Forex News

• EUR/CAD remains firm as the Euro holds steady despite weaker German industrial activity data for March.
• Germany’s Industrial Output fell 0.7% in March, missing forecasts and extending February’s revised 0.5% decline.
• The commodity-linked Canadian Dollar may weaken amid lower oil prices.

EUR/CAD extends its gains for the third successive day, trading around 1.6040 during the European hours on Friday. The currency cross remains stronger as the Euro (EUR) remains firm against its major peers despite the decline in Germany’s industrial sector activity in March.

Data released by Destatis on Friday showed that Germany’s seasonally adjusted Industrial Output declined 0.7% month-over-month (MoM) in March, missing expectations for a 0.5% increase and following February’s revised 0.5% drop. On an annual basis, German Industrial Production fell 2.8% YoY in March after posting a revised 0.2% decrease in February.

The Euro (EUR) stays supported amid hawkish commentary from European Central Bank (ECB) officials. ECB Executive Board member Isabel Schnabel said on Thursday that the central bank could raise interest rates as early as next month, warning that households and businesses are beginning to respond in a troubling manner to sharply rising global energy prices. Meanwhile, ECB board member Piero Cipollone stated on Wednesday that the likelihood of a rate hike has increased due to persistent inflation pressures, despite negotiated wage data indicating that pay demands have not yet accelerated.

The EUR/CAD cross may further appreciate as the commodity-linked Canadian Dollar (CAD) may decline amid lower oil prices. It is important to note that Canada is the largest crude oil exporter to the United States (US).

West Texas Intermediate (WTI) crude prices retreat after posting modest gains in the previous session, trading near $92.60 per barrel at the time of writing. Crude oil prices moved lower as easing tensions between the US and Iran reduced concerns over potential supply disruptions.

Oil prices had earlier advanced after renewed tensions flared between the United States (US) and Iran. The US military said it conducted retaliatory strikes on Iranian targets on Thursday, focusing on sites allegedly linked to attacks against US forces.

ING’s Francesco Pesole highlights that the Euro has been resilient on crosses but slipped versus the Dollar, with softer equities and commodity FX underperformance shaping flows. He stresses that a peace‑Hormuz deal could lift EUR/USD above 1.1800, while failed negotiations or renewed tensions risk sending the pair back below 1.1700, leaving a highly binary outlook tied to Gulf developments.

Tariff risks and Gulf scenarios

"The euro held up relatively well in the crosses yesterday, despite losing some ground against the USD. That is probably due to the impact being more visible in softer equities than significantly higher oil prices, which meant underperformance of less liquid, commodity-exposed currencies. Only NOK narrowly outperformed the dollar yesterday, although that was entirely due to a Norges Bank hike."

"We still think a peace-Hormuz deal could prompt EUR/USD to rally above 1.1800. But risks are very binary at this stage. Even without a military re-escalation, negotiations falling through again should take EUR/USD back below 1.170."

"The euro didn’t seem to suffer from Trump’s 4 July ultimatum to the EU to ratify its trade deal, threatening to hike tariffs. That’s understandable considering geopolitical volatility makes it impractical to price in a risk two months ahead. To us, however, it’s a reminder that if the conflict heads to a resolution, trade may well be next on Trump’s agenda, with the USMCA and EU on top of the list."

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

• The Indian Rupee corrects after a three-day winning spree against the US Dollar.
• A sharp recovery in oil prices due to renewed US-Iran tensions weighs on the Indian Rupee.
• Investors await the US NFP data for fresh cues on the Fed’s monetary policy outlook.

The Indian Rupee (INR) fails to extend its three-day winning streak against the US Dollar (USD) and corrects sharply on Friday. The USD/INR pair bounces back to near 94.56 from the two-week low of 94.03 posted on Thursday.

The Indian currency faces backlash from a sharp recovery in oil prices, following renewed fears over the sustainability of the temporary ceasefire between the United States (US) and Iran after the exchange of attacks near the Strait of Hormuz.

Iran accuses US of violating ceasefire

At the time of writing, the WTI Oil price is down 1.6% to near $93, but holds its Thursday’s recovery move from $87.50, which came after Iran accused the US of violating ceasefire terms. Tehran condemned Washington for targeting an Iranian oil tanker and another ship entering the Hormuz. “The aggressive, terrorist, and pirate US military has violated the ceasefire,” a military spokesperson said, The Guardian reported.

In response, US President Donald Trump stated that the attack was a retaliatory measure from Washington’s navy destroyers and that the ceasefire is still intact. “It's just a love tap," Trump told ABC News when asked about the strikes, adding, “The ceasefire is going. It's in effect."

A sharp recovery in oil prices has renewed concerns for currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs.

