Forex News
Brown Brothers Harriman’s (BBH) Elias Haddad highlights an extended broad rally in South Korean Won (KRW) as Korean equities underperform, reducing rebalancing outflows. Haddad sees an encouraging outlook, with KRW about 11% undervalued on Real Effective Exchange Rates (REER) metrics and the Bank of Korea (BoK) poised to start hiking at its July 16 meeting. A new 24-hour onshore KRW market and a roadmap for won internationalization should bolster long-term demand.
Rebalancing, hikes and internationalization
"KRW broad rally extended, mirroring the underperformance in the KOSPI so far this month. The logic is that as Korean equities underperform and their weight in global portfolio declines, the need for foreign investors to trim positions and repatriate funds diminishes, reducing KRW outflows."
"By the same token, should the KOSPI regain leadership the rebalancing outflows are likely to re-emerge against KRW."
"Beyond rebalancing dynamics, the outlook for KRW is encouraging. The currency is significantly undervalued (11% undervalued based on deviation from real effective exchange rate trend), and the BoK is poised to start raising rates at its next July 16 meeting."
"Meanwhile, the South Korean government confirmed it will unveil its “roadmap for won internationalization” end-July. Monday’s launch of 24-hour onshore KRW trading marked the first major step."
"Over time, greater international use of KRW should increase underlying demand for the currency."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Fed minutes show most officials see policy firming warranted.
- Rising Treasury yields keep USD/JPY supported above 162.00.
- Break above 162.84 could expose 163.00 and 165.00.
The Japanese Yen depreciated by over 0.26% within familiar levels, as the Fed’s last meeting minutes showed that the majority of participants indicated that “some policy firming would likely be warranted” and agreed to shorten the length of the monetary policy statement. The USD/JPY trades at 162.54 after bottoming near 162.03.
USD/JPY weakens as hawkish Fed minutes lift Dollar and yields
Market mood is mixed, following US President Donald Trump's change of tone, turning more hawkish against Iran’s behaviour, threatening to escalate the conflict. This boosted the Greenback, as the US Dollar Index (DXY) reclaimed the 101.00 figure.
Digging into the US central bank’s minutes, all officials upported to leave rates unchanged and saw a stable labour market. Most participants “preferred” not to use the previous language, pointing to scenarios in which prices would remain elevated due to AI-infrastructure demand.
Worth noting that several participants remarked that they did not see the current policy stance as restrictive, while a few other participants commented that they saw the current policy stance as slightly restrictive.
In the meantime, money markets had priced in an 18% chance of a 50-basis-point (bps) rate hike at the September meeting, while the chances of a 25-bps rate hike are close to 52%.
Meanwhile, the US 10-year Treasury yield, which is positively correlated with the USD/JPY pair, is rising by 1.5 basis points to 4.569%, suggesting traders are eyeing further tightening.
Aside from this, the USD/JPY extended its gains, it remains above the 162.00 mark. A breach of the July 1 high of 162.84 clears the door towards 163.00. On further strength, the next area of interest would be 165.00 ahead of the psychological 170.00 figure.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- EUR/USD holds steady as traders digest hawkish-leaning FOMC minutes.
- Fed policymakers remain concerned about inflation while describing labor market conditions as balanced.
- Technically, EUR/USD retains a bearish bias while trading within a descending channel and below key moving averages.
EUR/USD holds firm on Wednesday after reversing earlier losses triggered by renewed tensions between the United States (US) and Iran, while traders digest the June Federal Open Market Committee (FOMC) meeting minutes. At the time of writing, the pair is trading around 1.1427 after hitting an intraday low of 1.1391.
The US Dollar (USD) saw little immediate reaction to the minutes, suggesting much of the Federal Reserve's (Fed) message was already reflected in market pricing. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 100.97, easing from an intraday high of 101.27.
Officials remained cautious about inflation, which remains well above the central bank's 2% target, while describing labor market conditions as balanced.
Policymakers also signaled that the future path of interest rates will depend on incoming economic data, with some indicating that additional policy tightening could be warranted if inflation proves more persistent than expected.
Nevertheless, renewed geopolitical tensions and expectations that the Fed could deliver at least one interest rate hike this year should continue to underpin the Greenback, keeping downside pressure on EUR/USD.
Technical analysis:
On the daily chart, EUR/USD is trading within a downward parallel channel and beneath its key moving averages, which keeps the near-term bias bearish.
