Forex News

• NZD/USD trades lower with a softer New Zealand Dollar against the Greenback.
• Middle East tensions curb risk appetite and support demand for the US Dollar.
• New Zealand inflation and the central bank’s hawkish stance limit the downside.

NZD/USD edges lower on Thursday, trading around 0.5875 at the time of writing, down 0.47% on the day, as risk aversion dominates market sentiment. The pair remains confined within a narrow range seen in recent days, with investors reluctant to take strong directional positions amid ongoing geopolitical uncertainty.

Escalating tensions between the United States (US) and Iran continue to weigh on global markets, boosting demand for safe-haven assets. This dynamic supports the US Dollar (USD), which is also underpinned by higher US Treasury yields and reduced expectations for near-term rate cuts. The US Dollar Index (DXY) is moving higher, reflecting renewed interest in the Greenback.

On the macroeconomic front, recent US data present a mixed picture. Initial Jobless Claims rose slightly to 214K, above expectations, though the release had limited market impact. Meanwhile, economic activity showed signs of improvement, with the S&P Global Composite Purchasing Managers Index (PMI) rising to 52 in April from 50.3 previously, pointing to moderate expansion.

In New Zealand, recent inflation data continues to support the currency. The Consumer Price Index (CPI) increased by 3.1% YoY in the first quarter, confirming that price pressures remain above the Reserve Bank of New Zealand (RBNZ) target. This reinforces expectations of a sustained restrictive monetary policy stance, limiting the downside for NZD/USD.

According to Rabobank, this backdrop has led markets to price in significant rate hikes over a one-year horizon, although the bank suggests these expectations may be excessive. The institution notes that financial conditions have already tightened considerably, which could limit the central bank’s need to act aggressively.

Rabobank also highlights near-term downside risks for NZD/USD, driven by safe-haven demand for the US Dollar in case of further escalation in the Middle East war. However, the bank expects a moderate recovery in the pair later in the year, supported by the prospect of additional rate cuts from the Federal Reserve (Fed).

Societe Generale analysts note the Brazilian Real's (BRL) performance and highlight that USD/BRL failed to clear its downward‑sloping 200‑day moving average during recent consolidation, confirming the broader bearish trend. The pair has broken below its range, with the they targeting the lower band of a multi‑month channel near 4.90 and projections at 4.86/4.84, while viewing 5.20 as short‑term resistance.

Bearish structure targets 4.90 and below

"USD/BRL failed to overcome the downward‑sloping 200‑DMA during the recent consolidation, underscoring the persistence of the broader downtrend."

"A break below the lower bound of the range has triggered a resumption of the decline."

"The next objectives are located near the lower band of a multi‑month channel around 4.90, followed by projections at 4.86/4.84."

"The peak achieved earlier in April at 5.20 is a short‑term resistance."

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

• Gold trims intraday losses, but gains remain capped by firmer US Dollar and elevated Oil prices.
• Oil-driven inflation fuels higher-for-longer rate expectations, weighing on Gold
• Technically, XAU/USD trades below the Bollinger midline on the 4-hour chart, signaling downside pressure.

Gold (XAU/USD) trades under pressure on Thursday as a firmer US Dollar (USD) and elevated Oil prices weigh on the precious metal, while uncertainty over stalled US-Iran talks keeps market sentiment cautious. Traders are also digesting mixed US economic data, with Jobless Claims rising above expectations and Purchasing Managers Index (PMI) figures pointing to resilient business activity.

At the time of writing, XAU/USD is trading around $4,720, after hitting an intraday low of $4,684.

Shipping disruptions in Hormuz sustain inflation fears

Tensions in the Strait of Hormuz are rising as the route remains under a dual blockade by the US Navy and Iran. US President Donald Trump said on Truth Social that “we have total control over the Strait of Hormuz, no ship can enter or leave without the approval of the United States Navy.” He also added that he has ordered the Navy to “shoot any boat putting mines in Hormuz.”

Meanwhile, The Washington Post, citing a Pentagon assessment, reported that it could take up to six months to fully clear mines from the waterway, underscoring the risk of prolonged disruption to global oil supply.

Islamic Revolutionary Guard Corps (IRGC) reportedly seized two vessels in the strait on Wednesday, according to shipping companies and the semi-official Tasnim news agency.

Rising crude Oil prices, driven by these disruptions, continue to fuel inflation concerns globally, increasing the likelihood of a “higher-for-longer” interest rate environment across major central banks. While Gold is typically viewed as a hedge against inflation, higher borrowing costs tend to weigh on demand for the non-yielding asset as investors shift toward yield-bearing assets such as bonds.

US-Iran talks uncertainty underpins US Dollar strength

Markets remain skeptical about whether the United States (US) and Iran will resume negotiations anytime soon. This comes despite the ceasefire extension announced by Trump, which Iranian officials have not formally accepted. Tehran has criticized Washington’s decision to maintain the naval blockade, calling it a key obstacle to negotiations.

This backdrop is underpinning the US Dollar after a corrective slide earlier this month on hopes of de-escalation following the announcement of a two-week ceasefire. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.78, extending gains for the third straight day.

At the same time, fading expectations of Federal Reserve (Fed) interest rate cuts are lifting US Treasury yields, further supporting the US Dollar and weighing on non-yielding assets like Gold.

On the data front, US Initial Jobless Claims rose to 214K, above the 212K forecast and up from 208K previously. The preliminary S&P Global Manufacturing PMI rose to 54 in April from 52.3 in March, marking a 47-month high, while the Services PMI improved to 51.3 from 49.8, reaching a two-month high.

