Forex News
ING’s Francesco Pesole points out the Canadian Dollar is the best-performing G10 currency since the conflict started, supported by resilient equities and Canada’s energy exporter status. While markets now price a Bank of Canada hike by year-end, ING is cautious on Canada’s outlook but sees further easing as unlikely and expects USD/CAD pressure toward a break below 1.35 if Oil unwinds gradually.
Energy support and BoC pricing aid CAD
"The Canadian dollar has been the best-performing G10 currency since the start of the conflict.
"...the equity market holding up relatively well remains very crucial as it allows the loonie (like AUD) to fully benefit from its energy net-exporter status without suffering from major risk sentiment fallout."
"Domestically, markets have also priced in a rate hike by the Bank of Canada by year-end. We aren’t convinced just yet and remain cautious about Canada’s economic outlook due to upcoming USMCA renegotiations. However, further easing now seems off the table."
"Should we see a somewhat gradual unwinding of the oil rally with risk sentiment recovering further, USD/CAD may stay under some pressure and break below the 1.35, late-January lows."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
DBS Group Research strategist Philip Wee argues that the DXY Index’s failed breach of 99.7 signals a turning point for 2026 risk sentiment, as the fading "energy apocalypse" trade and G7/IEA actions reduce safe-haven demand for the Dollar. He highlights that a restrictive +0.75% real rate and 4.4% unemployment now limit USD upside compared with 2022.
DXY failure at 99.7 shifts narrative
"The DXY Index’s failed breach of 99.7 marks a critical transition in the 2026 risk narrative."
"While the DXY's failure at 99.7 was triggered by the oil price collapse, the underlying resistance is rooted in a Fed that is already in restrictive territory, boasting a positive real policy rate of 0.75% compared to the deeply stimulative minus 5.65% seen at the onset of the Ukraine crisis."
"However, the USD’s primary hurdle remains structural: unlike the tailwinds of 2022, a restrictive +0.75% real rate and the 4.4% unemployment rate suggest the Fed is now more focused on a soft landing than an aggressive inflation fight, firmly capping the greenback’s upside."
"Today, the divergence between the real US interest rate stance and the US labour market health creates a ceiling for the USD that did not exist in 2022."
"Unless the Iran conflict reignites a long-term inflationary spiral that prices out the market’s two Fed cuts for 2026, the USD lacks the aggressive rate-hike tailwind that fuelled its significant rally in 2022."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The US Consumer Price Index is expected to rise 2.4% YoY in February.
- Annual core CPI inflation is expected to hold steady at 2.5%.
- EUR/USD’s near-term technical outlook points to a bearish bias despite the recent rebound.
The US Bureau of Labor Statistics (BLS) will publish the February Consumer Price Index (CPI) data on Wednesday. The report is expected to show a stabilization in inflation, still above the Federal Reserve’s (Fed) 2% target.
The monthly CPI is forecast to rise 0.3%, following the 0.2% increase recorded in January, while the annualized reading is seen holding steady at 2.4%. Core CPI figures, which exclude volatile food and energy prices, are expected to come in at 0.2% and 2.5%, on a monthly and yearly basis respectively.
Although inflation data is critical for Fed officials when deciding on the next policy step, the market reaction could remain muted due to the fact that the February CPI prints won’t reflect the impact of rising crude Oil prices on inflation. After the United States (US) and Israel launched a joint military operation against Iran on February 28, the barrel of West Texas Intermediate (WTI) rose sharply from about $67 to above-$110 before correcting lower.
What to expect in the next CPI data report?
CPI figures for February are unlikely to diverge significantly from market expectations. In the past six releases, monthly core CPI readings were either 0.2% or 0.3%. Similarly, CPI was up either 0.2% or 0.3% on a monthly basis in this time frame, with the exception of a 0.4% increase recorded in August, 2025.
The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) reports painted a mixed picture in regard to input price pressures in the private sector. The Prices Paid Index component of the Manufacturing PMI survey jumped to 70.5 in February from 59 in January, while the Prices Paid Index of the Services PMI survey declined to 63 from 66.6.
Previewing the inflation data, “the February CPI report this week should begin to show a moderation in services inflation that will help build confidence for the FOMC”, said TD Securities analysts.
“Core CPI likely moderated in February to 0.23% m/m owing to a slower rise in services along with more modest tariff pass-through. We look for the headline to accelerate to 0.25% m/m as energy prices rebounded. Our forecast translates to 2.5% and 2.4% y/y for core and headline, respectively,” they explained.
How could the US Consumer Price Index report affect EUR/USD?
Markets virtually see no chance of a Fed interest rate cut in March and only price in about a 12% probability of a 25 basis-points (bps) reduction in April, according to the CME FedWatch Tool. The odds of a fourth consecutive policy hold in June, after the central bank decided to keep interest rates unchanged in January, climbed to nearly 70% in the first few days after the US-Iran war started. Disappointing labor market data, which showed a decrease of 92,000 in Nonfarm Payrolls in February, and easing crude Oil prices, however, dragged that probability back below 60%.
