Forex News
- DJIA futures sagged under a punishing bond selloff before ripping back to the session highs after Trump said the US was in the final stages of talks with Iran.
- The peace signal did the heavy lifting across assets at once, knocking Oil and the US Dollar lower and, crucially, pulling Treasury yields down from multi-year highs.
- Those cooling yields matter more than the equity bounce, since a long-end blowout, with the 30-year at its highest since 2007, had been the main thing pressuring stocks.
- Nvidia reports after the close and FOMC minutes drop earlier in the session, so a bid built on one Iran headline still has to survive the night.
The Dow spent Wednesday hostage to two things it cannot control, the bond market and an Iran headline, and by the time of writing, the headline had won. Futures had been grinding lower under the weight of a vicious selloff in long-dated Treasuries, then turned on a dime and ripped back toward the session highs near 49,900 after President Donald Trump told reporters the US was in the final stages of negotiations with Iran. The remark, which crossed around 15:15 GMT, did in a single line what days of range-trading could not, knocking the geopolitical risk premium out of several markets simultaneously. Whether it deserves that much credit is another question entirely.
One headline, four markets
This was a textbook de-escalation trade, and the cross-asset confirmation was clean. Oil rolled over, with West Texas Intermediate (WTI) and Brent both pulling back as the supply-shock premium bled out. The US Dollar softened. Most importantly, Treasury yields cooled hard, with the 10-year shedding around 9 basis points and the 30-year about 7, a meaningful unwind given how stretched the long end had become. Earlier reports that crude was still moving through the Strait of Hormuz, roughly 6 million barrels by one account, had already nudged the peace narrative along, as had chatter that a Pakistani-brokered agreement text could be unveiled within a day. The Trump comment simply lit the fuse.
The bond market is the real story
Strip away the Iran noise and the thing actually driving equities this week has been the long end of the curve. The 30-year yield had climbed to its highest since 2007 and the 10-year was knocking on multi-year highs, both powered by a growing fear that oil-fed inflation is reigniting and that the Federal Reserve (Fed), about to pass to Kevin Warsh, is already behind the curve. That is the channel that matters. When yields scream higher they threaten an economy already squeezed by energy costs, and stocks wear it. So the afternoon relief in equities was really a relief in bonds wearing an equity costume, which is precisely why it is fragile. The inflation problem underneath does not vanish because a politician reached for the words final stages.
Why the skepticism is earned
Markets have been here before, repeatedly. This is the same conflict whose ceasefire was written off as near-worthless only days ago, whose counteroffers have been rejected more than once, and whose imminent-deal headlines have a habit of dissolving by the next session. Buying the de-escalation is rational on the day, and the cross-asset move proves traders took it seriously, but treating one pool-report soundbite as the end of a war that has run since late February is a leap the tape keeps making and the calendar keeps punishing. The honest read is that this is a tradable headline, not a resolution.
What to watch into the close
Nvidia (NVDA) reports after the closing bell, and it is the only catalyst tonight that can override the Iran story. Shares were up around 2% into the print, and strategists frame it as the single most important read on the entire artificial intelligence (AI) trade, with expectations described as relatively muted after the stock's enormous multi-year run. The things to watch are any sign of margin pressure from rising memory prices and how the company is handling sales into China. Minutes from the late-April Federal Open Market Committee (FOMC) meeting land earlier and are worth a read for how seriously officials are treating the energy-inflation problem. On the chart, the 49,250 low is the line that matters, with the 49,350 to 49,400 shelf as the first support above it. Hold those and the peace-hope bid stays alive, reclaim and hold 50K and a strong Nvidia print could extend it, lose 49,250 and the market is telling you it never believed the headline in the first place. The Dow bought the peace. Nvidia decides whether it gets to keep it.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The FOMC Minutes could provide fresh clues on how divided officials were before Kevin Warsh takes over as Fed Chair.
- Investors will scrutinize whether policymakers questioned the Fed’s easing bias in April.
- Persistent inflation pressures and higher Oil prices have shifted market expectations from rate cuts toward possible tightening.
The Minutes of the United States (US) Federal Reserve’s (Fed) April 28-29 monetary policy meeting will be published on Wednesday at 18:00 GMT. The US central bank decided to leave the policy rate unchanged at the 3.50%-3.75% range at that meeting, although the decision revealed an unusually high degree of disagreement within the Committee.
Fed Governor Stephen Miran voted in favor of a 25-basis-point (bps) rate cut, while Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissented against maintaining an easing bias in the policy statement.
Jerome Powell and company opted to hold rates in April
The Federal Open Market Committee (FOMC) kept rates unchanged in April for a third consecutive meeting, but the focus quickly shifted to the internal divide over the future policy direction. While policymakers broadly agreed on keeping rates steady, disagreement emerged over the communication surrounding the next move.
