Forex News
UOB Global Economics & Markets Research highlights that Gold advanced as expectations for another Fed hike this year eased following an interim US-Iran peace deal that pushed Oil and inflation expectations lower. Spot Gold hit its highest level since early June, while US Gold futures also edged higher, reflecting demand for the metal as yields and inflation fears moderated.
Safe haven benefits from softer Fed bets
"Gold prices rose on Tue as expectations of an interest rate hike from the Fed this year eased, following an interim US-Iran peace deal that sent oil prices and inflation fears lower. Spot gold was up 0.8% at $4,338.97/oz after touching its highest level since 5 Jun on Mon."
"US gold futures added 0.1% to settle at $4,354.40/oz."
"The early rally was fueled by a continued slide in oil prices spurred by the prospect of a US-Iran agreement that re-starts Middle East exports via the Strait of Hormuz. The yield on the 10-year US Treasury note declined more than 3 bps to 4.43%."
"US Treasuries held onto early gains on Tue, following a strong 20-year bond auction. The $13bn sale in 20-year bonds was strong, at a high yield of 4.927%."
"Indirect bidders took down 73.2% of the auction, up from the recent average of 64.9%."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The US Federal Reserve is expected to leave the policy rate unchanged for the fourth consecutive meeting in June.
- The revised Summary of Economic Projections will provide key clues on potential rate hikes.
- All eyes will be on the new Fed Chair Kevin Warsh’s comments.
The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, another pivotal meeting for markets to gauge the stance of policymakers and new Chair Kevin Warsh as energy prices retreat after the United States and Iran reached a framework deal to reopen the Strait of Hormuz.
Markets widely expect the Federal Open Market Committee (FOMC) to keep interest rates unchanged in the range of 3.5%-3.75% for the fourth consecutive meeting in June.
As this decision is fully priced in, the revised Summary of Economic Projections (SEP) and Fed Chair Warsh’s comments in his first post-meeting press conference will grab all the attention as they could offer key clues on the policy outlook and thus drive the US Dollar’s (USD) performance.
Despite the recent decline in crude Oil prices, markets still see a relatively strong probability of the Fed tightening the policy later in the year. According to the CME FedWatch Tool, investors are currently pricing in about a 58% probability that the Fed will raise the interest rate by 25 basis points (bps) at least once by end-2026.
After fluctuating at around $65 per barrel before the US and Israel launched a joint attack on Iran on February 28, the West Texas Intermediate (WTI) rose to its highest level since June 2022 above $110 by mid-March. Since the first temporary ceasefire agreement between the US and Iran was announced in early April, Oil prices corrected lower but remained elevated relative to pre-war levels. With the latest deal finally paving the way for the reopening the Strait of Hormuz, WTI declined further and broke below $80.
Policymakers will take this development into account when penciling down their macroeconomic projections and interest rate expectations.
Previewing the Federal Open Market Committee (FOMC) meeting, “the policy rate will remain unchanged with likely hawkish changes in communications,” said TD Securities analysts.
“The easing bias will be dropped with hawkish adjustments to the SEP and dot plot. The uncertainty lies in new Fed Chair Warsh's press conference. A strong pushback from Warsh is unlikely as that would damage his credibility and effectiveness towards his long-term, reform-minded agenda,” they added.
When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement, alongside the SEP at 18:00 GMT. This will be followed by Fed Chair Kevin Warsh’s press conference starting at 18:30 GMT.
The latest SEP published in March showed that policymakers’ median projection pointed to a 25 basis points (bps) cut this year, unchanged from the SEP published in December 2025. It won’t be a surprise if there are hawkish revisions in the SEP given the changes in the macroeconomic backdrop.
Nevertheless, the market positioning suggests that the USD has room on the upside if the document shows that a majority of policymakers project at least one rate hike by the end of the year. In this scenario, market participants could continue to price in a rate hike and fuel another leg higher in US Treasury bond yields and the USD, causing EUR/USD to stretch lower.
Conversely, the USD could come under pressure if the SEP shows that a majority of policymakers expect to keep the policy rate unchanged for the rest of the year. Although this would still be a hawkish revision when compared to the March SEP, it would still be a less hawkish outlook than what markets are currently expecting. In this case, EUR/USD could gather recovery momentum.
Comments from Warsh in the post-meeting press conference could also drive the USD’s valuation. If Warsh pushes back market expectations for a rate hike and adopts an optimistic tone about the inflation outlook, now that Oil prices are coming back down, the USD could struggle to find demand. In the less likely scenario, Warsh could acknowledge strong labor market data and refrain from delivering a dovish message.
ING strategists Francesco Pesole, Chris Turner and Frantisek Taborsky note that the US Dollar (USD) is supported by strong US data and Fed expectations despite sharply lower Oil prices.