However, momentum is showing signs of improvement, with the Relative Strength Index (RSI) recovering to 41 from near-oversold territory, while the Moving Average Convergence Divergence (MACD) has turned marginally positive, reinforcing the idea of a consolidative phase within a broader downside structure rather than a clear bullish reversal.
On the topside, initial resistance is seen at the horizontal level around 1.1500, closely aligned with the upper boundary of the descending channel, forming a tight cap on any corrective bounce.
Above these, the 100-day Simple Moving Average (SMA) at 1.1611, followed by the 200-day SMA at 1.1649, represent more substantial barriers that would need to be reclaimed to ease the prevailing bearish tone.
On the downside, immediate support emerges at the horizontal level near 1.1350, ahead of the channel floor around 1.1305, where a break would likely open the way for a continuation of the broader downtrend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
United Overseas Bank’s (UOB) Quek Ser Leang notes USD/SGD is edging higher after a period of tight consolidation, with intraday upside seen as limited below nearby resistance. While short-term momentum has turned up, the bank still flags increased risk of a break under 1.2890 on a 1–3 week horizon, even as longer-term weekly signals point to potential strength toward 1.3095.
Upward bias capped below resistance
"24-HOUR VIEW: While we noted yesterday that “there has been a slight increase in downward momentum,” we pointed out that “this is likely to lead to USD trading in a lower range of 1.2900/1.2935 rather than a sustained decline.” USD then traded between 1.2906 and 1.2934, closing largely unchanged at 1.2929 (+0.04%). This time around, there has been a slight increase in upward momentum. Today, USD could edge higher, but it is unlikely to break above 1.2955. Note that there is another resistance at 1.2940. Support is at 1.2920 and 1.2910."
"1-3 WEEKS VIEW: After expecting USD to trade in a range for about a week, we highlighted yesterday (07 Jul, spot at 1.2915) that “downward momentum has ticked up, and the risk of USD breaking below 1.2890 is increasing.” We added, “a breach of 1.2955 (‘strong resistance’ level) would indicate that USD is likely to continue to trade in a range.” There is no change in our view"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- DXY churned into 101.00 after the June FOMC Minutes landed without a tradeable surprise, holding a 100.95 to 101.27 session range.
- A few policymakers argued for a rate hike at the June meeting itself, and half the dot plot now projects at least one increase by year-end.
- The easing bias is gone, the statement has been pared to a bare pledge on price stability, and the Fed's own dealer survey and market pricing still point in opposite directions.
The US Dollar Index (DXY) spent Wednesday travelling in circles, grinding around 101.00 after the Minutes of the June 16-17 Federal Open Market Committee (FOMC) meeting crossed the wires at 18:00 GMT, capping a session in which traders had already faded another round of Middle East friction. The muted price action undersells the document. A unanimous 12-0 vote to hold the target range at 3.50% to 3.75% papers over a Committee that agrees on very little beyond the decision itself.
Read more: FOMC Minutes leans toward higher-for-longer narrative
One vote, three arguments
Every voter backed June's hold, and the post-meeting statement shrank to a few terse lines anchored by a bare commitment to delivering price stability. The Minutes reveal what that unity cost: a few participants saw a live case for raising the target range at the meeting itself, and settled for the hold as a matter of timing rather than conviction.
The year-end projections split the room far more evenly than the vote. Many participants placed the appropriate federal funds rate within or slightly below the current range by December, while many others put it above; the June dot plot put 9 of 18 submissions behind at least one hike this year, against 8 holds and a single cut. Several participants added that they do not regard the current stance as restrictive at all.
The Committee also declined to repeat the language that had signalled an easing bias, a deletion most participants explicitly favoured, and the Chair announced five independent task forces to re-examine how monetary policy is conducted. Pair that with a Chair who spent last week in Portugal declining to offer forward guidance, and the picture is an institution rewriting its reaction function mid-cycle rather than one quietly preparing to cut.
Four percent inflation does the hawks' arguing for them
Staff estimates put headline Personal Consumption Expenditures inflation at 4.1% in May with the core measure near 3.4%, and participants traced the climb to tariff pass-through, supply disruptions from the Strait of Hormuz closure, and demand pressure from the artificial intelligence (AI) buildout. Several flagged that price pressures have broadened across transportation, airfares, petrochemicals, and agricultural inputs, which is precisely the sort of breadth that makes supply-shock inflation harder to wave through.
