Forex News

• Gold languishes near two-and-a-half-month lows below $4,360.
• A tense truce in the Middle East has improved investors' sentiment, weighing on the safe-haven USD.
• The technical picture remains bearish with price action well below the 200-day SMA.

Gold (XAU/USD) trades flat on Tuesday, near two-and-a-half-month lows at $4,268, with upside attempts capped below $4,360 so far. A moderate risk sentiment improvement, amid halting hostilities in the Middle East, has failed to support Gold, which remains vulnerable, weighed down by higher US Treasury yields.

Israel and Iran maintain a tense truce, despite an Israeli attack on the Lebanese city of Tyre that killed eight people earlier on the day. US President Donald Trump showed confidence about sealing a deal with Tehran within days, which has boosted a mild appetite for risk, sending the safe-haven US Dollar moderately lower against its main rivals.

Precious metals, however, remain on the back foot, weighed down by high US Treasury yields. US macroeconomic data released last week, namely the bright Nonfarm Payrolls report, prompted investors to ramp up bets on Federal Reserve rate hikes in the mid-term, triggering sharp rallies in US yields and the USD. Markets are now in a wait-and-see mode ahead of the release of the US Consumer Price Index (CPI) figures due on Wednesday, to confirm Fed-tightening bets

Technical Analysis: Stuck at the bottom of a falling channel

XAU/USD trades at $4,337, keeping a bearish near-term tone after breaking below the key 200-day simple moving average (SMA) last Friday. The pair trades near the bottom of a descending channel, with a previous support area ahead of $4,370 holding upside attempts for now, and with the $4,268 low still at hand.

Momentum conditions in daily charts are weak, with the Relative Strength Index (RSI) hovering in the mid-30s and the Moving Average Convergence Divergence (MACD) line deep in negative territory, which together hint that downside pressure remains dominant.

On the downside, initial support lies at the mentioned Monday's low of $4,268, ahead of the lower boundary of the descending channel near $4,220. Further down, the year-to-date low lies in the $4,100 area.

Bulls, on the other hand, should extend gains beyond the $4,350-$4,365 area (March 28, May 29 lows) and the 200-day SMA, now around $4,445. This would ease downside pressure and expose the top of the bearish channel, which would meet the price around $4,540.

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

• The US Dollar Index trades lower against its major currency peers amid the risk-on mood.
• US President Trump expresses confidence that a deal with Iran could be announced within the next two or three days.
• Investors await the US CPI data for May.

The US Dollar (USD) underperforms its major currency peers during the European trading session on Tuesday, as renewed hopes of a permanent peace deal between the United States (US) and Iran have diminished its safe-haven demand.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.27% lower to near 99.73.

The Iran deal hopes have intensified, following remarks from US President Donald Trump that negotiations with Tehran are in “final throes” and the Strait of Hormuz could open up in “two or three days” if an agreement with Tehran is secured, The Guardian reported.

The US Dollar had outperformed in the last few months as elevated oil prices due to Hormuz closure boosted inflationary pressures globally and prompted hawkish Federal Reserve (Fed) bets.

According to the CME FedWatch tool, there is an almost 69% chance that the Fed will deliver at least one interest rate hike this year. This is a sharp turnaround from two interest rate cuts anticipated before the onset of the Middle East war.

Meanwhile, investors await the US Consumer Price Index (CPI) data for May, which will be released on Wednesday. Investors will pay close attention to the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US headline CPI is expected to arrive higher at 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – grew at a faster pace of 2.9% against the previous reading of 2.8%.

BNY’s Bob Savage reports that Bank of Japan (BoJ) officials are considering pausing further reductions in JGB purchases after March 2027, keeping buying near ¥2.1tn as the balance sheet shrinks via maturities. The June meeting is expected to deliver a rate hike to 1.0%. This evolving stance, alongside firmer Japanese money supply, frames the backdrop for USD/JPY and JGB yields.

Policy normalization and JGB purchases

"Bank of Japan (BoJ) officials are increasingly leaning toward pausing further reductions in bond purchases after March 2027, reflecting growing concern about market stability as the central bank unwinds years of quantitative easing."

"Sources indicate policymakers may maintain monthly bond purchases at around ¥2.1tn rather than continue tapering, arguing that the BoJ’s balance sheet will shrink substantially through the natural runoff of maturing bonds."