"The Dollar can stay resilient, but needs a nod from policymakers (especially from new Chair Kevin Warsh) that rate hikes are a real possibility,” they add. “This keeps questions around the durability of the oil sell-off open, and FX markets are, for now, reluctant to fully price in that optimism.”
In summary, the USD’s valuation, and EUR/USD’s performance, will depend on how convinced Fed policymakers are of a quick return to disinflation. Unless there is a clear message, either within the SEP or from Chair Warsh, that policy-tightening is no longer the preferred path forward, any weakening in the USD could remain short-lived.
Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:
“The technical outlook is yet to point to a bullish reversal. On the daily chart, the Relative Strength Index (RSI) recovered but is yet to make a decisive breakthrough 50. Additionally, EUR/USD remains well below the 100-day and 200-day Simple Moving Averages (SMAs).”
“On the upside, a key resistance area seems to have formed at 1.1655-1.1675, where the Fibonacci 38.2% retracement of the February-April downtrend, the 100-day SMA and the 200-day SMA converge. In case EUR/USD manages to clear this area, it could face an interim resistance at 1.1730 (Fibonacci 50% retracement) ahead of 1.1800 (Fibonacci 61.8% retracement).”
“Looking south, the first support level could be spotted at 1.1560 (Fibonacci 23.6% retracement) before 1.1500 (static level, round level) and 1.1410 (March 13 low).”
Warsh, at the helm of a hawkish-leaning Fed
New Fed Chair Warsh inherits a committee that consists of mostly hawkish voting and non-voting members. Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari stand out as the most hawkish voters, according to the FXStreet Speechtracker scores.
In a speech on May 27, Kashkari scored 7.4/10 on the FXS Speechtracker, modestly above the 7/10 historical average and thus slightly more hawkish relative to the established baseline. The speech leaned clearly toward vigilance on inflation as he stressed that the risk to the US inflation now outweighs the risk of labour-market deterioration. Kashkari also noted that most post-April data point to higher inflationary risks and that a Middle East war shock could keep global price pressures elevated.
Fed’s Logan delivered a distinctly more hawkish tone on June 3, with an FXS Speechtracker score of 8.2/10. The remark that “inflation is trending toward the mid-2s, not all the way to 2%” and that trimmed-mean inflation is “not currently a reliable signal,” alongside comments that financial conditions are accommodative, the labor market is stable, and corporate earnings are “going gangbusters,” underscored concern that inflation is taking too long to return to target. By stressing that monetary policy is not restraining the economy and expressing increasing concern that higher interest rates could be necessary later this year, the speech pushed the policy narrative further into hawkish territory.
If Warsh intends to convince policymakers of the need for policy-easing, he will have an uphill battle. Some of the more neutral members, such as New York Fed President John Williams and Fed Governor Jerome Powell, could be inclined toward holding settings steady but they are unlikely to support rate cuts until there is convincing evidence that inflation is moving back toward the target, or there is a persistent and clear deterioration in labor market conditions.
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 highlight that cyclical drivers have reasserted themselves in FX, underpinning a stronger Dollar over the coming months. They argue that these cyclical factors will keep the Dollar bid, delaying any meaningful downturn. The note frames current Dollar strength as part of a broader cyclical upswing rather than a temporary spike.
Cyclical forces support dollar strength
"Cyclical factors return to the FX market and look set to keep the dollar bid over coming months."
"The credible threat of some Fed tightening later this year prompted a bullish re-assessment of the dollar."
"FX: Cyclical dollar bullishness takes over."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
MUFG’s Derek Halpenny highlights that Fed Chair Kevin Warsh’s first post-FOMC press conference comes as Brent Oil has dropped sharply, easing near-term inflation risks but not eliminating them. The bank expects the Fed to keep rates unchanged while likely removing the 2026 rate cut from the median dots and dropping the easing bias from the statement, a combination seen as broadly supportive for the Dollar.
Fed dots and guidance in focus
"But this doesn’t imply Fed Chair Warsh will be dovish this evening and inflation risks are likely still a concern."
"A number of the other FOMC members will certainly be still more concerned over inflation risks than at the last SEPs update in March and hence, we will likely see the one rate cut for this year implied by the median dots in March being removed."
"The statement is very likely to show the removal of the implied easing bias with the removal of the word “additional” referring to adjustments to the fed funds target range which would signal the view of the FOMC that the next move could be a hike or a cut."
"Warsh is likely to signal that the policy stance is currently appropriate and given the changes to the statement and the SEPs is likely to be more hawkish, he may be reluctant to push a dovish view at this juncture."
"Still, the large drop in energy prices could well allow him leeway to emphasise the importance of looking through energy price shocks that could help pressure front-end rates and the dollar lower."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Silver remains under pressure on Wednesday as investors await the Federal Reserve’s monetary policy decision.