Risks to the inflation outlook were still judged as tilted to the upside, and the staff repeated that persistence after five years above target remains a salient risk. The scenario work carried the same asymmetry: most participants sketched worlds in which inflation stays elevated on AI demand, the Middle East, or tariffs, and almost all of them concluded that policy firming would be warranted there. The June projection round already leans that way, marking 2026 headline inflation up to 3.6% from March's 2.7%.
Markets have started trading the argument
The pricing detail buried in the Minutes is the cleanest tell for positioners. Going into the June meeting, the Fed's own survey of dealers had the funds rate on hold into early 2027 with a cut pencilled in for the second quarter, while market pricing carried a hike by mid-2027 instead. Three weeks later the market has stopped waiting; pricing now assigns roughly one-in-three odds to a July hike, favours a move by September, and traces a funds path toward 4% by year-end.
Rate differentials did the Greenback's heavy lifting over the intermeeting window, with the two-year Treasury yield rising by more than its advanced-economy counterparts as the broad Dollar appreciated modestly. The offsets are real: pricing still carries at least one further hike apiece from the European Central Bank and the Bank of England this year, and a soft June payrolls report keeps traders from chasing the hawkish repricing much further.
Wednesday's muted reaction, set against a dot plot already revised hawkishly in June, reads as confirmation rather than news; the firming optionality was in the price before the Minutes spelled it out. The calendar tightens from here, with June's Consumer Price Index print due on July 14 at 12:30 GMT ahead of the July 28-29 FOMC decision. Another 4% headline reading would promote the firming scenarios from contingency planning to base case, and the Dollar tends to notice a promotion.
US Dollar Index technical levels
Resistance: The session high at 101.27 caps the day, with three separate intraday rallies stalling beneath 101.30 across Wednesday's trade. A close through that shelf clears the road toward the 101.50 round handle, the near-term ceiling flagged across sell-side desks this week.
Support: The 101.00 handle is the immediate battleground and Wednesday's settlement. Below it, the 100.95 session low is the level that matters; losing that base opens a run toward 100.50, with little obvious structure in between on the intraday tape.
Bias: Bullish while 100.95 holds, targeting a break of 101.27 and an extension toward 101.50; the five-minute Stochastic Relative Strength Index is curling higher from oversold near 25, and a Committee openly debating hikes gives Dollar dips a standing bid. A decisive break of 100.95 invalidates the call and shifts attention to 100.50.
Dollar Index 5-minute chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The June FOMC Minutes reinforced the Fed’s cautious approach as policymakers unanimously agreed to maintain interest rates unchanged while keeping a close eye on inflation risks.
Although officials agreed that downside risks to the labour market had eased somewhat, they generally continued to view upside risks to inflation as elevated. Several participants warned that persistent price pressures could stem from stronger AI-related investment, higher tariffs or renewed tensions in the Middle East, with staff projections revised to show higher inflation in both 2026 and 2027 than previously expected.
Importantly, a few policymakers judged that another rate hike could eventually become appropriate, although they still supported leaving policy unchanged at the June meeting. Almost all of those participants indicated that additional tightening would likely be warranted should inflation evolve along less favourable paths.
The Minutes also revealed a subtle but meaningful shift in the Committee's communication. Most participants favored removing language that suggested an easing bias and a majority favored shortening the post-meeting statement, arguing that it should instead emphasize the Fed’s commitment to achieving its dual mandate and restoring price stability.
While staff modestly downgraded the GDP outlook relative to April, the discussion suggests policymakers remain considerably more concerned about inflation persistence than slowing growth, reinforcing the view that the bar for rate cuts remains high.
Bottom line
The Minutes delivered a hawkish hold. Policymakers continue to see inflation as the dominant risk, several officials still believe further tightening could become necessary, and the Committee appears keen to distance itself from any perception that rate cuts are imminent. From a market perspective, the release supports the higher-for-longer narrative and should remain supportive of the US Dollar and Treasury yields while weighing on rate-sensitive assets.
Market reaction
The Greenback remains under pressure on Wednesday, pushing the US Dollar Index (DXY) to challenge the 101.00 region. In the meantime, investors continue to assess the FOMC Minutes while closely following developments from the geopolitical landscape.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.30% | 0.26% | -0.20% | -0.05% | -0.43% | -0.00% | |
| EUR | 0.09% | -0.21% | 0.37% | -0.11% | 0.05% | -0.34% | 0.09% | |
| GBP | 0.30% | 0.21% | 0.57% | 0.10% | 0.25% | -0.13% | 0.28% | |
| JPY | -0.26% | -0.37% | -0.57% | -0.47% | -0.30% | -0.70% | -0.28% | |
| CAD | 0.20% | 0.11% | -0.10% | 0.47% | 0.15% | -0.24% | 0.18% | |
| AUD | 0.05% | -0.05% | -0.25% | 0.30% | -0.15% | -0.39% | 0.01% | |
| NZD | 0.43% | 0.34% | 0.13% | 0.70% | 0.24% | 0.39% | 0.41% | |
| CHF | 0.00% | -0.09% | -0.28% | 0.28% | -0.18% | -0.01% | -0.41% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the FOMC Minutes of the June 16-17 meeting at 17:15 GMT.
