Forex News
- Silver weakens as a stronger USD makes the metal costlier in other currencies.
- US military officials said they have destroyed IRGC posts, air-defense systems, and missile sites.
- Higher US yields curb safe-haven Silver demand; 10-year hits 4.07% amid rising energy-driven inflation fears.
Silver price (XAG/USD) extends its losses for the second successive session, trading around $87.20 per troy ounce during the early European hours on Tuesday. The precious metal faces challenges despite increased safe-haven demand amid the Middle East war.
The dollar-denominated Silver loses attraction amid a stronger US Dollar (USD) as the grey metal becomes more expensive in other currencies. The Greenback strengthens on heightened safe-haven demand amid the Middle East war.
US military officials said on Tuesday that they have destroyed command posts of Iran’s Revolutionary Guards as well as Iranian air defense and missile launch sites since the start of the joint Israeli-US offensive on Saturday.
A Reuters report cited Ebrahim Jabari, senior adviser to the commander-in-chief of the Islamic Revolutionary Guard Corps, as saying: “The Strait of Hormuz is closed. If anyone tries to pass, the Revolutionary Guards and the regular navy will set those ships ablaze.”
Additionally, higher US Treasury yields offset safe-haven demand for Silver. The 10-year yield rose to 4.07% after climbing 10 basis points, as escalating Middle East tensions boosted energy prices and inflation concerns.
Rising fuel costs intensified inflation concerns, prompting traders to reassess the outlook for Federal Reserve (Fed) policy. Expectations for the next Fed rate cut have shifted to July from June, according to the CME FedWatch tool, though markets still price in two 25 basis point reductions.
(This story was corrected on March 3 at 10:10 GMT to say that expectations for the next Fed rate cut have shifted to July from June, not to September from July.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Heightened market volatility due to escalating oil prices amid the war in the Middle East between the United States (US), Iran, and Israel has raised concerns over the likelihood of an interest rate hike by the Bank of Japan (BoJ) in its upcoming monetary policy meeting on March 19.
According to a report from Reuters, three sources familiar with the central bank’s thinking have stated, "It’s become difficult for the BOJ to raise rates.”. The report further added that the Japanese central bank would need time to scrutinise how its “past rate hikes and the Middle East conflict affect the economy and prices”.
The Reuters report also stated that while rising oil prices may push up underlying inflation, they could hurt the economy and warrant a delay in rate hikes if the conflict persists.
The Japanese Yen (JPY) has been underperforming its peers since the day the war started. The currency is down almost 1% against the US Dollar. Given that the Japanese economy relies heavily on imports of oil to meet its energy needs, higher oil prices are an unfavorable situation for the Japanese Yen.
Meanwhile, BoJ Deputy Governor Ryozo Himino expressed confidence on Monday that the central bank could raise interest rates toward neutral, even if the headline inflation falls below 2%. However, he didn’t deliver an explicit timeframe on when the BoJ will raise borrowing rates.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.02% | 0.61% | 0.88% | 0.22% | -0.42% | 0.65% | 1.97% | |
| EUR | -1.02% | -0.42% | -0.15% | -0.79% | -1.42% | -0.36% | 0.94% | |
| GBP | -0.61% | 0.42% | 0.06% | -0.39% | -1.02% | 0.05% | 1.35% | |
| JPY | -0.88% | 0.15% | -0.06% | -0.63% | -1.26% | -0.14% | 1.09% | |
| CAD | -0.22% | 0.79% | 0.39% | 0.63% | -0.67% | 0.49% | 1.75% | |
| AUD | 0.42% | 1.42% | 1.02% | 1.26% | 0.67% | 1.07% | 2.39% | |
| NZD | -0.65% | 0.36% | -0.05% | 0.14% | -0.49% | -1.07% | 1.31% | |
| CHF | -1.97% | -0.94% | -1.35% | -1.09% | -1.75% | -2.39% | -1.31% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Danske Research Team expects Euro area headline inflation to rise to 1.8% year-on-year in February, with core inflation steady at 2.2%. National data were mixed, but services inflation momentum appears to have picked up after a tax-driven dip in January. The bank anticipates services inflation dynamics similar to late last year.