"The debate comes ahead of the June 15–16 meeting, where the BoJ is also widely expected to raise its policy rate to 1.0% from 0.75%. "

"The discussion highlights the tension between reducing the BoJ’s dominant presence in the government bond market and avoiding excessive volatility in yields as Japan continues its monetary policy normalization."

"Japan’s money supply growth firmed in May. M2 rose 2.5% y/y in May, up from 2.3% y/y in April, while M3 increased 1.7% y/y, unchanged from April."

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

• The Australian Dollar faces pressure against its risky currency peers as market experts see the RBA’s next policy move on the downside.
• Analysts at NAB said that the Australian economy has lost momentum.
• US-Iran early deal hopes have lifted market sentiment.

The Australian Dollar (AUD) trades lower against its major currency peers during the European trading session on Tuesday. The Aussie Dollar is up 0.15% against the US Dollar (USD) as the market sentiment turns risk-on. However, it is underperforming its risky currency peers amid hopes that the next move by the Reserve Bank of Australia (RBA) on interest rates will be a “cut” rather than a hike.

Analysts at National Australia Bank (NAB) have scrapped their previous forecast of a hike by the RBA in the August policy meeting, and now expect it to lower its interest rate, citing that the economy has lost momentum. However, the NAB has not provided any timeframe for the cut.

Australian economic concerns have stemmed from weak employment and soft Consumer Price Index (CPI) data for April. The Australian Bureau of Statistics reported last month that inflationary pressures cooled down to 4.2% Year-on-Year (YoY) in April from 4.6% in March. On the labor market front, employers laid off 18.6K payrolls in April, while they were anticipated to add 17.5K fresh workers.

Analysts at Commonwealth Bank of Australia (CBA) have predicted that the RBA will hold its Official Cash Rate (OCR) steady at 4.35 by the year-end and deliver cuts in May and August next year.

For more cues on the Australian interest rate outlook, investors will focus on the policy meeting next week, in which the RBA is expected to leave interest rates steady at 4.35%.

Meanwhile, the market sentiment has turned favorable for riskier assets on hopes that the United States (US) and Iran will reach a deal soon. These hopes have intensified following comments from US President Donald Trump that negotiations with Iran are in “final throes” and the Strait of Hormuz could open up in “two or three days” if an agreement with Tehran is secured, The Guardian reported.

As of writing, S&P 500 futures are up almost 0.5% to near 7,450, reflecting risk-on market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.23% lower to near 99.75.

Brown Brothers Harriman’s (BBH) Elias Haddad observes that AUD/USD is consolidating around 0.7050, with yield spreads pointing to downside risks below 0.7000. Haddad notes weak Australian business and consumer sentiment and argues that the Reserve Bank of Australia (RBA) is more likely to extend its policy pause, as growth is projected below potential and the current cash rate sits near estimated neutral levels.

Yield spreads and RBA pause risk

"AUD/USD is consolidating recent losses around 0.7050. Australia-US 2-year bond yield spreads suggests AUD/USD risk undershooting 0.7000 in the near-term."

"Australia’s business and consumer sentiment indexes paint a soft growth picture. NAB business confidence improved in May but remains deeply negative, while business conditions held at +3 index points, below its long-run average."

"In parallel, the Westpac–MI consumer sentiment index worsened to near record lows in June due to cost-of-living issues."

"First, the RBA projects real GDP growth to be below potential over the next two years. Second, the RBA cash rate at 4.35% currently sits near the top of the range of model-based central estimates of the nominal neutral rate."

"RBA cash rate futures trimmed slightly odds of a 25bps hike by year end to 4.60%. In our view, the risk is skewed towards a more extended pause in the RBA tightening cycle."

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

The Japanese Yen (JPY) continues to face strong headwinds, trading back above the critical 160.00 threshold against the US Dollar despite improving domestic fundamentals. While Japan's current account surplus has surged to historic highs and the Bank of Japan (BoJ) prepares for an upcoming policy meeting with an interest rate hike almost fully priced in, these positive drivers are being completely overshadowed by broader macroeconomic pressures. 

Elevated global energy prices and geopolitical friction continue to dominate market sentiment, leaving major financial institutions aligned on a soft near-term path for the Japanese currency.

