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MUFG’s Derek Halpenny argues that the ongoing United States (US) blockade in the Strait of Hormuz is building a significant inflation shock for the US and globally, with Oil and input costs surging. He notes that President Trump’s strategy of squeezing Iran’s energy revenues is time‑consuming and politically costly, and expects rising inflation and global central bank responses to increasingly shape US Dollar performance.
Blockade-driven price pressures and policy risk
"The US blockade in the Strait of Hormuz continues with little sign of any progress toward another round of peace talks. President Trump has ordered the US navy to shoot at any boat laying mines while the US military stated that it had intercepted two oil supertankers that had tried to evade the blockade. The focus now is fully on the Strait of Hormuz and pressuring Iran into shifting its position."
"However, Iran knows there is a time limit for the US as well and the inflationary impact of the closure will have a US and global impact that will be damaging for President Trump. The risk must be that Iran’s tolerance for pain will be considerable and in that regard this stalemate could drag on to the extent that crude oil prices soon hit new highs and create greater financial market volatility."
"So this remains an issue of time and if President Trump’s strategy is to squeeze Iran dry of energy revenues, then time will be required, which we would argue President Trump doesn’t have. These prices are likely to get worse over the coming weeks if the Strait of Hormuz remains closed – our assumption based on crude oil prices average USD 115pbl in Q2 would see annual inflation pick up to around 3.6% in Q2 to 3.8% in Q3 and Q4 this year. The impact on refined fuels and fertiliser prices could mean these estimates are too low."
"This will have implications for inflation globally too of course and for Europe we maintain that the ECB and BoE will be quicker to act than the Federal Reserve which will continue to weigh on US dollar performance, especially under circumstances of equity market resilience continuing"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- WTI US Oil declines as markets price in tentative hopes of de-escalation in the Middle East.
- Hopes for talks between Iran and the United States remain fragile and uncertain.
- US consumer sentiment deteriorates, reviving economic concerns.
West Texas Intermediate (WTI) US Oil trades around $92.55 at the time of writing on Friday, down 3.28% on the day, marking a notable pullback after reaching recent highs earlier in the week. This move comes as markets reassess expectations for a swift de-escalation in tensions between Iran and the United States (US).
Iran’s Foreign Minister Seyed Abbas Araghchi is traveling to Pakistan for another round of indirect discussions with Washington, aiming to revive diplomatic dialogue. Tensions around the Strait of Hormuz continue to fuel concerns over global supply. Disruptions to maritime traffic and sporadic military actions are maintaining a structural upside risk for Crude prices, even as the current correction reflects short-term market repositioning.
At the same time, US economic data is adding further pressure. The University of Michigan Consumer Sentiment Index fell to 49.8 in April, its lowest level in decades, signaling growing pessimism among households. Inflation expectations are also rising, partly driven by higher energy prices, further complicating the economic outlook.
This environment is leading to a more cautious view of future Oil demand, as investors grow concerned about a potential slowdown in consumption in the world’s largest economy. Despite persistent geopolitical risks, these factors are helping to cap the upside in WTI prices in the near term.
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.
TD Securities analysts expect a broadly neutral near-term impact on the Canadian Dollar (CAD) from a more balanced Bank of Canada (BoC) tone. With USD/CAD trading back near pre-conflict levels, they see the pair fluctuating around current levels through Q2 2026 before gradually moving lower toward 1.34 by year-end as their bearish USD view plays out.
TD sees range trade then gradual CAD gains
"Risks to Canada's outlook are more two-sided now, allowing the BoC to strike a more neutral tone with limited CAD impact. We expect USD/CAD to chop around current levels through Q2 before eventually trending lower into H2 toward 1.34."
"Risks to the Canadian outlook appear more balanced and two-sided now which should allow the BoC to keep a more cautiously neutral outlook without signaling the need for any imminent action. Against this backdrop, a more balanced tone—compared to the otherwise dovish communication we have seen from the BoC this year, should have a more muted impact on the CAD."