In the post-meeting statement, the Federal Reserve retained language suggesting an easing bias, implying that future policy adjustments could still lean toward rate reductions if conditions warrant. However, several policymakers appeared increasingly uncomfortable with maintaining that message amid rising inflation risks.
Since the April meeting, the macroeconomic backdrop has shifted significantly. Inflation concerns have intensified following stronger-than-expected price data and higher energy costs linked to geopolitical tensions. Consumer Price Index (CPI) inflation accelerated to 3.8% YoY in April, its highest level in three years, while elevated Oil prices continue to fuel fears of broader price pressures.
At the same time, labor market data remains relatively resilient, reducing the urgency for policy easing. April’s Nonfarm Payrolls showed 115K new jobs created in the US, below the stellar 185K reported in March, but well above the 62K expected.
Previewing the release, Bank of America analysts expect the publication to reinforce the Fed’s recent hawkish tone. They noted that policymakers likely focused on persistent inflation risks and upside pressures linked to geopolitical developments, while Wells Fargo analysts expect the Minutes to provide additional details on whether non-voting members also viewed the next policy move as being equally likely to be a hike or a cut.
The publication could also attract additional attention because it represents the final set of Minutes linked to Jerome Powell’s tenure as Fed Chair before Kevin Warsh officially takes over leadership of the central bank.
When will FOMC Minutes be released and how could it affect the US Dollar?
The FOMC will release the Minutes of the April 28-29 policy meeting at 18:00 GMT on Wednesday.
Market expectations on interest rates have changed sharply over recent weeks. Fed funds futures have shifted away from pricing rate cuts and now reflect growing expectations that rates could remain unchanged for an extended period, with some investors even seeing the risk of higher rates later this year.
According to the FdWatch tool, the chances of a Fed 25 bps rate hike by December sit at 40.1%, against only 43.4% for a hold.
This positioning suggests that the US Dollar (USD) could react strongly if the Minutes reveal broader support for removing the easing bias or indicate that more officials discussed conditions that could eventually justify tighter monetary policy.
The Greenback could gather additional strength if policymakers express rising concerns that inflation risks are becoming more persistent, particularly if discussions show that upside risks outweigh concerns about economic growth.
Conversely, the US Dollar could come under pressure if the publication highlights that most policymakers still considered inflation shocks linked to energy prices as temporary and continued to see the next policy move leaning toward easing once price pressures moderate.
Nevertheless, any market reaction could remain limited as investors may prefer to wait for additional inflation and labor market data before reassessing expectations for the June FOMC meeting under Kevin Warsh’s leadership.
The US Dollar Index (DXY) trades at 99.43 at the time of writing. The near-term tone is bullish as price holds above both the 100-period and 200-period Simple Moving Averages (SMAs) on the 4-hour chart, reinforcing a constructive structure after breaking and moving above the prior downward trend-line resistance. Momentum is stretched, with the Relative Strength Index (RSI) hovering in overbought territory near 72, which suggests upside pressure persists but also leaves the index vulnerable to a corrective pause if buyers lose conviction just below nearby Fibonacci resistance.
On the topside, immediate resistance emerges at the 61.8% Fibonacci retracement, drawn from the March 31 high to the April 17 low, at 99.49, with a break there exposing the 78.6% Fibonacci retracement at the 100.00 round level and the recent swing high near 100.64 as a more significant barrier. On the downside, initial support aligns with the 50% retracement at 99.13, ahead of a broader demand band clustered around the 38.2% Fibonacci retracement at 98.78, the 200-period SMA near 98.59 and the 100-period SMA around 98.50, while deeper pullbacks would look to the 23.6% Fibonacci retracement at 98.34 and the prior swing low at 97.63 to limit losses.
(The technical analysis of this story was written with the help of an AI tool.)
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.
A Bloomberg article revealed that US crude stockpiles plunged, as Oil exports began to empty domestic supply inventories.
The Middle East conflict increased demand for Oil produced in the US, triggering a decline of 17.8 million barrels, its lowest level in nearly a year, according to the US Energy Information Administration.
Worth noting that US Oil exports prevented a spike in crude prices. Recent data revealed that the US turned to a net exporter for the first time on record. Overseas crude shipments have averaged 5.3 million barrels per day this month and, if that pace continues, would set a new record.
The closure of the Strait of Hormuz pushed buyers to seek alternative energy sources. The US has also released crude from its Strategic Petroleum Reserve to help mitigate the supply shock.
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.
- Silver advances on Wednesday, rebounding after the previous day's decline.
- Lower US Treasury yields support precious metals despite expectations of restrictive monetary policy.
- Geopolitical tensions linked to the US-Iran conflict maintain inflation risks and support safe-haven demand.
