Forex News
Danske Bank’s Danske Research Team notes that the Bank of Japan (BoJ) kept its policy rate at 0.75% with a closer 6-3 vote, reinforcing expectations for a potential June or summer hike. The new outlook highlights stronger inflation pressures than activity, pushing JGB yields higher and strengthening the Japanese Yen. Markets now price roughly a 54% probability of a summer move.
Closer vote underpins summer hike risk
"As widely expected, the Bank of Japan is on hold this morning keeping the overnight call rate at 0.75%. The decision was taken with a 6-3 vote, a closer call than both at the March and January meetings when only Takata Hajime voted for a hike, supporting our expectation for a June hike."
"The new outlook report suggests that the energy crunch affects inflation more than activity with a 0.5pp revision to GDP growth in the fiscal year (FY) 2026 and only 0.1pp in FY2027 while inflation excluding fresh food and energy has been revised 0.4pp/0.5pp higher respectively."
"The board members' forecasts also indicate that they are more worried about faster inflation than the risk on activity."
"The market has reacted with a stronger JPY and JGB yields edging higher."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Antje Praefcke at Commerzbank discusses the likely confirmation of Kevin Warsh as new Fed Chair in May, potentially succeeding Jerome Powell by mid‑month. The bank highlights questions over Powell’s future role on the Board and whether Warsh will push for earlier rate cuts despite elevated inflation, as political pressure from the U.S. president raises concerns about long‑term Fed independence.
Warsh nomination and policy implications
"So it’s time to turn to another topic: the new Fed Chair."
"Apparently, the senator on the Banking Committee who had intended to veto the nomination of Kevin Warsh has withdrawn his objection after the Department of Justice dropped a criminal investigation into construction work on the Fed building involving current Fed Chair Jerome Powell."
"This clears the way for Warsh’s election in the committee tomorrow."
"Following tomorrow’s committee vote, Warsh could be confirmed by the Senate in early May (possibly as early as next week)."
"Our economists assume that the Fed will not be able to resist pressure from the U.S. president in the medium term, which is why the key interest rate is likely to be cut for the first time toward the end of the year, with two further cuts expected in 2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold drops to a four-week low as stalled US-Iran talks keep the US Dollar supported amid lingering uncertainty.
- Hormuz supply disruption keeps Oil prices elevated, fueling inflation risks and reinforcing a “higher-for-longer” rate outlook.
- Technically, XAU/USD remains capped below the 100-day and 50-day SMAs, with momentum indicators signaling growing bearish pressure.
Gold (XAU/USD) slips to a near one-month low, pressured by a firmer US Dollar (USD) and mounting Oil-driven inflation concerns, as investors await clearer signals on stalled diplomatic efforts between the United States (US) and Iran to end the war. At the time of writing, XAU/USD is trading around $4,571, down roughly 2.37% on the day.
This Tuesday marks two months since the US and Israel launched attacks on Iran. While a ceasefire appears to be holding, there has been no meaningful progress toward a second round of peace talks. The United States is reviewing Iran’s latest proposal. Still, early signals suggest that US President Donald Trump and his national security team remain skeptical of Tehran’s offer, which leaves nuclear negotiations for a later stage.
With no near-term resolution in sight, risk sentiment remains fragile, keeping the US Dollar supported. A stronger Greenback reduces demand for bullion as it becomes more expensive in other currencies. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.74, erasing the previous day’s losses and up 0.25% on the day.
At the same time, Oil prices continue to rise as supply through the Strait of Hormuz remains largely disrupted due to a dual blockade, fueling inflation risks. This, in turn, adds further pressure on the metal, as markets expect central banks, particularly the Federal Reserve (Fed), to keep borrowing costs higher for longer and may even consider raising rates if inflation pressures persist.
Higher interest rates increase the opportunity cost of holding Gold, as the metal does not offer any yield. Traders now look ahead to the upcoming Fed monetary policy decision due on Wednesday, where a hold is fully priced in, according to the CME FedWatch tool. The focus will be on forward guidance, which is likely to determine the next directional move in Gold, as a hawkish stance is expected to keep prices under pressure.