FIIs keep paring their stake in Indian stock market

There seems to be no relief for Indian stock markets from selling pressure by Foreign Institutional Investors (FIIs) despite a broader risk rally. FIIs are dumping their stake in Indian equity markets as higher oil prices have raised concerns over India Inc.’s earnings projections.

So far in March, FIIs have remained net sellers in three of four trading days and have pared their stake worth Rs. 6,961.75 crore.

Investors await US NFP data

The impact of a sharp recovery in the US Dollar, which came in the North American session on Thursday, has also offered support to USD/INR. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 98.10. The DXY recovered due to the revival of concerns over the longevity of the US-Iran ceasefire.

Going forward, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for April, which will be released at 12:30 GMT. Investors will closely monitor the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

According to the CME FedWatch tool, there is a 74% chance that the Fed will hold interest rates at their current levels by the year-end.

Technical Analysis: USD/INR attracts bids near 20-day EMA

USD/INR trades higher at around 94.50 at the press time. The pair maintains a bullish near-term bias as it holds above the 20-day exponential moving average (EMA) at 94.2031. The pair is consolidating near recent highs, and the Relative Strength Index (RSI) around 56 stays in positive territory without reaching overbought conditions, suggesting upside pressure remains but with moderated momentum.

On the downside, initial support emerges at the 20-day EMA near 94.20, where a break would expose a deeper correction towards 93.00. Looking up, the pair aims to revisit its all-time high of 95.53 posted on May 5.

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

Deutsche Bank analysts point out that stronger US data and hawkish Federal Reserve commentary have pushed Treasury yields higher and supported the Dollar Index. Inflation expectations and jobless claims surprised to the upside, while Fed officials signalled rates could stay on hold for quite some time and even rise if the Strait of Hormuz disruption persists.

Rates on hold narrative underpins Dollar

"And on top of the geopolitical headlines, we also had a hawkish batch of US data, with numbers on the labour market and inflation both surprising on the upside. For instance, the NY Fed’s latest survey showed 1yr inflation expectations up to 3.64% in April (vs. 3.5% expected), which is the highest since September 2023. So that raised expectations about a more hawkish response from the Fed. And that came on top of strong labour market data, with the weekly initial jobless claims at 200k in the week ending May 2 (vs. 205k expected), which took the 4-week moving average down to a two-year low of 203.25k."

"That hawkish newsflow continued with various Fed speakers. In particular, Boston Fed President Collins (a non-voter this year) said she agreed with the hawkish dissenters who didn’t want to include the easing bias in the statement. So that added to the sense there was wider scepticism around further rate cuts."

"We also heard from two of the hawkish dissenters. Cleveland Fed President Hammack said her own outlook was that “interest rates will be on hold for quite some time.” And Minneapolis President Kashkari said that “if the Strait of Hormuz is closed for an extended period of time, it may well be that the next move might need to be up in interest rates.”"

"So investors priced in a more hawkish outlook, with markets pricing a 38% chance of a rate hike by March 2027 at the close, up from 21% the previous day. And in turn, Treasury yields rose across the curve, with the 2yr yield (+4.6bps) up to 3.91%, whilst the 10yr yield (+3.8bps) rose to 4.39%."

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

• Gold regains positive traction and moves back closer to an over two-week high set on Thursday.
• Hopes for a US-Iran peace deal counter renewed hostilities and undermine the safe-haven USD.
• Diminishing odds for a Fed rate hike also support the bullion as traders await the US NFP report.

Gold (XAU/USD) maintains its bid tone through the early European session on Friday and remains close to an over two-week high, touched the previous day. Despite renewed hostilities in the Strait of Hormuz, investors seem hopeful over a potential US-Iran peace deal. This triggers a fresh leg down in Crude Oil prices, easing inflationary concerns and tempering bets for a more hawkish US Federal Reserve (Fed). The outlook, in turn, keeps a lid on any further US Dollar (USD) appreciation and turns out to be a key factor acting as a tailwind for the bullion.

The US Central Command said Thursday that US forces targeted Iranian military facilities responsible for launching attacks against warships transiting through the strategic waterway. Earlier, Iran accused the US of violating the ceasefire by striking multiple targets in and around the strait. However, US President Donald Trump stated that a ceasefire with Iran is still in place and added that it would be obvious if the ceasefire was over. Moreover, the US military stated that US forces do not seek escalation, undermining the USD's reserve currency status and supporting the Gold price.

Meanwhile, the latest development fails to assist Crude Oil prices to capitalize on Thursday's goodish intraday move up, though the downside seems cushioned amid geopolitical uncertainties. In fact, Trump warned that US forces will hit a lot harder and more violently if Iran doesn’t sign a deal soon. Moreover, continued economic growth and inflation fears have forced investors to push back their expectations for rate cuts by the US Fed to late 2027 or early 2028. This, in turn, should limit deeper USD losses and cap the upside for the Gold as traders keenly await the US monthly employment details.