- The FOMC Minutes are expected to show further insight about the first Federal Reserve meeting with Kevin Warsh as chairman.
- The Fed is likely to provide a reduced version of the minutes amid Warsh’s reluctance to provide forward guidance.
- Investors will be attentive to growth and inflation expectations to assess the bank’s policy plans.
The United States (US) Federal Reserve (Fed) will release the Minutes of the June 16-17 Federal Open Market Committee (FOMC) meeting on Wednesday at 18:00 GMT. The Minutes should shed more light on the Fed’s hawkish hold delivered at Kevin Warsh’s first meeting as Fed Chair. Even so, doubts remain about how much the minutes will reveal, given Warsh's refusal to provide forward guidance.
The US central bank left the Fed Funds rate unchanged in the 3.50%-3.75% range, as widely expected, although the statement’s language showed a hawkish tilt that surprised markets and provided some support to the US Dollar (USD).
The committee approved the decision unanimously, putting an end to market speculation about the divergences within the governing council. Beyond that, the statement highlighted resilient activity and above-target inflation, adding to the case for interest rate hikes in the near term.
Kevin Warsh and his unexpected hawkish edge
The Fed met expectations in June and left its benchmark interest rate on hold for the sixth consecutive time, with the new chairman’s hand evident in the reduced monetary policy statement. The main takeaway of June’s meeting, however, was Kevin Warsh’s willingness to remove forward guidance, in clear contrast to his predecessor, Jerome Powell’s style, to allow the central bank further flexibility in setting monetary policy.
Warsh, however, was swift to tackle investors’ concerns about the central bank’s independence, showing an “unambiguous” commitment to deliver price stability, which the market took as a hawkish signal.
The bank’s statement also confirmed Warsh’s plans to implement radical changes in key areas of the central bank, including communication, data sources, and the framework of the central bank's inflation studies, which might also alter the bank’s monetary policy stance in the medium term.
As an immediate consequence of the new house style, the bank is expected to deliver a slimmer, less informative version of the Minutes with no clear hints about the bank’s rate path beyond the economic and inflation outlook.
With this in mind, investors will cautiously analyse the Minutes against the framework of last week’s disappointing Nonfarm Payrolls (NFP) report. June’s Payrolls showed a sharp slowdown in net employment creation, at 57K against expectations of a 110K increase, following three months of strong data, which prompted investors to push back hopes of Fed rate hikes.
Beyond that, concerns about inflation have eased since last month’s meeting. The latest US inflation figures remain well above the 2% target, but the easing tensions in the Middle East have brought Crude Oil prices back to pre-war levels. This is likely to cool price pressures over the coming months, and might grant Warsh with valuable leeway to postpone rate hikes.
When will FOMC Minutes be released and how could they affect the US Dollar?
The FOMC will release the Minutes of the June 16-17 policy meeting at 18:00 GMT on Wednesday.
Investors’ bets on Fed rate hikes have receded from the highs witnessed before last week’s NFP report, but money markets are still pricing at least a 25-basis-point rate hike over the next six months, which keeps the US Dollar buoyed.
The CME Group’s FedWatch tool still shows a 58% chance of a rate hike in September and nearly an 80% chance that the bank will tighten its monetary policy before the year-end. In this context, a clear message from the bank to contain inflationary pressures might reassure Fed tightening bets and provide a fresh boost to the US Dollar.
Downside risks from the US Dollar, in this case, would come from comments that play down the risk of second-round effects on inflation and link current higher prices to the energy shock.
USD moves, in any case, are likely to be limited, as recent developments in the Middle East and last week’s labour figures have altered the scenario, and investors are likely to await further US economic releases to better assess the Fed’s rate hike calendar.
The US Dollar Index (DXY) has been wavering on both sides of the 101.00 level so far this week, trading within a corrective channel from last week’s highs at the 101.80 area. Momentum indicators highlight a mixed bias, with the Relative Strength Index (14) just below 50 and the Moving Average Convergence Divergence (MACD) near zero hinting at a lack of clear bias, although the broader trend remains bullish.
