Forex News
- Gold attracts fresh buyers as geopolitical tensions continue to underpin safe-haven assets.
- The USD retains its status as the global reserve currency and might cap the precious metal.
- Traders now look to US macro data, though the focus remains on geopolitical developments.
Gold (XAU/USD) maintains its offered tone through the first half of the European session, though it lacks follow-through and remains below the $5,200 mark. Investors remain concerned about a prolonged conflict in the Middle East and its impact on the global economy amid an already uncertain environment. In fact, US President Donald Trump said that the US military operation in Iran could take four to five weeks, and more strikes would continue for as long as necessary. This continues to weigh on investors' sentiment, which is evident from a generally weaker tone around the equity markets and underpins demand for the safe-haven bullion.
Meanwhile, the closure of the Strait of Hormuz – one of the world’s most critical energy chokepoints – led to the recent surge in Crude Oil prices to the highest level since June 2025. Moreover, Iran has targeted infrastructure critical to the world’s energy production as part of its retaliation and warned that it will not allow a single drop of oil to leave the region. This has raised fears of a fresh energy crisis that could ramp up inflation and force the US Federal Reserve (Fed) to slow or scale back its plan to cut interest rates further. The outlook contributes to keeping the non-yielding Gold below the $5,200 mark, though a modest US Dollar (USD) slide favors bulls.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats from its highest level in over three months, touched on Tuesday, and backs the case for additional gains for the XAU/USD pair. That said, it will be prudent to wait for a sustained strength and acceptance above the $5,200 mark before positioning for any further intraday appreciating move. Market participants now look forward to the US economic docket – featuring the release of the ADP report on private-sector employment and ISM Services PMI. The data might do little to provide any meaningful impetus to the buck or the Gold price, as the focus remains glued to developments surrounding the ongoing US-Israel-Iran war.
XAU/USD 4-hour chart
Gold needs to surpass $5,200 to back the case for further appreciation
The near-term bias turns cautiously bearish after the Gold price slipped back from the upper boundary of the ascending channel that has guided gains since early February, now trading just above the channel’s lower band near $5,025. The Relative Strength Index (14) recovers toward 43 after briefly approaching oversold territory, which suggests fading but still-present downside momentum. The Moving Average Convergence Divergence (MACD) line holds below its signal line and has retreated toward the zero line, reinforcing a loss of bullish conviction after the rejection above $5,380.
The XAU/USD pair trades only marginally above the rising 200-period Simple Moving Average (SMA) on the 4-hour chart around $5,030, indicating that the broader uptrend remains intact but under pressure in the short term. Initial support emerges in the $5,140–$5,130 band, with a break lower exposing the 200-period SMA and channel floor clustered around $5,030, followed by a deeper cushion near $4,980.
On the upside, immediate resistance stands near $5,210, where recent intraday rebounds stalled, followed by $5,260 and then the recent swing area around $5,320. A sustained recovery above $5,260 would ease the current bearish tone and open the way back toward the $5,380 region, while failure to defend $5,030 would signal a more decisive corrective phase within the broader ascending structure.
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
UOB’s Lee Sue Ann notes that Australia’s economy ended 2025 with stronger-than-expected GDP growth, underpinned by resilient household spending and ongoing private investment. However, she highlights that elevated inflation and a cautious Reserve Bank of Australia (RBA) stance point to a gradual and uneven outlook. UOB still expects the RBA to wait until the 5 May meeting for the next rate move.
Australian growth strong but policy risks
"The Australian economy strengthened with resilient domestic demand. GDP grew 0.8% q/q in 4Q25 and 2.6% y/y, the fastest pace in nearly three years and above RBA expectations, supported by steady household spending (+0.3% q/q) and a fifth consecutive quarterly rise in private investment (+0.7% q/q)."
"Overall, we expect the Australian economy to remain supported by lingering resilience in household spending and stronger-than-expected private demand carried over from late 2025. That said, elevated inflation and a cautious monetary policy backdrop will shape a gradual and uneven recovery ahead, particularly as higher interest rate expectations begin to restrain activity. These dynamics also unfold against the backdrop of the conflict in the Middle East, which is likely to add further upward pressure on inflation."