"With USD/CAD back around pre-conflict levels and market putting peak geopolitical shock and uncertainty premia behind, we expect the USD/CAD to be choppy and trade around current levels through Q2."
"We maintain our bearish USD lean in 2026 and see USD/CAD falling to 1.34 by year-end. USMCA poses an asymmetric risk for USD/CAD in our view – a deal in place is likely to lift CAD sentiment and positioning positively a lot more than lack of a deal. We expect USMCA compliant goods to remain exempt from tariffs irrespective of a deal."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- DJIA futures churn in a wide range as fresh headlines on Iran talks in Pakistan pull traders in both directions.
- Hopes for a quick resolution faded after Iran framed Araghchi's trip as a bilateral tour rather than direct negotiations with the US.
- University of Michigan Consumer Sentiment jumps to 49.8 from 47.6 expected, though April still prints a record low.
- Year-ahead inflation expectations ease to 4.7%, while the five-year gauge ticks up to 3.5%.
Dow Jones Industrial Average (DJIA) futures are trading broadly flat in the early afternoon GMT on Friday, holding above 49,100 after a choppy session that saw prices swing between 48,900 and 49,500. Risk sentiment is being pulled in opposing directions by renewed US-Iran diplomacy headlines out of Islamabad and a stronger-than-expected University of Michigan (UoM) Consumer Sentiment print that nonetheless left April at its weakest reading on record. The prior session closed lower, with the cash index shedding around 0.36% as tech earnings weighed.
Witkoff and Kushner head to Pakistan as Araghchi arrives
US special envoy Steve Witkoff and senior adviser Jared Kushner are set to land in Islamabad this weekend to take part in talks alongside Iranian Foreign Minister Abbas Araghchi, who flew into Pakistan on Friday evening local time. The news triggered a brief risk-on burst during European hours, with DJIA futures pushing back above 49,400 and Oil prices easing as traders leaned into the possibility of a restart of the stalled second round of negotiations. Vice President JD Vance is not currently joining the trip, given that Iran's lead negotiator from the first round, parliamentary speaker Mohammad Bagher Ghalibaf, is also absent, which the White House reads as a signal that Tehran is not yet ready to commit to a full second round.
Iran's bilateral framing dims resolution odds
The enthusiasm proved short-lived. Iranian state media IRNA explicitly framed Araghchi's trip as a bilateral visit to Pakistani officials rather than a direct engagement with the US delegation, with onward stops in Muscat and Moscow. Araghchi himself posted on X that the purpose was to coordinate with partners on bilateral matters and consult on regional developments, making no mention of Washington. Combined with Ghalibaf's absence, the odds of a substantive breakthrough on this particular trip look slim, and DJIA futures faded their earlier gains as traders registered the gap between the optics and the substance.
UoM sentiment beats but remains at record lows
The final April UoM Consumer Sentiment Index printed at 49.8, well ahead of the 47.6 consensus but still the weakest on record and down 6.6% from March. The Consumer Expectations subindex came in at 48.1 versus 46.1 expected. On the inflation side, one-year ahead expectations eased to 4.7% from 4.8%, while the five-year gauge ticked up to 3.5% from 3.4%, nudging the stickier end of the inflation picture higher just as the Federal Reserve (Fed) weighs the passthrough from elevated Oil prices into upcoming Consumer Price Index (CPI) readings. The mix is an awkward one for equities, as it pushes back against any near-term dovish Fed pivot without meaningfully improving the growth picture.
Strait of Hormuz standoff continues to cap upside
Beyond the diplomacy headlines, the underlying Iran backdrop remains tense. The US naval blockade of the Strait of Hormuz is still in place, with President Donald Trump refusing to lift it before a deal is struck, while Iran continues to assert operational control of the waterway. Reports of sanctioned vessels still transiting the strait underscore the standoff, and so long as Oil supply risk premia stay elevated, DJIA futures look unlikely to cleanly reclaim the 49,500 zone brushed earlier in the week without a genuine, confirmed restart of direct US-Iran talks.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- EUR/USD rebounds as renewed US-Iran talks hopes weigh on the US Dollar.