Looking ahead, investors will continue to monitor US-Iran developments while keeping an eye on US economic data, including the ADP Employment Change 4-week average and the Conference Board’s Consumer Confidence Index for April.
Technical analysis: XAU/USD trades below key SMAs as downside momentum builds
On the daily chart, XAU/USD remains capped below the 100-day Simple Moving Average (SMA) and the 50-day SMA, keeping the near-term bias bearish. The Relative Strength Index (RSI) around 39 holds below the midline, while a negative Moving Average Convergence Divergence (MACD) reading points to building downside momentum, suggesting sellers remain in control.
On the topside, initial resistance is seen at the 100-day SMA around $4,749, with a subsequent barrier at the 50-day SMA near $4,854, and bulls would need a daily close above this cluster to reassert a stronger uptrend. On the downside, immediate support comes from the nearby horizontal level at $4,550, while a deeper slide would expose the 200-day SMA around $4,263, where longer-term buyers could attempt to defend the broader bullish structure.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
ING strategist Francesco Pesole notes that despite higher Oil prices and geopolitical uncertainty, the Dollar has only found limited support as resilient US equities and month‑end flows weigh on USD performance. He highlights that high‑beta commodity currencies like the Australian Dollar and Canadian Dollar are currently favored, but warns that once month‑end flows fade, USD gains could accelerate if Gulf negotiations fail to progress.
Risk, flows and FOMC shape USD
"In theory, this should be a favourable environment for the dollar, yet USD has found only limited support so far. We see two reasons. First, US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic."
"That remains a key missing link for a sustained dollar rally; EUR/USD, like many other USD crosses, currently shows a higher beta to global equities than to oil prices or rate differentials. Second, month‑end flows should be acting as a drag on the dollar, given relative US equity outperformance in April."
"Once month‑end flows roll off in the coming days, barring tangible progress in negotiations, we would expect USD gains to accelerate."
"For today, some focus will be on consumer confidence figures, although a wait‑and‑see approach ahead of tomorrow’s FOMC decision and big tech earnings (Alphabet, Microsoft, Amazon and Meta) could keep volatility in USD crosses somewhat contained."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI Oil prices rally to two-week highs around $98.00 on Tuesday.
- The deadlocked US-Iran conflict is pushing Crude prices higher.
- UN chief Antonio Guterres warned about a global food emergency if the Strait of Hormuz remains closed.
Crude prices appreciated for the second consecutive day on Tuesday, with the US benchmark West Texas Intermediate (WTI) barrel changing hands at $98.00 at the time of writing, its highest price since April 13. Meanwhile, some reports say that US President Donald Trump disliked the peace proposal sent by Iran, which leaves the Middle East conflict deadlocked and the Strait of Hormuz closed for its ninth week.
News reported by Reuters, and citing a US official, explains that Trump was not satisfied with Iran’s peace plan as it does not address the nuclear program issue. US Secretary of Energy Chris Wright, however, affirmed earlier on Tuesday that the US president is focused on getting the right trade deal with Tehran and that they will announce “historic agreements today in Europe.”
Meanwhile, a waterway for 20% of global crude supply remains closed, pushing the price of the WTI barrel closer towards the $100 level, while the Brent trades at $111.21 at the time of writing. This has prompted several nations to call for a reopening of Hormuz, while the UN Secretary-General, Antonio Guterres, has warned of a global food emergency if the closure lasts long
Technical Analysis: Bulls are testing resistance around $98.00
WTI US Oil keeps a firm bullish bias from mid-April lows below $80, with bulls testing levels at the $98.00 area. Technical indicators on the 4-hour chart support the bullish view as the Relative Strength Index (RSI) advances to 67, just below overbought territory, while the Moving Average Convergence Divergence (MACD) remains in positive territory, together suggesting persistent upside momentum.
A confirmation above April 12 highs at $98.15 would bring the $100.00 psychological level into focus. Further up, the next target emerges at the $106.60 area, where price action was capped on April 7.
On the downside, initial support is now aligned with the horizontal base at $91.10, which contained downside attempts on Thursday. A bearish reaction below here would expose last week's lows, near $85.20 ahead of the April 17 low, at $78.88.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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