Forex News

Rabobank’s Senior FX Strategist Jane Foley highlights that UK political uncertainty around Labour leadership and upcoming May elections could distract GBP markets this spring. She links GBP’s earlier outperformance to a sharp repricing of Bank of England (BoE) expectations, now partly unwound. With UK inflation risks tied to Middle East energy disruptions, they see EUR/GBP supported and expect gradual upside over a six‑month horizon.

Rabobank sees EUR/GBP grinding higher

"The political clouds in the UK are set to serve as a distraction for the GBP markets this spring especially if the Labour party fares poorly in the May elections as expected."

"While GBP is the third best performing G10 currency measured since the start of the war in the Middle East, we would expect GBP bulls to become nervous in the weeks ahead."

"Currently the market is priced for just over one rate hike on a six-month view."

"The volatility in UK market rates in recent weeks hints of concerns about the anchoring of UK inflation expectations relative to some other G10 markets."

"The 200 day and 100-day sma will likely provide near term support close to the EUR/GBP 0.87 level. We would favour buying dips on moves back towards 0.86 and look for the currency pair to grind towards the 0.88 area on a 6-month view."

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

Danske Research Team notes that Canadian headline inflation rose to 2.4% year-on-year in March, slightly below expectations, while core measures stayed stable. Governor Macklem is not worried about a temporary rise in inflation expectations, and the bank expects next week’s Bank of Canada (BoC) meeting to deliver a rate hold, consistent with current market pricing.

Slight inflation rise unlikely to shift policy

"In Canada, March headline inflation rose to 2.4% y/y (prior: 1.8%), slightly below expectations."

"The Bank of Canada's closely watched core measures remained stable, and Governor Macklem stated on Friday that the central bank is not concerned about a temporary rise in inflation expectations."

"The print is likely to be neutral for next week's Bank of Canada meeting, where we expect a rate hold in line with market pricing."

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

BNY’s John Velis highlights uncertainty around Federal Reserve (Fed) leadership as Kevin Warsh faces Senate confirmation hearings. Political conditions could delay his appointment, while Jerome Powell has pledged to stay as Chair pro tempore until an investigation concludes. Prediction markets assign low odds to a swift transition, leaving policy continuity but timing of any change in Fed leadership unclear.

Politics complicate Fed transition path

"On Tuesday, the Senate Banking Committee holds confirmation hearings for Fed Chair nominee Kevin Warsh amid uncertainty over the timing of the Fed’s leadership transition."

"The president, for his part, has recently indicated he wants to pursue the investigation, setting up an indefinite delay for the confirmation proceedings if Tillis holds to his position."

"In his last FOMC press conference, Chair Jerome Powell (whose term leading the FOMC formally expires on May 15) said he would stay on as Chair pro tempore if no successor is named by then."

"Prediction markets are skeptical that everything will be wrapped up by May 15."

"The hearing will be substantive regardless of the outcome on confirmation and timing."

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

• Gold trades with a mild bearish bias as a firmer US Dollar caps upside.
• US-Iran talks remain in doubt ahead of the ceasefire deadline, keeping markets cautious.
• On the 4-hour chart, XAU/USD remains range-bound below the Bollinger midline near $4,805.

Gold (XAU/USD) trades with a mild negative bias on Tuesday but lacks strong directional momentum, as investors hold back from aggressive positioning amid uncertainty over whether US-Iran peace talks will resume, following renewed tensions in the Strait of Hormuz over the weekend.

At the time of writing, XAU/USD is trading around $4,794, down nearly 0.53% on the day, pressured by a modest uptick in the US Dollar (USD).

US-Iran talks in doubt as ceasefire deadline approaches

Diplomatic efforts to end the US-Iran war remain uncertain, with mixed signals surrounding a potential second round of peace talks expected in Pakistan. US Vice President JD Vance is expected to lead a delegation to Islamabad for negotiations.

Multiple media reports suggested that Iran is sending a delegation for the talks. However, Iran’s state broadcaster pushed back on these claims, stating in a Telegram post that “so far, no delegation from Iran has travelled to Islamabad, neither a primary nor a secondary, neither initial nor follow-up.”

With the current two-week ceasefire set to expire on Wednesday, markets remain cautious. US President Donald Trump said on Monday it is “highly unlikely” that he will extend the truce, adding, “We will not open the Strait of Hormuz until a deal is signed.” Trump has also warned that fighting could resume if no agreement is reached.