- Markets await Fed and ECB monetary policy meetings as oil-driven inflation clouds outlook.
- US consumer sentiment improves, while inflation expectations remain elevated.
EUR/USD rises on Friday, snapping a three-day losing streak as prospects of renewed US-Iran peace talks lift market sentiment and weigh on the US Dollar (USD). At the time of writing, the pair is trading around 1.1715, up 0.27% on the day, recovering from two-week lows.
CNN reported that US President Donald Trump is sending envoys Steve Witkoff and Jared Kushner to Pakistan for talks with Iran. This follows earlier reports that Iran’s Foreign Minister Abbas Araghchi is set to travel to Pakistan.
Iran’s Tasnim news agency said Araghchi will outline Tehran’s considerations for ending the war, while IRNA noted the visit is bilateral with Pakistani officials, indicating that contacts with the US remain indirect for now.
The developments have raised hopes for renewed US-Iran talks, reducing safe-haven demand for the US Dollar. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is easing from a one-week high near 98.94 to trade around 98.56, down about 0.27% on the day.
However, uncertainty persists over whether direct talks between Washington and Tehran will materialize. Tehran has previously ruled out negotiations under current conditions, citing the ongoing US naval blockade as a key obstacle.
Looking ahead, traders will closely monitor US-Iran developments, particularly whether Washington eases the naval blockade and Tehran moves to reopen the Strait of Hormuz. Until then, the strait remains under a dual blockade, keeping Oil prices elevated and inflation pressures in focus.
Beyond geopolitics, attention is gradually shifting to next week’s monetary policy decisions from major central banks, including the Federal Reserve (Fed) and the European Central Bank (ECB).
Both central banks are widely expected to keep interest rates unchanged amid mounting inflation concerns driven by rising Oil prices. The focus will be on forward guidance and how policymakers balance inflation risks against growth concerns.
On the data front, the University of Michigan’s Consumer Sentiment Index for April rose to 49.8, above the forecast of 47.6 and matching the previous reading. The Consumer Expectations Index also improved to 48.1 from 46.1, beating expectations. Meanwhile, 1-year inflation expectations eased slightly to 4.7% from 4.8%, while the 5-year outlook edged higher to 3.5% from 3.4%.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
- GBP/USD appreciates on ceasefire hopes and Iran talks.
- Weak US sentiment data added pressure on the Greenback.
- UK Retail Sales beat forecasts, helping the Sterling stay supported.
GBP/USD advances on Friday as improved risk appetite weighed on the US Dollar’s (USD) safety appeal amid growing speculation that a second round of talks between the US and Iran looms. A three-week extension of the ceasefire between Israel and Lebanon added to traders’ optimism.
Sterling firms as softer US sentiment and solid UK sales help
The GBP/USD pair trades at 1.3498, up 0.24% after bouncing off daily lows of 1.3453, amid renewed hopes for an end to the conflict between the US and Iran.
Newswires reported that Iran’s Foreign Minister Abbas Araghchi will present a proposal for talks with the US, according to Pakistani sources. He and a small delegation are expected to meet with Pakistani mediators to discuss a potential resumption of negotiations with Washington.
Data in the US revealed that households are becoming pessimistic about the economy. The University of Michigan (UoM) Consumer Sentiment in April fell from 53.3 in March to 49.8, the lowest level since 1978. Inflation expectations for one year rose from 3.8% to 4.7%, while those for a five-year term increased from 3.4% to 3.5%.
Joanne Hsu, the director of the poll, said that “The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices.”
Consequently, traders do not expect the Federal Reserve (Fed) to cut rates in 2026, according to Prime Terminal data. This could put downward pressure on GBP/USD if the UK’s economy weakens further, forcing the Bank of England (BoE) to ease policy.