Technical Analysis: XAU/USD trades below the Bollinger midline, downside risks linger

In the 4-hour chart, XAU/USD remains capped in the near term, trading under the 20-period Simple Moving Average (the Bollinger middle band) at roughly $4,756, which reinforces a bearish bias despite still holding comfortably above the lower band support near $4,677. The Relative Strength Index (14) around 41 leans to the downside, suggesting sellers retain the upper hand, while the modest Average True Range (14) near 38 points to contained but persistent volatility.

On the topside, initial resistance is aligned with the 20-period SMA/Bollinger middle band at about $4,756, with a further hurdle at the upper Bollinger band near $4,834, where failure would keep the broader corrective tone intact. On the downside, immediate support emerges at the lower Bollinger band around $4,677; a decisive break below this floor would open the door to a deeper pullback, whereas sustained defense of this area could encourage a consolidation phase.

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

Rabobank Senior FX Strategist Jane Foley highlights that stronger-than-expected New Zealand Consumer Price Index (CPI) and a hawkish Reserve Bank of New Zealand (RBNZ) stance have driven aggressive market pricing for policy tightening and supported the New Zealand Dollar (NZD). Foley notes near-term downside risks for NZD/USD from safe-haven Dollar demand and softer RBNZ expectations, but still anticipates a moderate NZD/USD recovery later this year as further Federal Reserve (Fed) rate cuts loom.

Hawkish RBNZ versus Fed cut risks

"For now, however, the stickiness of domestically driven inflation clearly has the market worried. New Zealand headline Q1 CPI inflation registered a stronger than expected 3.1% y/y, in line with the previous release."

"On the back of this week’s release of stronger than expected Q1 New Zealand CPI inflation data and the hawkish tone of the RBNZ, the market is priced for over 100 bps of rate hikes on a 1-year view. This is far more aggressive than Rabobank’s forecasts."

"Although the RBNZ has not announced any policy change in recent months, there has been a noticeable tightening of monetary conditions stemming from the move higher in market rates and the stronger performance of the NZD. Since the market has already done this heavy lifting, it may eventually mean that the RBNZ can afford to raise rates a little less than some market hawks currently expect."

"An escalation in the Iran war would likely lead to another bout of safe haven USD buying and a dip in NZD/USD near-term, while a moderation in RBNZ rate hike expectations could weigh on the outlook for NZD/USD on a 1-to-3-month view. That said, we expect the currency pair to edge moderately higher later in the year on risk of further Fed rate cuts."

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

Nomura analysts note that April Euro area PMIs point to stagflation risks as activity softens while price indices jump to highs last seen in 2022/23. The Euro area composite PMI fell below 50, driven by weaker services, while manufacturing showed resilience, with firms apparently advancing purchases as they brace for Iran war-related supply and energy shocks.

Stagflation fears as prices accelerate

"European PMIs for April highlight stagflation risks, with price indices rising across the board to levels not seen since 2022/23."

"Euro area PMI output indices generally revealed weakening activity; however, the manufacturing industry was surprisingly resilient."

"Most concerning in the April data were large moves higher in price PMIs across Europe, related to higher energy prices from the Iran war."

"There was a 3.2pt rise in the euro area composite PMI output price index to 57.0 (its highest since early 2023) and a 3.1pt increase in the composite PMI input price index to 68.4, with larger rises in the manufacturing PMI price indices than the services PMI price indices."

"The moves higher in output price indices are larger than occurred in March, suggesting businesses are passing higher costs on to customers more."

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

S&P Global released on Thursday the flash estimate of the United States (US) S&P Global Composite Purchasing Managers Index (PMI), which expanded in April. The index printed at 52, better than the final March reading of 50.3.

“US business activity growth recovered slightly in April, having slowed to near-stagnation in March following the outbreak of war in the Middle East. However, the overall pace of expansion remained subdued, most notably in the services economy where demand faltered,” according to the official report.

Manufacturing output in the same month also improved, rising to 54 from the previous 52.3 and beating expectations of 52.5. Finally, the Services PMI surged to 51.3 after printing at 49.8 in March and surpassing the market’s forecast of 50.

(This section below was published at 11:41 GMT as a preview of the flash US PMI data for April)

US flash PMI Overview

The preliminary United States (US) S&P Global Purchasing Managers’ Index (PMI) data for April is due for release today at 13:45 GMT.

According to the preliminary estimates, the US Manufacturing PMI expands at a faster pace to 52.5 from the previous reading of 52.3. The Services PMI is expected to have returned to 50.0 after declining to 49.8 in March. A figure below 50.0 is considered a contraction in the business activity.

An improvement in both the manufacturing and the services sectors suggests that the overall business output expanded at a faster pace. In March, the US Composite PMI arrived at 50.3.

Investors will pay close attention to the private sector PMI data to get cues about how much the Middle East War has impacted business activity.

How could the US PMI data affect EUR/USD?

EUR/USD trades 0.2% lower at around 1.1680 ahead of the US S&P Global PMI data release. On a daily chart, the pair holds just above the 38.2% Fibonacci retracement at 1.1666 but remains capped by the 20-period Exponential Moving Average (EMA) at 1.1689, which suggests that the near-term trend is uncertain.

The Relative Strength Index (RSI) at 50.2 is neutral, hinting at waning upside momentum with the upside bias remaining intact.

On the topside, immediate resistance is located at the 20-day EMA near 1.1689, followed by the 50.0% retracement at 1.1745 and the 61.8% level at 1.1825, with further hurdles at 1.1938 and 1.2082.

Looking down, initial support emerges at the 38.2% retracement at 1.1666; a break lower would expose the 23.6% level at 1.1567, ahead of a more substantial floor around the Fibonacci anchor at 1.1408.

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