Immediate resistance emerges at the mid-range of the 101.00s, which held bulls in early July, closing their path towards the 2026 peak of 101.80. On the downside, bears would have to breach the area between the 38.2% Fibonacci retracement of June’s rally and the July 2 low, in the 100.50-100-60 area, to confirm a deeper correction, aiming for the June 11 high around 100.30. Further down, the 78.6% Fibonacci retracement meets the June 15 low, just below 99.40.
(The technical analysis of this story was written with the help of an AI tool.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Economic Indicator
FOMC Minutes
FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Next release: Wed Jul 08, 2026 18:00
Frequency: Irregular
Consensus: -
Previous: -
Source: Federal Reserve
Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.
ABN AMRO’s Georgette Boele reports that the Reserve Bank of New Zealand lifted its policy rate by 25 bp to 2.5% and signalled more tightening is likely. Despite some easing in energy prices, the bank sees persistent inflation pressures and scope for further reduction in stimulus. With markets pricing additional hikes, ABN AMRO expects modest upside for the New Zealand Dollar versus the US Dollar.
RBNZ hikes and signals further tightening
"This week, the Reserve Bank of New Zealand raised its policy rate by 25bp to 2.5%."
"It also said that, with inflation still above target and economic activity expected to strengthen, further reduction in monetary stimulus is likely to be needed to bring inflation back to the 2% target midpoint."
"Future OCR decisions will depend on incoming data, price-setting behaviour and the strength of economic activity, and how these factors affect medium-term inflation pressures."
"The market is pricing in almost 40bp of additional rate hikes this year."
"As a result, we expect modest upside for the New Zealand dollar against the US dollar."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold’s next catalyst is jobless claims report.
- Trump says Iran deal is over, reigniting war-premium fears.
- Rising Oil and Treasury yields pressure non-yielding bullion.
Gold (XAU/USD) price dives over 1.30% on Wednesday as tensions in the Middle East bolstered the Greenback after US President Donald Trump said that the agreement to end the war with Iran was “over.” At the time of writing, XAU/USD trades at $4,059 after hitting a four-day low of $4,021.
XAU/USD falls as Oil spike revives Fed tightening risks
The yellow metal is feeling the strength of the US Dollar (USD) and also of rising US Treasury yields. US President Trump’s doubts about making a deal with Iran increased the chances of a resumption of attacks, exerting pressure on Oil prices.
Western Texas Intermediate (WTI), the US crude Oil benchmark, gains over 3%, with the barrel quoting at $74.50 at the time of writing. This boosted the Greenback as high energy prices pose the risk of high inflation, fueling bets for higher interest rates. The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, is up 0.10% at 101.20.
US Treasury yields are up, with the 10-year T-note rising almost 8.5 basis points, yielding 4.589%, a headwind for the non-yielding metal.
The swaps markets have priced in 27 basis points of Federal Reserve (Fed) tightening by the end of the year. Nonetheless, for the July meeting, traders expect the Fed to hold rates, as odds are at 65% versus a slim 35% chance of a rate hike, according to Prime Terminal.
Traders will next watch for the release of the Fed’s last meeting minutes, the first led by Kevin Warsh. On Thursday, the US economic calendar includes the release of Initial Jobless Claims for the week ending July 4.
Wall Street Banks adjust their Gold forecasts
Bank of America lowered its 2026 Gold price forecast by 14% to $4,360 due to a hawkish Fed but still sees $5,000 as attainable after the tightening cycle.
XAU/USD price forecast: Gold price remains bearish, eyes on $4,000
Price action shows that Gold remains downward biased, with the yellow metal falling to a new lower low for the third straight day in the week, an indication of sellers’ strength. The Relative Strength Index (RSI) confirms that bears are gaining traction, with the index pointing lower toward oversold territory.
Traders should be aware that Bullion’s daily chart shows the formation of a ‘death cross,’ an indication that in the medium and long term, further downside is seen.
For a bearish continuation, Gold must remain below $4,100. Once achieved, the next stop would be the day's low at $4,021, followed by the $4,000 milestone. On further weakness, the next stop is the year-to-date (YTD) low of $3,941, followed by the October 28, 2025, daily low of $3,886.
To shift to a bullish trend, Gold needs to break convincingly above $4,250 and target $4,300. Key resistance levels include the 50-day SMA at $4,372 and the 200-day SMA at $4,491, with $4,500 also within reach.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