Fed implied forward rates
In the UK, core Retail Sales exceeded estimates, rising by 0.7% MoM in March, boosted by petrol sales, up from -0.6% in February, the Office for National Statistics (ONS) reported. Yearly, headline Retail Sales expanded by 1.7%, above forecasts but slightly below the previous print.
Next week, the US economic docket will feature the Federal Reserve’s monetary policy decision along with GDP, Durable Goods Orders, and jobs data. In the UK, traders will eye the Bank of England’s interest rate decision.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3516, holding a constructive bullish tone as the spot remains above the clustered simple moving averages around 1.3411. Price also trades over the former descending trend line, whose break level near 1.2986 now underpins the broader recovery, suggesting dips are likely to find buyers while the pair stays north of the moving average support area.
On the downside, immediate support is aligned with the 1.3516 area, where the latest close and current session open converge, ahead of the triple simple moving average zone near 1.3411. A deeper pullback would eye the reclaimed descending trend-line break around 1.2986 as a more distant structural floor, while on the topside bulls would need to challenge the prior rising trend-line break region near 1.3866, which now acts as the next significant resistance cap.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on April 24 at 16:43 to say that UK Retail Sales rose 0.7% MoM in March, not 0.2%.)
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.22% | -0.19% | 0.37% | -0.07% | -0.34% | -0.26% | 0.45% | |
| EUR | -0.22% | -0.39% | 0.00% | -0.26% | -0.52% | -0.52% | 0.23% | |
| GBP | 0.19% | 0.39% | 2.17% | 0.15% | -0.13% | -0.11% | 0.63% | |
| JPY | -0.37% | 0.00% | -2.17% | -0.42% | -0.63% | -0.63% | 0.10% | |
| CAD | 0.07% | 0.26% | -0.15% | 0.42% | -0.17% | -0.21% | 0.50% | |
| AUD | 0.34% | 0.52% | 0.13% | 0.63% | 0.17% | 0.09% | 0.76% | |
| NZD | 0.26% | 0.52% | 0.11% | 0.63% | 0.21% | -0.09% | 0.70% | |
| CHF | -0.45% | -0.23% | -0.63% | -0.10% | -0.50% | -0.76% | -0.70% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- EUR/GBP trades range-bound on Friday, set for third straight weekly loss.
- Strong UK Retail Sales support the Pound, while weak German IFO weighs on the Euro.
- Traders await the ECB and BoE monetary policy meetings next week.
EUR/GBP trades in a tight range on Friday, fluctuating between minor gains and losses as markets show a muted reaction to the latest economic data, with traders remaining focused on geopolitical developments surrounding the US and Iran. At the time of writing, the cross is hovering around 0.8671, broadly flat on the day and on track for a third consecutive weekly decline.
The British Pound (GBP) is finding support from stronger-than-expected Retail Sales data, while the Euro remains under pressure after Germany’s latest IFO Business Climate Index came in weaker across the board, highlighting deteriorating business sentiment amid rising energy prices and ongoing Middle East tensions.
UK Retail Sales data for March pointed to resilient consumer demand. Headline Retail Sales rose by 0.7% MoM, beating expectations of 0.2% and reversing the previous 0.6% decline. On an annual basis, sales rose by 1.7% YoY, easing slightly from 1.8% previously but still above forecasts of 1.3%.
Germany’s IFO Business Climate Index for April fell to 84.4 from 86.3, missing expectations of 85.5. The Current Assessment gauge declined to 85.4 from 86.7, below the 86.2 forecast, while the Expectations Index dropped to 83.3 from 85.9, also coming in under estimates of 85.
On the geopolitical front, market sentiment improved somewhat after reports that Iran’s Foreign Minister Abbas Araghchi is expected in Islamabad, raising hopes that diplomatic channels could reopen after stalled talks. However, Iran’s state news agency IRNA said the visit is aimed at discussions with Pakistani officials rather than direct engagement with the US.