Silver (XAG/USD) rises on Wednesday and trades around $76.00 at the time of writing, up 3.11% on the day, as investors return to precious metals following a pullback in US Treasury yields. The white metal rebounds after a sharp decline in the previous day, benefiting from a pause in the global Bond market sell-off.
The benchmark US 10-year Treasury yield is easing after recently reaching its highest levels in several months, reducing some of the pressure on non-yielding assets such as Silver. Lower yields typically reduce the opportunity cost of holding precious metals.
However, the macroeconomic backdrop continues to limit the market’s upside potential. Higher energy prices linked to persistent tensions between the United States (US) and Iran are fueling concerns about renewed inflationary pressures, reinforcing expectations that the Federal Reserve (Fed) may keep monetary policy restrictive for a longer period.
Markets continue to adjust their expectations for US interest rates following cautious comments from several policymakers. Investors are now looking ahead to the release of the Federal Open Market Committee (FOMC) meeting minutes later in the day for further clues on how policymakers assess the impact of rising energy prices on the inflation outlook.
Meanwhile, geopolitical developments remain in focus. Indirect negotiations between Washington and Tehran remain stalled, while statements from both sides continue to fuel concerns about a potential regional escalation. This environment maintains a persistent demand for safe-haven assets, providing additional support for 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.
- Trump’s Iran optimism weighs on the US Dollar and Oil prices.
- UK inflation cools, easing immediate pressure on the Bank of England.
- Fed minutes loom as traders price possible December hike.
The GBP/USD pair posts gains of over 0.30% during the North American session on Wednesday as the US Dollar (USD) turns negative for the day amid optimism about US-Iran talks that could end the conflict, which has lasted nearly 11 weeks. At the time of writing, the pair trades at 1.3449, after bouncing off daily lows of 1.3375.
GBP/USD climbs as softer UK inflation eases BoE pressure
Market mood turned positive on US President Trump’s comments that the US is in the final stages of talks with Iran, which weighed on the US Dollar and Oil prices. Nevertheless, mixed headlines around the conflict are looming as Iran’s Foreign Minister spokesman said that neither the US nor Israel should be allowed to pass through Hormuz, via Al Jazeera.
The US Dollar Index (DXY), which tracks the buck’s performance against six major currencies, is down 0.21% at 99.09. West Texas Intermediate (WTI) Oil is also posting losses, plunging more than 4%, with the barrel below the $100.00 milestone.
Ahead, traders will eye the Federal Reserve’s (Fed) last meeting minutes, searching for clues regarding the future path of rates. Still, last week’s inflation prints ignited a repricing of the Fed’s monetary policy, with traders discounting a 50% chance of a rate hike by December, according to Prime Terminal data.
Across the pond, British inflation dipped from 3.3% to 2.8% YoY in April, below estimates of 3%, a relief for the Bank of England (BoE), which has been pressured amid a looming stagflationary scenario.
Several BoE officials crossed the wires, led by Governor Andrew Bailey, who commented that financial market tightening gives the central bank time to assess whether to raise rates as “we have a softening picture for growth and the labour market.”
MPC member Catherine Mann said she is worried about high inflation late in 2026, while Swati Dhingra said there is sufficient restrictiveness to avoid tightening policy. Echoing some of Dhingra’s comments was Sarah Breeden, who said that she had seen tightening in financial conditions.
Ahead this week, the UK docket will feature S&P Global Flash PMIs, which will update business sentiment towards present and future economic conditions.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3450. The pair holds a slight bullish bias as spot hovers around the confluence of the reclaimed upward support trend line from 1.3159 and the downward resistance line off 1.3864, turning this area into a pivotal zone. Price trades above the simple moving average composite around 1.3430, suggesting underlying support, while the Relative Strength Index (14) near 48 hints at neutral-to-firming momentum rather than overstretched conditions.
On the downside, initial support is seen at the trend-line pivot area around 1.3450, with the simple moving average cluster near 1.3430 offering additional backing if a pullback develops. As long as the pair defends this band, buyers could retain control, keeping the focus on a potential continuation of the nascent rebound, while a sustained break back below the moving average support would undermine the constructive short-term structure.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.35% | -0.17% | 0.03% | -0.65% | -0.64% | -0.20% | |
| EUR | 0.14% | -0.22% | -0.04% | 0.16% | -0.51% | -0.49% | -0.07% | |
| GBP | 0.35% | 0.22% | 0.17% | 0.39% | -0.31% | -0.27% | 0.15% | |
| JPY | 0.17% | 0.04% | -0.17% | 0.21% | -0.47% | -0.45% | -0.02% | |
| CAD | -0.03% | -0.16% | -0.39% | -0.21% | -0.68% | -0.62% | -0.23% | |
| AUD | 0.65% | 0.51% | 0.31% | 0.47% | 0.68% | 0.03% | 0.43% | |
| NZD | 0.64% | 0.49% | 0.27% | 0.45% | 0.62% | -0.03% | 0.42% | |
| CHF | 0.20% | 0.07% | -0.15% | 0.02% | 0.23% | -0.43% | -0.42% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- EUR/USD rebounds modestly as softer US Treasury yields limit further upside in the US Dollar.