"Even before the latest conflict, Australia’s inflation indicators had remained uncomfortably high. Annual CPI held at 3.8% y/y in Jan, unchanged from Dec but above the consensus estimate of 3.7%. Seasonally adjusted headline CPI rose 0.5% m/m in Jan, accelerating from 0.2% m/m in Dec. On an annualized basis, headline inflation stood at 4.0% on a three-month basis and 3.7% on a six-month basis."
"Today’s GDP release is the final major data point before the RBA’s 17 Mar meeting."
"Our base case remains that the RBA will wait for the next quarterly inflation report on 29 Apr before moving at the 5 May meeting, especially as recent data show underlying inflation easing from the 3Q25 spike. While this remains our central view, we acknowledge that the risk of a Mar hike has increased."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Correction: This story was corrected on June 4 at 07:40 GMT to say that China's RatingDog Manufacturing PMI for February came in at 52.1, not 62.1 as initially reported. The data was wrongly displayed at FXStreet's economic calendar.
China's RatingDog Manufacturing Purchasing Managers' Index (PMI) climbed to 52.1 in February from 50.3 in January, the latest data published by RatingDog showed on Wednesday. This figure came in better than the expectation of 50.1.
Meanwhile, the Services PMI rose to 56.7 in February, compared to 52.3 prior. The market consensus was for 52.3.
AUD/USD reaction to China’s PMI data
At the time of writing, the AUD/USD pair is trading around 0.7004, down 0.52% on the day.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Deutsche Bank analysts highlight that Brent and WTI Oil have seen their biggest two-day jump since 2020 as fears of a prolonged Middle East conflict and supply disruptions intensify. They note that despite sharp gains, WTI remains below its 2024 average and still far from levels historically associated with recessions or full-scale market corrections.
Energy shock fears drive crude higher
"Of course, oil prices have been the main focus given the direct impact, and yesterday saw Brent crude up another +4.71% to $81.40/bbl."
"So that now makes it the biggest 2-day jump for oil prices (+12.31%) since the pandemic recovery in 2020, and this morning they’re up another +1.51% to $82.63/bbl."
"However, prices did come off their intraday peak above $85/bbl in European hours, stabilising after Trump said that the US “will begin escorting tankers through the Strait of Hormuz, as soon as possible” if necessary and that it would provide political risk insurance for ships travelling through the Gulf to “ensure the FREE FLOW of ENERGY to the WORLD”."
"That said, with little detail on the plan, the reversal in oil proved short-lived, with Brent falling back to $78.40/bbl before rising again, moving back above $82/bbl this morning."
"Interestingly though, if you look at the long-term history of oil prices, WTI is still a little below its 2024 average, and there’s still a long way to go before it compares to some of history’s bigger crises."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The USD/INR pair reached a fresh record high of 92.58 on Wednesday.
- Indian Rupee remains under pressure amid higher Oil prices driven by the ongoing war in the Middle East.
- The INR weakens as investors withdraw over $350 million from equities amid rising risk aversion.
The Indian Rupee (INR) declines against the US Dollar (USD), extending its losing streak for the fifth successive session. The USD/INR pair reached a fresh record high of 92.66 during the Asian hours on Wednesday. Traders expect the Reserve Bank of India (RBI) to sell dollars to avert steeper rupee losses.
The INR faces challenges due to higher Oil prices, which could be attributed to the ongoing war in the Middle East. India imports over 80% of its crude Oil needs. When Oil prices rise, India must pay more in dollars to buy the same quantity of crude.
The USD/INR pair could further appreciate as the Indian Rupee struggles with increased risk aversion amid geopolitical conflict in the Middle East. Foreign fund outflows from the Indian stock market weighed on the Indian Rupee. Rising risk aversion led investors to pull over $350 million from Indian equities on Monday.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, extends gains for the third consecutive day, trading around 99.10 at the time of writing. Traders will likely observe the US ISM Services Purchasing Managers’ Index (PMI), due later in the North American session.
The Greenback advances on fading expectations of imminent rate cuts from the Federal Reserve (Fed). The yield on the US 10-year Treasury note holds around 4.06% at the time of writing after rising for two consecutive sessions amid elevated inflation fears.
Higher energy prices have added to inflation concerns, prompting markets to scale back bets on near-term policy easing. Investors largely expect the US central bank to keep interest rates unchanged until summer, despite calls from US President Donald Trump for lower borrowing costs.