The popularly known US Nonfarm Payrolls (NFP) report is due for release later during the early North American session and is expected to show that the economy added 62K new jobs in April. This would mark a significant slowdown from the previous month's reading of 178K. Meanwhile, the Unemployment Rate is forecast to hold steady at 4.3%, while Average Hourly Earnings might have risen by 3.8% YoY in April. Nevertheless, the data will further play a role in influencing expectations about the Fed's policy stance, which, in turn, will drive the USD and provide a fresh impetus to the Gold price.

XAU/USD 4-hour chart

Gold bulls have the upper hand while above 23.6% Fibo. amid constructive setup

The XAU/USD pair is holding a clear bullish bias as it sits above the 200-period Simple Moving Average (SMA) and above the 61.8% Fibonacci retracement level of the latest upswing. Furthermore, momentum indicators remain constructive. The Relative Strength Index (RSI) at 64.24 stays in positive territory without yet being deeply overbought, while the Moving Average Convergence Divergence (MACD) (12, 26, 9) prints a positive reading near 6.13. This hints that upside momentum is still in play, albeit less aggressive than during the prior leg higher.

On the downside, the 23.6% retracement at $4,703.51 has turned into immediate support, followed by the 200-period SMA at $4,665.16, with deeper retracement cushions emerging at $4,587.31 (38.2%) and $4,493.39 (50.0%) if a broader correction unfolds. On the topside, the next significant resistance appears at the swing-anchor near $4,891.35, and as long as the Gold price holds above the $4,700 area, pullbacks are likely to be viewed as corrective within the prevailing uptrend.

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

• USD/JPY fails to find acceptance above 157.00 and heads for a flat weekly performance.
• Japanese authorities' intervention warnings are keeping Yen sellers contained.
• US Nonfarm Payrolls data is expected to show that job creation slowed down in April.

The US Dollar (USD) trades moderately lower against the Japanese Yen (JPY) on Friday, on track to close the week practically flat, as Japanese authorities’ warnings about further interventions keep Yen sellers on their toes. The pair has stalled below 157.00 after bouncing from more than two-month lows on Wednesday, following another round of suspected action by Tokyo.

Japanese top currency diplomat Atsushi Mimura said on Thursday that Japan faces no constraints on how often it can intervene on currency markets to support the Yen, and that he is in daily contact with US authorities, committed to stemming speculative JPY moves.

The USD/JPY dropped more than 400 pips on April 30, in the first MOF intervention after the pair crossed the 160.00 level, considered the limit of tolerable Yen weakness for Japanese authorities. A Reuters report affirmed that Japan might have spent more than 5 trillion Yen (USD 32 billion) to boost the local currency, and recent price action suggests that smaller interventions have followed this week.

The Yen faces fundamental hurdles

These actions are keeping Yen sellers at bay for now, although the fundamental backdrop casts doubt about the sustainability of that policy. The comparatively low interest rates set by the Bank of Japan (BoJ), combined with risks to Japan’s economy from higher Oil prices amid the country’s delicate fiscal stability, put the Yen in a vulnerable position.

The US Dollar, on the other hand, is drawing some support from safe-haven trades on Friday as tensions in the Middle East escalate, dampening previous hopes of a swift end to the US-Iran war.

Apart from that, investors will keep an eye on the US Nonfarm Payrolls report, due 12:30 GMT, which is expected to show the US labor market added 62K jobs in April, a significant slowdown in employment creation compared with March's 178K gains. The precedent of a stronger-than-expected ADP Employment Change, however, maintains hopes of a positive surprise alive.

• Dow Jones futures climb as easing tensions in the Middle East improve overall market sentiment.
• CENTCOM said US forces launched self-defense strikes on Iran but do not seek further escalation.
• Traders await earnings from Ubiquiti, Wendy’s, and Brookfield, while focusing on upcoming US employment data.

Dow Jones futures gain 0.18%, trading near 49,790 during the early European hours on Friday, ahead of the United States (US) regular opening. Meanwhile, the S&P 500 rise 0.30% to near 7,390, and the Nasdaq 100 futures advance 0.48% above 28,820.

US stock futures rise amid improving market sentiment driven by the de-escalation of renewed tensions in the Middle East. The US military’s Central Command (CENTCOM) stated that United States (US) forces intercepted on Thursday what it described as unprovoked Iranian attacks and carried out self-defense strikes while US Navy guided-missile destroyers were transiting the Strait of Hormuz toward the Gulf of Oman. CENTCOM added that it does not seek further escalation but remains prepared to defend US personnel and assets.