- Eurozone inflation remains above the ECB’s 2% target, reinforcing expectations of a June rate hike.
- Technically, EUR/USD remains under bearish pressure below the 50-day and 100-day SMAs, with sellers still controlling the near-term trend.
EUR/USD stages a modest rebound on Wednesday as a pullback in US Treasury yields limits further upside in the US Dollar (USD), while the Euro (EUR) draws support from the latest Eurozone inflation data, which strengthened expectations that the European Central Bank (ECB) could raise interest rates sooner than previously anticipated.
At the time of writing, the pair is trading around 1.1632 after hitting an intraday low near 1.1582, its weakest level since April 7. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, consolidates around 99.36 near six-week highs.
Data released by Eurostat showed inflation remained above the ECB's 2% target for a second consecutive month. The Harmonized Index of Consumer Prices (HICP) rose to 3% YoY in April from 2.6% in March, driven largely by higher energy prices, while Core HICP eased slightly to 2.2% YoY from 2.3% previously.
Reuters reported on Wednesday, citing sources, that the case for an ECB rate hike in June is now “nearly sealed” as the inflation outlook moves toward the “adverse scenario.”
According to a BHH Market View report, markets are currently pricing in an 86% probability of a 25-basis-point ECB rate hike to 2.25% at the June 11 meeting. However, the report noted that rate hikes in a low-growth, high-inflation environment are not outright bullish for the Euro, though they could help cushion the downside.
At the same time, hawkish Federal Reserve (Fed) expectations and ongoing uncertainty surrounding the US-Iran negotiations continue to keep the US Dollar supported, limiting stronger upside attempts in EUR/USD. From a technical perspective, bearish momentum also suggests sellers remain in control in the near term.
Technical Analysis:
On the daily chart, EUR/USD keeps a bearish bias as it holds below both the 50-day Simple Moving Average (SMA) and the 100-day SMA. The pair is drifting just above a nearby horizontal floor at 1.1600, while the Relative Strength Index (RSI) is around 43 and a negative Moving Average Convergence Divergence (MACD) line with a slightly negative histogram hints that downside momentum remains in place, albeit without extreme conditions.
On the topside, immediate resistance is seen at the 50-day SMA near 1.1649, followed by the 100-day SMA around 1.1701 and the horizontal barrier at 1.1800, which together form a broader supply band. On the downside, initial support comes at 1.1600, with a break exposing the next horizontal level near 1.1500, where buyers would likely attempt to slow the decline.
(The technical analysis of this story was written with the help of an AI tool.)
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- AUD/USD surges as investors focus on Australia’s upcoming labor market report.
- Stronger US ADP employment data boosts the US Dollar.
- Australia’s Employment Change is expected to rise by 17.5K, while the Unemployment Rate is forecast to remain at 4.3%.
AUD/USD advances to the vicinity of the 0.7150 region on Wednesday as the United States (US) Dollar (USD) continues to lose momentum despite upbeat US labour market data on Tuesday. Meanwhile, traders now turn their attention to the upcoming Australian employment report.
Data-wise in the US, the latest ADP employment report showed that US private employers added 42,250 jobs on a four-week average, reinforcing expectations that the Federal Reserve (Fed) may maintain a cautious stance on interest rate cuts. The stronger labour market data boosted US Treasury yields and initially supported the Greenback across the board.
Investors are now closely watching Australia’s April Employment Change report, scheduled for release on Thursday. Market expectations point to an increase of around 17.5K jobs, while the Unemployment Rate is expected to remain steady at 4.3%. A stronger-than-expected labor market reading could reinforce expectations that the RBA may keep rates elevated for longer.
Short-term technical analysis:
On the 4-hour chart, AUD/USD trades at 0.7167. The pair holds a mildly constructive stance, trading above the 20-period Simple Moving Average (SMA) at 0.7136 yet capped by the 100-period SMA at 0.7194, leaving the broader tone neutral while intraday pressure skews modestly higher. The Relative Strength Index (RSI) has recovered to around 55, hinting that buyers have regained some control after an earlier oversold phase but still face nearby overhead supply.
On the topside, immediate resistance aligns at the nearby horizontal barrier around 0.7174, with the 100-period SMA at 0.7194 forming the next hurdle if bulls extend the latest bounce. On the downside, initial support is seen at the 20-period SMA at 0.7136, closely backed by horizontal levels around 0.7135 and 0.7128, while a break below 0.7115 would expose a deeper corrective phase within the broader range.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on May 20 at 16:30 GMT to say that the AUD/USD is up following US Dollar weakness)
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