On the Iranian side, Mohammad Bagher Ghalibaf said Tehran has been “preparing to show new cards on the battlefield” and would “not accept negotiations under the shadow of threats.”

Higher Oil prices keep pressure on Gold

Meanwhile, ongoing disruptions in the Strait of Hormuz, which remains under a dual blockade by US naval forces and Iran, continue to support elevated Oil prices. This is keeping inflation risks in focus and reinforcing expectations that major central banks, including the Federal Reserve (Fed), may keep interest rates higher for longer.

While Gold is often seen as a hedge against inflation, higher borrowing costs tend to weigh on its appeal by increasing the opportunity cost of holding the non-yielding metal. As a result, the precious metal remains under pressure in the near term, even as geopolitical risks provide some support and keep prices largely range-bound.

Looking ahead, traders will closely monitor developments around US-Iran talks and the ceasefire deadline, as well as movements in the US Dollar and Oil prices for fresh directional cues.

Focus will also be on the upcoming US Retail Sales data and confirmation hearing of Kevin Warsh, Donald Trump’s nominee for Federal Reserve Chair, scheduled for 14:00 GMT before the Senate Banking Committee.

Technical analysis: XAU/USD stuck in range as momentum weakens

From a technical perspective, the near-term outlook remains neutral on the 4-hour chart, with price hovering just below the 20-period Bollinger Band middle line near $4,805 while holding above the lower band around $4,756.

The Relative Strength Index (RSI) around 49 and the subdued Average Directional Index (ADX) near 11 both hint at fading momentum and lack of a strong directional trend, leaving XAU/USD in consolidation.

On the topside, initial resistance is located at the Bollinger middle band around $4,805, with a break above this level exposing the upper band near $4,854 as the next barrier.

On the downside, the lower Bollinger band at approximately $4,756 acts as immediate support, and a clear drop beneath this floor would signal that sellers are regaining control and could open the door to a deeper corrective phase.

• EUR/USD finds support near 1.1750 on Tuesday after rejection at 1.1790.
• Eurozone economic sentiment deteriorated beyond expectations in April.
• Investors remain cautious ahead of the second round of US-Iran peace talks.

The Euro (EUR) posts moderate losses against the US Dollar (USD), trading at 1.1765 ahead of Tuesday's US session opening, after being capped at the 1.1790 area on Monday. Investors are digesting a gloomy Eurozone ZEW economic sentiment survey earlier on the day, while the focus now turns to the Federal Reserve (Fed) chair nominee, Kevin Warsh, and the US-Iran peace talks

Data released by the ZEW Institute on Tuesday revealed that institutional investors' sentiment about the German economy has plunged to -17.2 in April, its weakest reading since December 2022, well below the -5 forecasted by market analysts, following a -0.5 reading in March. The feeling about the current economic situation also declined, to -73.7 in April, from -62.9 in March.

Likewise, the Eurozone Economic Sentiment has dropped to -20.4, also its weakest reading since December 2022. The market was expecting a moderate improvement to -3.6 from last month's -8.5 print.

Concerning the geopolitical situation, the Wall Street Journal reported on Monday that Tehran conveyed to regional mediators its willingness to send a delegation to Pakistan. Iranian authorities had threatened to pull out of the peace process on Monday, in retaliation for the seizure of an Iranian cargo vessel by the US military.

Beyond that, Reuters cited an anonymous US source, affirming that “things are moving forward”, altogether, feeding a moderate market optimism.

In the US, the recently appointed Fed Chairman, Kevin Warsh, will face the confirmation hearing at the US Senate later on Tuesday. The former Fed Governor will likely face questions about the central bank's independence from the White House and its financial portfolio.

Technical Analysis: Sideways consolidation below 1.1800

EUR/USD maintains its upside trend from the late-March lows intact, but recent price action shows some hesitation ahead of the 1.1800 area. Technical indicators in the 4-hour chart are also hinting at a weakening upside momentum.

The Relative Strength Index has been moving back and forth around the 50 midline, pointing to a lack of clear bias. The Moving Average Convergence Divergence (MACD) remains at its slightly negative levels, showing a fading upside pressure rather than a decisive bearish turn, at least for now.

Bulls have been capped at 1.1790 area earlier on Tuesday, which is closing the path towards Friday's highs near 1.1850 for now. On the downside, immediate support is located at Monday's lows near 1.1730, followed by the upward-sloping trendline, now around 1.1705. A clear break below this area would open the way towards a cluster of support levels between 1.1645 and 1.1675, which held bears on April 8, 9, 10, and 13.

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