruel choice” between price stability and maximum employment. However, he acknowledged that the central bank still has work to do on inflation.
When asked about the dual mandate, he said that the Fed does not have a “cruel choice” between price stability and maximum employment but acknowledged that the Fed “have work to do on the price stability front.”
In the statement, the Fed removed forward guidance language, marking Kevin Warsh’s first leading role in monetary policy. The Fed acknowledged that the economy continues to grow robustly despite uncertainties related to the Middle East conflict and noted that the labor market remains steady, with the unemployment rate unchanged.
Additionally, “Inflation remains elevated relative to the Committee’s 2 per cent goal, partly due to supply shocks that have increased prices in sectors like energy. The Committee is committed to delivering price stability.”
The Summary of Economic Projections (SEP) shows that the median forecast for the Fed Funds Rate is 3.8% by the end of the period, up from 3.4% in March. The economy is projected to grow by 2.2% by the end of 2026. Meanwhile, the Core PCE, the Fed’s preferred inflation indicator, is forecasted at 3.3%, which is 1.3% above the 2% target.
The swaps market had priced in 30 basis points of Federal Reserve tightening by the end of the year, according to Capital Edge data.
Earlier, US Retail Sales for May rose 0.9% MoM, beating the 0.5% forecast, as per the US Census Bureau. Gas station sales up 3.4% due to higher gasoline prices amid Iran tensions. The data shows consumer resilience, with 11 of 13 categories growing.
The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, trades near three-month highs of 100.57, up by 1.55%.
Geopolitical noise has tempered since the US and Iran agreed on a Memorandum of Understanding (MOU) setting the stage for a 60-day truce, aimed at talking about Tehran’s nuclear program and that they are not allowed to acquire nuclear weapons. Earlier, US President Donald Trump said that the agreement is not final and that he could resume bombing if Iran does not behave.
XAU/USD technical outlook: Gold stumbles below the $4,300 figure, on hawkish Fed
Gold price turned bearish after the Fed’s decision, with price action clearing June 16 support of $4,306, which opened the door to hit a two-day low of $4,219 before recovering some ground.
Momentum shifted sour, as depicted by the Relative Strength Index (RSI). The RSI is recoiling in bearish territory, a reading that hints sellers are in charge.
If XAU/USD drops below $4,200, it opens the door to test the June 11 swing low of $4,023, ahead of the $4,000 mark.
Upwards, Gold must surpass $4,300 if buyers want to test higher prices. Above this area, the key psychological levels of $4,350 and $4,400 must be cleared if buyers would like to push prices higher.
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.
The Federal Reserve (Fed) left interest rates unchanged at 3.50%-3.75% on Wednesday, but the bigger surprise came from the updated economic projections and Kevin Warsh's first press conference as Fed Chair.
The policy statement itself struck a relatively familiar tone after officials acknowledged that economic activity continues to expand at a solid pace despite heightened uncertainty linked partly to the conflict in the Middle East. The Fed also pointed out strong productivity growth and capital investment but said inflation remains elevated relative to its 2% goal, with recent supply shocks and higher energy prices helping to push prices higher.
The updated Summary of Economic Projections (SEP), however, delivered a distinctly more hawkish message.
Policymakers sharply raised their inflation forecasts, with PCE inflation now expected to end 2026 at 3.6%, up from 2.7% projected in March. Core inflation forecasts were also revised higher, while the Fed continues to see inflation returning to its 2% objective only in 2028.
The rate outlook shifted higher as well. Indeed, the median projection for the Federal Funds rate at the end of 2026 rose to 3.8% from 3.4%, with policymakers also lifting their projected rate paths for 2027 and 2028. At the same time, growth forecasts were trimmed only modestly and unemployment projections improved slightly, reinforcing the view that the Committee sees inflation as a more pressing concern than economic weakness.
Warsh used his first appearance as Chair to reinforce that message.
He repeatedly stressed that inflation remains well above target and said the Committee's commitment to restoring price stability was unanimous and unambiguous. He argued that persistently high prices continue to burden households and maintained that inflation is ultimately determined by monetary policy.
At the same time, Warsh made it clear that he intends to change how the Fed communicates with markets.
He described the new policy statement as shorter, simpler and more focused on facts, while defending the decision to remove forward guidance. According to Warsh, forward guidance is not well suited to the current environment, and policymakers should not attempt to signal future decisions when economic conditions remain uncertain.
The most notable development from the press conference was Warsh's announcement of a broad review of the Fed's policymaking framework.
He unveiled five task forces that will examine communications, the balance sheet, data sources, productivity and employment, and the Fed's inflation framework. The groups will include experts from inside and outside the economics profession and are expected to propose recommendations for future changes.
Among the areas under review is the SEP itself. Warsh revealed that he expects changes to the SEP and suggested a new communications framework could be introduced before the end of the year. He also declined to submit his own rate projection, arguing that doing so would not be helpful to the conduct of policy.
On the economy, Warsh painted a relatively constructive picture. He said labour market conditions remain stable, noted that recent jobs data have been moving in a favourable direction and argued that trends matter more than individual data releases. He also suggested that monetary policy appears restrictive primarily in the housing sector, while financial conditions elsewhere in the economy appear less constrained.
Artificial intelligence featured prominently in the discussion. Warsh said policymakers spent time discussing AI and productivity developments, describing the technology as offering significant opportunities as well as risks.
To sum up
The meeting delivered a clear message: the Fed remains committed to returning inflation to 2%, policymakers now expect inflation to stay elevated for longer than previously anticipated, and the new Chair appears determined to reshape how the central bank communicates and evaluates policy in the years ahead.
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.
Forex Market News
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