A significant negative surprise in the monthly core CPI print, a reading at or below 0%, could cause investors to reassess the odds of a rate cut in June and cause the US Dollar (USD) to come under selling pressure with the immediate reaction. Conversely, a reading above 0.3% in this data could boost the USD by casting doubt on a policy-easing step in June.
Still, investors could refrain from taking large positions based on this data alone, given the uncertainty surrounding the inflation outlook from March on because of the volatility in energy prices caused by the US-Iran war.
Eren Sengezer, FXStreet European Session Lead Analyst, shares a brief technical outlook for EUR/USD.
“The Relative Strength Index (RSI) indicator on the daily chart rebound from near-30 but stays below 50, suggesting that EUR/USD is yet to complete a bullish reversal. Additionally, the pair remains below the strong 1.1675-1.1700 resistance area, reinforced by the 200-day Simple Moving Average (SMA), the Fibonacci 61.8% retracement of the November-January uptrend and the 100-day SMA.”
“In case EUR/USD fails to reclaim this region, 1.1600-1.1590 (static level, Fibonacci 78.6% retracement) could be seen as the first support area before 1.1500-1.1470 (static level, beginning point of the uptrend). Looking north, technical resistance levels could be spotted at 1.1750 (Fibonacci 50% retracement) and 1.1820 (Fibonacci 38.2% retracement).”
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.
Danske Research Team observes that EUR/USD is little changed below 1.1650, with 2‑year Bund and US Treasury yields slightly lower. The bank forecasts US February CPI at 2.5% year‑on‑year for both headline and core, marginally above consensus, but does not expect this to materially alter current market pricing for the Dollar or rates.
Cross holds below 1.1650 pre CPI
"EUR/USD remains about unchanged below 1.1650 from yesterday's open. 2Y Bund yields declined about 6bp and 2Y US Treasury yields pulled back 2bp over yesterday's trading session. "
"Today's most important data release will be the US February CPI. US gasoline prices were on the rise already before the war in Iran erupted, and we expect energy inflation to lift headline CPI by +0.3% m/m SA (2.5% y/y). Core inflation will likely remain more modest at +0.2% m/m SA (2.5% y/y) due to low housing contribution."
"We will follow comments from ECB executive board member Schnabel, who is scheduled to speak today. As the silent period ahead of the March meeting begins tomorrow, both Guindos and Schnabel have the chance to offer key insights today."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Indian Rupee faces challenges due to hedging demand and foreign portfolio outflows.
- IEA’s proposed drawdown would surpass the 182 million barrels released after Russia’s 2022 invasion of Ukraine.
- The US Dollar could regain ground on rising safe-haven demand amid growing uncertainty over the Middle East conflict.
USD/INR remains flat after paring daily losses on Wednesday, as the Indian Rupee (INR) faces pressure from hedging demand and foreign portfolio outflows, even as easing oil prices calm concerns over the Iran war. Moreover, market sentiment improved after reports that the International Energy Agency (IEA) may release record oil reserves to stabilize markets. Traders may expect an intervention by the Reserve Bank of India (RBI) to cap the downside of the rupee.
Indian equities struggle due to concerns about artificial intelligence’s impact on the country’s IT sector, though the ongoing Middle East war has largely overshadowed these worries.
India’s one-year and two-year OIS rates have climbed more than 45 basis points each since the Israeli–US conflict with Iran began on February 28, while the benchmark 10-year bond yield has risen by a comparatively modest 11 basis points through Monday before trimming part of the increase. At current levels, swap rates are pricing in nearly two rate hikes by the Reserve Bank of India over the next 12 months.
West Texas Intermediate (WTI) crude oil price gave up gains from the previous session, trading around $82.30 per barrel during the Asian hours on Wednesday. However, the downside in oil prices may remain limited due to rising uncertainty surrounding the Iran conflict and shipping disruptions through the crucial Strait of Hormuz.
The IEA’s proposed drawdown would exceed the 182 million barrels released in 2022 following Russia’s invasion of Ukraine. It is worth noting that India relies heavily on oil imports to meet its energy needs and remains highly sensitive to fluctuations in oil prices.
The US Dollar (USD) could regain ground on increased safe-haven demand amid rising uncertainty surrounding the Middle East conflict. US President Donald Trump said late Monday that the Middle East conflict could end soon. However, US officials indicated on Tuesday that military operations were intensifying in Iran, with limited prospects for diplomatic negotiations, Reuters reported.
Traders await key US Consumer Price Index (CPI) data due later in the day. Focus will then shift toward Friday’s Personal Consumption Expenditures (PCE) Price Index data. These figures may offer fresh signals on the Federal Reserve’s policy outlook.
Technical Analysis: USD/INR remains above nine-day EMA near 92.00
USD/INR trades around 92.30 at the time of writing, slightly below the previous close. The technical analysis of the daily chart indicates a persistent bullish bias as the pair remains within the ascending channel pattern.
The USD/INR pair holds a clear bullish near-term bias as price consolidates near recent highs above the rising 50-day Exponential Moving Average, while the nine-day EMA tracks just below spot and underpins the latest upswing. Momentum remains positive with the 14-day Relative Strength Index (RSI) hovering in the mid-60s, staying below overbought territory after failing to break higher, which signals persistent but moderated buying pressure rather than exhaustion at current levels.