- The interim US-Iran peace agreement reduces concerns about energy prices and global inflation.
- Markets are watching economic projections and comments from the central bank chief for clues on the future path of interest rates.
Silver (XAG/USD) trades around $69.85 on Wednesday at the time of writing, down 0.25% on the day. Traders remain cautious ahead of the Federal Reserve’s (Fed) policy decision later in the day, which could provide fresh guidance on the outlook for US interest rates.
The white metal continues to benefit from a relatively supportive macroeconomic environment. The announcement of a framework peace agreement between the United States (US) and Iran has helped reduce the risk of disruptions to global energy supplies. This development has fueled expectations of easing energy-driven inflation pressures, a factor that has supported demand for precious metals in recent days.
Under the preliminary terms of the agreement, the two countries have agreed to a 60-day ceasefire and the reopening of the Strait of Hormuz, a strategic route for global Oil trade. Further discussions are expected regarding Iran’s nuclear program, while several aspects of the agreement remain subject to differing interpretations between Washington and Tehran.
Market attention is now turning to the Fed. The US central bank is widely expected to leave its benchmark interest rate unchanged within the 3.5%-3.75% range, but investors will focus primarily on whether policymakers revise their interest rate and inflation projections. The updated economic forecasts and the so-called dot plot will be closely scrutinized.
Investors will also analyze comments from Fed Chair Kevin Warsh to assess whether the central bank maintains a hawkish stance amid still-persistent inflation. Markets continue to price in the possibility of a 25-basis-point rate hike before year-end, limiting the upside potential for non-yielding assets such as Silver.
The recent performance of the US Dollar (USD) also remains an important factor for the precious metal. Optimism surrounding the US-Iran agreement has weighed on the Greenback in recent days, providing indirect support to Dollar-denominated metals. However, investors prefer to wait for the outcome of the Fed meeting before taking more aggressive directional positions on Silver.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Brown Brothers Harriman highlights GBP/USD trading around its 200-day moving average as UK Gilts outperform European bonds. With softer UK May CPI delaying Bank of England tightening expectations to December, Elias Haddad expects GBP/USD to drift lower and stabilize closer to 1.3100, reflecting relatively stronger US growth prospects and ongoing uncertainty in the UK political landscape.
Soft UK CPI delays BOE tightening
"GBP/USD is directionless around its 200-day moving average (1.3417), while gilts are outperforming European bonds. UK May CPI was soft and suggests the Bank of England (BOE) will not be in a rush to tighten policy. Headline CPI unexpectedly remained at 2.8% y/y (consensus: 3.0%, BOE projection: 3.3%) for a second straight month while core CPI rose less than expected to 2.6% y/y (consensus: 2.7%) vs. 2.5% in April."
"The swaps curve pushed out the pricing of a first full 25bps BOE rate rise to December from November. We expect GBP/USD to edge lower and stabilize closer to 1.3100, reflecting a stronger US growth outlook relative to the UK and the murky UK political backdrop."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
ING’s FX team notes that a rate hike by the ECB is fully priced into EUR/USD, limiting upside for the Euro. They stress that even additional ECB hawkishness may not translate into Euro gains, as markets already discount tighter policy. The analysis suggests EUR/USD may find it difficult to rally on ECB decisions.
Hawkish ECB already in the price
"A hike from the ECB today is fully priced in."
"The euro will struggle to benefit from ECB hawkishness."
"FX Daily: Euro already prices a hawkish ECB."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data. Silver trades at $69.70 per troy ounce, down 0.47% from the $70.03 it cost on Tuesday.
Silver prices have decreased by 1.95% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 69.70 |
1 Gram | 2.24 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 62.04 on Wednesday, up from 61.85 on Tuesday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
MUFG’s Derek Halpenny underlines that Brent Oil falling below USD 80 and a roughly 30% drop in crude over a month have significantly reduced perceived near-term inflation risks from energy. This shift is seen as a “game-changer” for assessing broader inflation, potentially allowing the Fed some leeway even as it maintains a generally hawkish stance on policy and projections.
Sharp crude drop eases inflation risk
"As a result, Brent crude oil fell below the $80pbl level yesterday for the first time since 3rd March."
"In the space of one month, crude oil has declined from an intra-day high (on 18th May) by 30%."
"That’s a game-changer in terms of assessing near-term risk to broader inflation from a sustained energy price shock."
"In the period since the crude oil price has dropped nearly 30%, the 2-year UST bond yield is close to unchanged so there is clearly a reluctance amongst investors to take a bullish view on rates with uncertainty over the outcome this evening an obvious deterrent."
"Investors also likely see the energy price drop as only a counter to the continued surge in equities and the three months of stronger than expected NFP reports."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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