Improving trade fundamentals clash with external geopolitical shocks

Analysts at Commerzbank note that Japan's structural economic backdrop is showing clear signs of independent strength, highlighted by a high current account surplus. However, they argue that these domestic improvements are currently taking a backseat in the currency markets. Instead, global commodity fluctuations and international conflicts remain the primary forces suppressing the Yen's value.

In the short term, however, the exchange rate will continue to be determined primarily by the Iran conflict and the price of Oil.

Anticipated policy normalisation fails to shift bearish Yen sentiment

Looking closely at monetary policy dynamics, strategy experts at MUFG point out that upcoming tightening steps from the Bank of Japan are already heavily anticipated by investors. Because the market has already factored in aggressive policy updates (including potential interest rate hikes and future shifts in government bond purchasing programs), such moves are unlikely to spark an independent recovery for the struggling currency until international commodity pressures cool.

Overall, the latest developments have not changed our view that the Yen is likely to remain weak in the near-term until the worst of the energy price shock begins to fade.

Banks point toward persistent near-term weakness for the Japanese Yen

Both institutions maintain a bearish near-term outlook for the Japanese Yen, predicting it will remain weak in the months ahead. Commerzbank explicitly states that external forces like Oil prices and geopolitics will continue to dominate the exchange rate over short-term domestic improvements. Echoing this soft sentiment, MUFG projects that the currency will struggle to find meaningful upward traction, noting that even expected interest rate hikes from the BoJ will fail to trigger a structural reversal until global energy market shocks begin to subside.

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

• GBP/USD rises toward 1.3390 on Tuesday, supported by a weaker US Dollar after easing tensions between Israel and Iran.
• Markets have shifted their expectations for the Bank of England and now price in a rate hike before the end of the year.
• UK political uncertainty and concerns about economic growth continue to limit the British Pound’s upside potential.

GBP/USD trades around 1.3390 on Tuesday at the time of writing, up 0.42% on the day, mainly benefiting from a weaker US Dollar (USD) following confirmation that direct attacks between Israel and Iran have ceased. The easing geopolitical backdrop reduces demand for safe-haven assets and weighs on the Greenback, providing support for the pair.

However, the British Pound’s (GBP) gains remain limited despite a shift in monetary policy expectations in the United Kingdom (UK). While markets had previously expected the Bank of England (BoE) to deliver two rate cuts this year, the outlook has been completely reversed. Investors are now pricing in a 25-basis-point rate hike before the end of the year, according to estimates cited by CNBC.

At first glance, this development may appear supportive for the British currency, but several factors explain why the market reaction remains restrained. First, expectations for tighter monetary policy reflect concerns about persistent inflation, particularly driven by higher energy prices, rather than an improvement in the economic outlook. Investors fear that higher interest rates could be implemented in an environment of weak growth or even economic stagnation.

BBH argues that the current backdrop leaves the British Pound vulnerable to a correction against the US Dollar. The bank believes that higher rates in an economy facing stagflationary pressures are not necessarily bullish for the currency, although they may help cushion the downside.

Meanwhile, political developments continue to weigh on market sentiment. UK Prime Minister Keir Starmer’s authority has been weakened by several government resignations, increasing uncertainty about the country’s political stability. This situation encourages investors to remain cautious despite expectations of a more restrictive monetary policy stance.

On the Bank of England (BoE) side, some Monetary Policy Committee (MPC) members are advocating for a near-term rate increase. However, Société Générale believes these policymakers are likely to remain in the minority and expects the central bank to adopt a more cautious approach at upcoming meetings.

Investors are now focused on the upcoming UK Gross Domestic Product (GDP) data release and US inflation figures. These reports could shape expectations for both the Bank of England and the Federal Reserve (Fed), and ultimately determine the next direction for GBP/USD.

ING’s Frantisek Taborsky says Hungary’s May inflation at 1.8% year-on-year confirms an idiosyncratic disinflation story and makes a June NBH easing cycle “a done deal”, with an initial 25 bp cut to 6.00% and 75 bp total this year. EUR/HUF remains around 355, with a mid-year target of 350 as conviction on rate cuts grows.

Low inflation anchors forint outlook

"Inflation in Hungary in May remained unchanged at 1.8% YoY, below market expectations (2.2%) and below the 3% forecast in the National Bank of Hungary's March inflation report. This confirms that Hungary remains in its idiosyncratic story since the April elections and the combination of sharp FX appreciation and price shields is keeping inflation low despite the pro-inflationary global story."