Immediate resistance is seen at the ascending channel’s upper boundary near the all-time high of 92.81. On the downside, initial support appears at the nine-day EMA at 92.06, followed by the channel’s lower boundary near 91.30.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | INR | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.26% | 0.00% | -0.18% | -0.74% | -0.25% | -0.08% | |
| EUR | 0.23% | -0.02% | 0.22% | 0.06% | -0.50% | -0.01% | 0.16% | |
| GBP | 0.26% | 0.02% | 0.23% | 0.08% | -0.48% | 0.00% | 0.17% | |
| JPY | 0.00% | -0.22% | -0.23% | -0.18% | -0.74% | -0.27% | -0.09% | |
| CAD | 0.18% | -0.06% | -0.08% | 0.18% | -0.56% | -0.07% | 0.09% | |
| AUD | 0.74% | 0.50% | 0.48% | 0.74% | 0.56% | 0.49% | 0.68% | |
| NZD | 0.25% | 0.01% | -0.01% | 0.27% | 0.07% | -0.49% | 0.19% | |
| INR | 0.08% | -0.16% | -0.17% | 0.09% | -0.09% | -0.68% | -0.19% |
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).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
In a statement released on Wednesday, the G7 group of nations said that their energy ministers supported, in principle, the implementation of proactive measures to address the situation, including the use of strategic reserves, per Reuters.
The statement comes after the Wall Street Journal (WSJ) carried a report, citing that “the International Energy Agency (IEA) proposed the largest release of oil reserves in its history in an effort to lower crude prices that have soared during the US-Israel conflict with Iran.”
The 32 member states of the IEA held an emergency meeting on Tuesday to assess the situation in the Middle East and its impact on oil prices.
Market reaction
Oil prices seem to have shrugged off the above headline, as WTI recovers some ground to near $85, still down roughly 1% on the day.
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.
Deutsche Bank analysts note that US equities remain relatively resilient despite sharp intraday swings. The S&P 500 slipped slightly and closed well off its highs, while futures recovered overnight. Volatility remains elevated, but the index is still less than 3% below its late-January record, supported by the Mag-7 and positive tech earnings such as Oracle’s strong sales outlook.
US equities hold near record territory
"Easing oil market stress sparked a strong rally in risk assets yesterday, with the STOXX 600 (+1.88%) recording its best day since last April. And while more concerning headlines late in the US session saw the S&P 500 (-0.21%) erase its gains, futures on the S&P 500 are +0.32% higher overnight."
"The volatility late in the US session did mean that the S&P 500 (-0.21%) closed nearly a percentage point off intra-day highs, with the equal-weight S&P 500 seeing a larger -0.82% decline."
"And the VIX index closed at 24.93, a modest -0.57pts lower on the day and notably above its intra-day low of 22.19."
"Still, while there remains plenty of caution, financial stress has eased materially since the start of the week when the VIX reached 35 at Monday’s open. And despite the recent volatility, the S&P 500 is still less than 3% from its record high on January 27."
"The Mag-7 have played a big role in supporting the relative resilience of US equities, with the index now +1.15% above its levels before the strikes after a +0.38% gain yesterday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
European Central Bank (ECB) Governing Council member and Germany's Bundesbank chief Joachim Nagel told Reuters on Wednesday that the central bank will be ready to act if surging energy costs due to the Iran war feed into durably higher Eurozone inflation.
Key quotes
We must be very vigilant.
If it becomes apparent that the current energy price increases will translate into broad consumer price inflation in the medium term, the Governing Council of the ECB will act decisively in a timely manner.
The discussions about falling short of our inflation target are likely to be over for the time being.
At this point in time, however, it is still too early to reliably assess the medium- to long-term consequences given the volatile situation.
Commerzbank’s Antje Praefcke argues that US inflation data are unlikely to move the Dollar near term, as markets focus on Oil and the Iran war. She outlines two scenarios for the conflict’s duration and their implications for Fed policy and Dollar performance, stressing that future Fed reaction under new leadership could cap sustained Dollar gains.
Oil shock scenarios and Fed credibility
"Even if today's figures come in lower than expected, they are unlikely to have a major impact on the US dollar."
"If the conflict is resolved relatively quickly, leading to a rapid recovery in oil prices, the Fed and other central banks would in all likelihood look through the short-term “oil bump” in inflation rates - in other words, they would describe the effect as temporary."
"If the conflict drags on and energy prices remain high, the situation could become more complicated for the Fed. Rising inflation rates would necessitate “high for longer” (i.e., unchanged key interest rates for a longer period of time) - the market has already postponed its expectations of Fed rate cuts."
"After that, however, the question would still remain as to how the “Fed after Powell” would shape its monetary policy, whether it would at least partially yield to political pressure for lower interest rates or not."
"Even if the dollar were to be an outperformer in the short term for the reasons often cited (safe haven etc.), the topic of “Fed monetary policy in the Warsh era” is likely to soon take up more space in investors' considerations again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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