US President Donald Trump also said that the ceasefire between the US and Iran remains in effect. A senior US official told Fox News that the recent attacks should not be viewed as a restart of the war or as signaling the collapse of the existing ceasefire arrangement.

During regular US trading on Thursday, the Dow Jones declined 0.63%, while the S&P 500 and Nasdaq 100 lost 0.38% and 0.13%, respectively. McDonald’s posted solid first-quarter earnings, surpassing expectations with revenue of $6.52 billion and earnings per share (EPS) of $2.83. Datadog surged 30.61% after reporting first-quarter earnings that more than doubled profits and lifting its full-year outlook. Meanwhile, MercadoLibre posted strong first-quarter 2026 revenue growth of 49% YoY to $8.85 billion, though its adjusted EPS of $8.23 fell short of market forecasts, sending the stock down 7%.

Investors are also awaiting earnings releases from companies including Ubiquiti Networks, Wendy’s, and Brookfield Asset Management. In addition, traders remain focused on the upcoming April US employment report, which is expected to show Nonfarm Payrolls rose by 62K jobs in April, compared with 178K in March, while the Unemployment Rate is projected to remain unchanged at 4.3%.

• GBP/USD rises to near 1.3590 as the risk-on rally revives.
• US President Trump confirms that the ceasefire with Iran is intact.
• The US NFP is estimated to come in at 62K, lower than the previous reading of 178K.

The GBP/USD pair trades 0.25% higher to near 1.3590 during the European trading session on Friday. The Cable reflects strength as the Pound Sterling (GBP) outperforms its major currency peers, except antipodeans, amid a revived risk-on rally.

As of writing, S&P 500 futures are 0.3% higher to near 7,360, exhibiting firm demand for riskier assets. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.16% lower to near 98.10. The DXY falls back after a recovery move on Thursday.

The appeal of risk-sensitive assets has revived as United States (US) President Donald Trump has confirmed that the ceasefire with Iran is intact despite the exchange of attacks near the Strait of Hormuz.

Meanwhile, investors await the US Nonfarm Payrolls (NFP) data for April, which will be published at 12:30 GMT. Investors will closely monitor the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook.

The labor market report is expected to show that the economy created 62K fresh jobs, significantly lower than 178K in March.

GBP/USD technical analysis

GBP/USD trades higher at around 1.3590 at the press time. The pair holds a constructive bullish tone as it remains above the 20-day exponential moving average (EMA) at 1.3519 and the 50.0% Fibonacci retracement at 1.3512. The pair is edging into a key retracement band, with the 61.8% Fibonacci level at 1.3595 acting as immediate overhead resistance, while a mid-range Relative Strength Index (RSI) near 58 hints at firm but not overstretched upside momentum.

On the topside, a clear break above the 61.8% retracement at 1.3595 would open the door toward the 78.6% Fibonacci barrier at 1.3713, ahead of the recent cycle high at 1.3864. On the downside, initial support is seen at the 20-day EMA at 1.3519, reinforced by the 50.0% retracement at 1.3512; a deeper pullback could then expose the 38.2% level at 1.3428, and the 23.6% retracement at 1.3325 before the broader bullish structure is challenged closer to the swing low at 1.3159.

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

• EUR/JPY strengthens near 184.15 in Friday’s early European session. 
• Risk-on mood and expectations of further ECB interest rate hikes support the Euro. 
• Japanese authorities reportedly intervened in the FX market in early May to support the Yen. 

The EUR/JPY cross gains traction to around 184.15 during the early European trading hours on Friday. The Euro (EUR) edges higher against the Japanese Yen (JPY) amid improved risk sentiment and hawkish signals from the European Central Bank (ECB). Traders await the ECB’s Christine Lagarde speech later on Friday for fresh impetus. 

ECB Executive Board member Isabel Schnabel said on Thursday that the bank could raise the interest rates as soon as next month, adding that companies and households are now reacting in a concerning way to surging global energy prices. Additionally, ECB board member Piero Cipollone noted on Wednesday that the chance of a central bank rate hike has risen as ‌inflation pressures are high, even as negotiated wage data showed pay demands had yet to increase.

Financial markets are now pricing in a 92% chance of a 25 basis point (bps) hike at the June meeting, with a total of three hikes anticipated by the end of 2026, according to Reuters. 

Nonetheless, the potential of further intervention from Japanese officials might underpin the JPY and create a headwind for the cross. Reuters reported on Friday, citing a source familiar with the matter, that Japan’s officials intervened in the foreign exchange market during holidays in early May after having conducted Japanese Yen-buying operations on April 30. The source said: “The intervention since the start of May was timed to coincide with the holiday period, when market liquidity was thin.”