US President Donald Trump noted the US Navy would provide insurance support to commercial vessels in the Gulf after Iran effectively disrupted traffic through the Strait of Hormuz. He added that US forces would escort ships if necessary, following reports that Iranian forces had fired on several vessels, per BBC.
Israel reportedly hit a building where Iranian clerics were meeting to choose a new Supreme Leader. US President Donald Trump warned that the escalation could pave the way for an equally hardline leadership in Iran, underscoring uncertainty surrounding the conflict’s outcome.
Technical Analysis: USD/INR reaches fresh record highs above 92.50
USD/INR reaches fresh record highs above 92.50 at the time of writing. The technical analysis of the daily chart indicates a persistent bullish bias as the pair is positioned above the upper boundary of the ascending channel pattern.
The near-term bias is bullish as the USD/INR pair holds well above the rising 50-day Exponential Moving Average (EMA) near 90.84, while the nine-day average accelerates higher and stays above the medium-term gauge, confirming strengthening upside momentum.
The Relative Strength Index (RSI) stands in overbought territory around 74, indicating firm buying pressure, though stretched conditions could cap the pace of further gains rather than reverse the trend immediately.
A break above the record high at 92.66 would lead the USD/INR pair to approach the psychological level of 93.00. On the downside, a pullback to the ascending channel would expose the initial support at the nine-day EMA at 91.62, followed by the lower channel boundary around 91.50.
(The technical analysis of this story was written with the help of an AI tool.)
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Danske Research Team notes that Euro area data show inflation slightly below target but higher than expected, reinforcing expectations that the ECB will keep its policy rate unchanged at 2.00%. Headline and core inflation have surprised to the upside, while futures pricing suggests only a temporary rise in Oil and European gas prices.
Euro inflation surprise and policy outlook
"In the euro area, HICP inflation rose to 1.9% y/y in February, above expectations, up from 1.7% y/y. Core inflation also exceeded forecasts at 2.4% y/y (cons: 2.2%), with core services inflation rebounding 0.4% m/m s.a., confirming January's 0.1% m/m s.a. dip was temporary. "
"While the Winter Olympics in Italy contributed to the inflation surprise, momentum in core inflation remains aligned with the ECB's targets. Headline inflation undershooting the 2% target by less than expected supports the unchanged policy rate."
"We now expect euro area inflation to reach 2.0% y/y in March and 2.2% in Q2 due to rising European gas prices."
"However, the ECB is likely to look past this temporary headline inflation rise, given underlying disinflation and futures pricing indicating a short-term spike in oil and gas prices."
"In the euro area, we will receive the January unemployment data and the final February PMIs. We expect the unemployment rate to remain at 6.2% due to continued employment increases in Southern Europe. The final PMIs are likely to confirm the flash release which surprised positively in a sign of moderate growth."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/GBP drifts higher to around 0.8710 in Wednesday’s early European session.
- Eurozone inflation data provides some support to the Euro.
- Traders dialed back BoE rate cut bets amid surging oil prices.
The EUR/GBP cross holds positive ground near 0.8710 during the early European session on Wednesday. The Euro (EUR) edges higher against the Pound Sterling (GBP) following hotter-than-expected Eurozone inflation data. Traders will take more cues from the Eurozone Retail Sales report, which will be released later on Thursday.
The Eurozone Harmonized Index of Consumer Prices (HICP) rose 1.9% YoY in February, compared to 1.7% in January, according to a flash estimate from Eurostat on Tuesday. The core HICP, which excludes volatile components like food, energy, alcohol, and tobacco, climbed 2.4% YoY in February. This figure came in above the market consensus and the previous reading of 2.2%.
The European Central Bank (ECB) has kept the deposit rate at 2.0% since June 2025. While a monetary policy is expected to remain unchanged at the March meeting, traders now see a 50% chance of a rate hike later this year due to soaring energy prices. This, in turn, could lift the Euro against the Pound Sterling in the near term.
Surging oil and gas prices due to Middle East conflicts have fueled fresh inflation fears, causing traders to scale back bets on further easing by the Bank of England (BoE). BoE Monetary Policy Committee (MPC) member Alan Taylor said on Monday that it is too soon to ascertain the impact of rising oil prices on the UK inflation and growth outlook; however, the central bank is closely tracking the event.
The probability of a BoE rate reduction later this month has also plunged, from about 80% last week to less than 20% now, according to Bloomberg.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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