Uncertainty remains over whether direct talks with the US will materialize, as the ongoing US naval blockade, which Tehran sees as a key obstacle, continues to weigh on prospects for negotiations. With the Strait of Hormuz still under a dual blockade, risks of Oil supply disruptions remain elevated, keeping energy prices high, fueling inflation concerns, and complicating the monetary policy outlook for both the Bank of England (BoE) and the European Central Bank (ECB).
Attention now turns to next week’s policy meetings, where both central banks are widely expected to keep interest rates unchanged. The focus will be on forward guidance, particularly how policymakers assess the impact of elevated energy prices, with markets looking for clearer signals on the interest rate path as traders increasingly price in potential rate hikes.
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.
Nomura’s George Buckley and team expect the Bank of England (BoE) to leave Bank Rate unchanged at 3.75% next week, with a likely 8-1 vote and Huw Pill as the sole hawk. They see higher inflation and slightly weaker growth in new forecasts, no rate moves through end-2027, but asymmetric risks of near-term hikes and later cuts.
MPC seen on prolonged policy hold
"The Bank of England announces its rate decision and publishes a new set of forecasts next Thursday at midday. We expect no change in rates, with one member voting for a hike, fuller guidance, notably higher inflation and modestly weaker growth forecasts."
"A hold decision from the MPC next week looks highly likely. Even financial markets, which are pricing in more than two hikes before year-end, see only a 2-3bp risk of a hike on 30 April."
"On balance, however, we judge that an 8-1 vote for a hold is likely, with Pill being the lone voice for a rate hike this time."
"We see no further moves in policy rates this year or next, though we judge the risks as being to the upside in the near term and to the downside further ahead. Should these risks materialise (hikes followed by cuts) it may not be a ‘policy mistake’; rather the Bank being nimble in initially taking out insurance against second-round inflation effects, then having to reverse course thereafter."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/USD climbs as USD loses intraday traction amid Middle East uncertainty.
- Softer US yields and improved sentiment support risk currencies.
- The upside is fragile, as geopolitics and oil prices remain key drivers.
AUD/USD is pushing higher toward the 0.7140 area on Friday, as the US Dollar (USD) loses momentum despite ongoing Middle East noise, allowing risk-sensitive currencies to recover.
Despite solid economic data from the United States (US) earlier this week, the Greenback is edging lower as the market takes profit on its recent strength. A modest pullback in US yields, combined with a slight improvement in overall risk sentiment, is weighing on the US Dollar, creating space for the Aussie to advance.
While the current backdrop remains marked by elevated geopolitical tensions and rising Oil prices, market reactions have shifted. Instead of focusing solely on safe-haven assets, traders are beginning to show signs of stabilization in sentiment, which typically supports currencies like the Australian Dollar (AUD).
Short-term technical analysis:
On the four-hour chart, AUD/USD trades at 0.7140, hovering around a pivotal horizontal level of the same price as the pair consolidates in a broadly neutral tone. The quote sits above the longer-term 100-period Simple Moving Average (SMA) at 0.7075, which underpins the medium-term structure, but remains capped by the 20-period SMA at 0.7149, signaling a lack of clear directional conviction in the near term. The Relative Strength Index (14) at 47.3 leans slightly to the soft side but stays near the midline, suggesting range-bound momentum rather than a decisive bearish or bullish impulse.
On the topside, immediate resistance is located at the 20-period SMA at 0.7149 and the nearby horizontal barrier at 0.7152, where a sustained breakout would be needed to reopen a more constructive short-term outlook. On the downside, first support emerges at 0.7133, ahead of the 0.7126 horizontal floor, while the 100-period SMA at 0.7075 offers a more substantial medium-term demand zone if sellers regain control.
(The technical analysis of this story was written with the help of an AI tool.)
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