Euro area data focus on inflation
"In the euro area, flash February inflation is released today. We expect headline inflation to rise to 1.8% y/y and core inflation to remain at 2.2%.
"Inflation in France and Spain came in higher than expected while Germany was below expectations."
"The momentum in services inflation picked up again in February after a very low January print which was due to lower taxes."
"So, we expect momentum in services inflation to be similar to November and December."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
BNY macro strategist John Velis maintains a forecast for three Federal Reserve rate cuts in the second half of the year despite geopolitical tensions and firmer producer prices. He argues that a weakening U.S. labor market will ultimately drive easier policy, potentially steepening the curve as front-end yields fall and long-end yields rise.
Labor concerns anchor dovish Fed outlook
"Against the backdrop of current geopolitical events, we don’t alter our view for three rate cuts in the second half of the year. The market’s rates curve hasn’t materially moved since the attacks began – with two cuts for the year, even with slightly higher (for the moment) oil prices and a small concomitant increase in inflation expectations on the day."
"Inflation last week, in the form of producer prices, was disappointingly high, driven largely by services – especially trade services, which is a proxy for margins. As firms pass on higher prices due to tariffs, their margins should rise, and this subcategory of the PPI increased by 4.2%."
"Our rate call, however, rests on our concern over the labor market, which we note is at best flat and could be in for another turn lower. Even in a sticky inflation world, we think that if the labor market deteriorates further, the FOMC will address that with looser policy at the expense of inflation."
"This could have the related effect of raising long-end yields, even as front-end yields would likely fall, resulting in a steeper curve."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/JPY holds steady near 111.45 in Tuesday’s early European session.
- The cross keeps the positive vibe above the key 100-day EMA, with bullish RSI momentum.
- The immediate resistance level emerges at 111.90; the first downside target to watch is 109.80.
The AUD/JPY cross trades on a flat note around 111.45 during the early European session on Tuesday. Hawkish rhetoric from the Reserve Bank of Australia (RBA) could provide some support to the Australian Dollar (AUD) against the Japanese Yen (JPY).
RBA Governor Michele Bullock said on Tuesday that a rate hike is possible in March if the policy-making board decides inflation expectations are at risk of becoming unanchored, and markets should be aware of that. Markets have priced in nearly a 30% chance of a quarter-point rise at the March meeting, while fully pricing a tightening for May, according to Reuters.
On the other hand, fears of a prolonged conflict in the Middle East could boost safe-haven currencies such as the JPY and act as a headwind for the cross. US military officials said on Tuesday that they have destroyed command posts of Iran’s Revolutionary Guards as well as Iranian air defense and missile launch sites since the start of the joint Israeli-US offensive on Saturday.
Technical Analysis:
In the daily chart, the near-term bias of AUD/JPY is bullish as price holds well above the rising 100-day exponential moving average near 105.10, confirming an established uptrend. The latest candle sits just under the upper Bollinger Band around 111.93, showing strong upside pressure with volatility expanding as the bands widen. RSI at 66.81 stays above its midline and out of overbought territory, indicating firm yet not exhausted bullish momentum and favoring continuation rather than immediate mean reversion.
Initial resistance emerges at the recent upper Bollinger Band area near 111.90, and a clear break above this zone would expose the next psychological barrier at 112.50. On the downside, first support aligns with the Bollinger middle band and prior congestion around 109.80, followed by stronger demand at the 107.70–108.00 region, where the lower band began to flatten on the last pullback. A deeper correction toward the 105.00–105.10 area would bring price into contact with the rising 100-day EMA, which protects the broader bullish structure as long as it holds.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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