"The start of an easing cycle in June seems like a done deal, and we expect 25bp to 6.00%. For the rest of the year, our economists see 75bp of easing overall, but today's soft CPI data can probably see the market pricing more than that."

"Yesterday's headlines from Governor Zoltan Kurali suggest that easing is coming, but the central bank does not want to rush. This means we cannot expect any bigger steps than 25bp."

"Meanwhile, EUR/HUF is showing admirable stability at 355 despite the deterioration of global sentiment. As long as EUR/HUF remains stable or grinds down, we believe that conviction regarding NBH rate cuts is growing. At the same time, we maintain 350 EUR/HUF as the target in our mid-year forecast."

"The June NBH meeting is only two weeks away and the global situation could still change in the meantime. However, the risk is rather on the positive side for Hungary given the escalation of the Middle East conflict over the weekend and the stronger US dollar at the moment."

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

• EUR/GBP hesitates above 0.8630, two-week lows, awaiting the ECB's decision.
• Mixed German macroeconomic data have failed to support the Euro.
• The pair has broken the base of a triangle pattern, hinting at a downside continuation.

The Euro (EUR) trades lower against the British Pound (GBP) on Tuesday, with bears testing support at two-week lows in the area of 0.8630, and bearish momentum building up. Mixed data from Germany has failed to provide support to the pair, although hopes that the European Central Bank (ECB) will hike rates on Thursday are keeping the Euro from depreciating further.

Data released earlier in the day revealed that German Industrial Production bounced back in April, following two consecutive contractions, while the trade surplus narrowed moderately, contrary to expectations. The data had minimal impact on Euro crosses.

Later on the day, ECB President Christine Lagarde is likely to confirm that the bank will hike rates on Thursday, pressured by the soaring inflationary levels. In the UK, the focus will be on the monthly Gross Domestic Product (GDP) and Manufacturing Production figures, due on Friday.

Technical Analysis: Bears pierce the base of the triangle

EUR/GBP trades at 0.8634, sitting just above two-week lows at 0.8630, after breaching the base of a symmetrical triangle pattern, which is holding bulls right now. Momentum indicators in the 4-hour chart endorse the bearish view, with the Relative Strength Index (RSI) hovering in the low 40s and the Moving Average Convergence Divergence (MACD) at treading within negative territory.

A break of the support level around 0.8630, which has held bears several times in June, brings the 2026 lows in the area of 0.8610-0.8620 into focus. On the upside, the reverse trendline, now at 0.8637, is capping upside attempts. If price action returns above that level, the June 4 and 5 highs, at 0.8655 and the triangle top, now at 0.8665, would be the next targets.

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

• The National Bank of Poland continued to add to its Gold reserves in April, becoming the top buyer among central banks so far this year.
• Globally, central banks resumed net purchases in April after recording net sales seen a month earlier.
• Gold prices remain subdued despite continued demand from central banks due to elevated global bond yields.

Poland’s central bank was the top Gold buyer in April among its peers, consolidating its position as one of the world’s most active sovereigns that accumulate the precious metal.

The bank bought 14 tonnes of Gold in the month, bringing the country’s year-to-date purchases to 45 tonnes, according to the most recent data published by the World Gold Council (WGC). 

Poland’s central bank Gold purchases so far this year have exceeded those of Uzbekistan and China, the second and third in the ranking, respectively.

The National Bank of Poland’s Gold holdings are at 595 tonnes, about 30% of its total reserves. The bank has doubled down its bet on the precious metal as a geopolitical hedge due to increased uncertainty.  

Data from the WGC shows that global central banks resumed net Gold purchases in April, rebounding from the net sales reported in March. Back then, the immediate economic fallout from the Iran war forced some sovereigns in emerging markets to offload Gold to protect their currencies.

Central bank buying has been a key driver of Gold’s rally, which saw the metal almost double in price in 2025. The pace of purchases jumped significantly in 2022, after Russia’s foreign reserves were immobilized following its invasion of Ukraine.

Gold touched an all-time high of around $5,600 per troy ounce in January but has fallen about 23% since then, trading at around $4,300. 

Gold’s most recent correction, which has driven its price below its 200-day Simple Moving Average since October 2023, has been triggered by a surprisingly strong US jobs report for May, which prompted markets to price in upcoming interest-rate hikes by the Federal Reserve. As Gold doesn’t yield interest, investors have fled to other interest-bearing assets such as bonds.