Forex News

• The New Zealand Dollar rises for a second consecutive day against the US Dollar.
• New Zealand inflation comes in above expectations, reinforcing bets on tighter monetary policy.
• Market sentiment improves slightly amid hopes for renewed talks between the United States and Iran.

NZD/USD trades around 0.5900 on Tuesday at the time of writing, up 0.20% on the day, extending its rebound from the lows near 0.5850 recorded on Monday. The pair’s upward movement mainly reflects the strength of the New Zealand Dollar (NZD), supported by stronger domestic inflation data, while the US Dollar (USD) remains constrained by mixed macroeconomic signals.

The latest data show that inflation in New Zealand, measured by the Consumer Price Index (CPI), increased by 0.9% QoQ in the first quarter, beating market expectations of 0.8% and accelerating from the 0.6% rise recorded in the previous quarter. On an annual basis, inflation remained steady at 3.1%, above the 2.9% forecast, confirming that price pressures remain persistent.

These figures keep inflation slightly above the Reserve Bank of New Zealand (RBNZ) target range of 1% to 3% and strengthen speculation about a possible tightening of monetary policy in the coming months. Several market participants now anticipate a potential rate hike as early as the May meeting, which is providing short-term support to the Kiwi.

According to analysts at Commerzbank, a rate increase could indeed provide temporary support to the New Zealand Dollar. However, the bank notes that stagflation risks, particularly linked to rising energy prices, could weigh on growth prospects and limit the medium-term upside potential of the NZD.

On the global front, risk appetite has improved slightly after reports suggesting a possible resumption of talks between the United States (US) and Iran, although uncertainty remains high regarding the timing and credibility of these negotiations. This relative easing in tensions tends to favor risk-sensitive currencies such as the Kiwi.

Meanwhile, the US Dollar Index (DXY), which measures the performance of the US Dollar against a basket of six major currencies, is hovering around 98.30. Investors are assessing the latest US data, including March Retail Sales, which rose by 1.7% MoM, exceeding expectations. Despite the resilience of the US economy, these figures have not been sufficient to fully revive the Greenback’s upward momentum.

Markets are also closely monitoring geopolitical developments in the Middle East as the temporary truce between the United States and Iran approaches its deadline. US President Donald Trump indicated that Washington is ready for military action if negotiations fail, maintaining a high level of uncertainty across global markets.

Kevin Warsh, United States (US) President Donald Trump's nominee to replace Jerome Powell as the next chair of the Federal Reserve (Fed), told the Senate Banking Committee that fundamental policy reforms are needed.

Key takeaways

"No more pressing question than cost of living."

"We are dealing with the legacy of Fed's policy errors."

"Need regime change."

"Need new inflation framework."

"Need to use tools differently."

"Interest rate tool is fairer."

"Need new communications."

"We try to keep politics out of the Fed."

"Fed has wandered outside of remit in recent years, I won't do that."

"Fed holds onto its forecasts longer than it should."

"Price stability should be a change in prices so that no one is talking about it."

"Independence is critically important but must be earned."

"Independence earned by delivering on promises."

"Essential that Fed officials can change their minds."

"If mistakes are made, central bankers must correct them fast."

"I don't believe in forward guidance."

"The Fed will have to dig deep in upcoming meetings."

"Skeptical of forward guidance."

"The supply side of the economy is changing dramatically."

“Monetary policy works with lags.”

“I think the inflation trend is quite favorable.”

“My broad sense is inflation risk has improved somewhat.”

“I'm most interested in underlying inflation rate.”

“The data being used to judge inflation is quite imperfect.”

“We need to see what real inflation rate is.”

“I don't agree that inflation overshoot is due to tariffs.”

“Fed's inflation task could ease over time.”

“Due to AI's impact, revisiting the Fed's models is crucial.”

“Limited time to reduce inflation.”

“Tends to prefer chaotic meetings, family disputes.”

“Too many Fed officials opine in advance on rate path.”

“Told Trump using rates is better than buying bonds.”

“Fed needs to get out of the fiscal business.”

“A smaller ballance sheet would mean rates could lower, inflation get better, economy stronger.”

This section below was published as a preview of Fed Chair nominee Kevin Warsh's testimony at 09:00 GMT.

• Fed Chair nominee Warsh will testify on Tuesday.
• Warsh's prepared remarks highlight his commitment to Fed's independence.
• Investors are likely to remain focused on US-Iran news.

Kevin Warsh, United States (US) President Donald Trump's nominee to replace Jerome Powell as the next chair of the Federal Reserve (Fed), will testify before the Senate Banking Committee on Tuesday.

According to Warsh's prepared remaks released on Monday, he will tell lawmakers that he is "committed to ensuring that the conduct of monetary policy remains strictly independent."

Warsh will argue that a reform-oriented Fed can make a real difference and underscore that he is committed to "working with the administration and congress on non-monetary matters that are part of the Fed’s remit."

After delivering his prepared remarks, Warsh will respond to questions from the members of the Senate Banking Committee.

The CME FedWatch Tool currently shows that markets are pricing about a 60% probability of the Fed leaving the policy rate unchanged at 3.5%-3.75% at end-2026. Back in January, around the time when Warsh was officially nominated for the position, markets were forecasting three 25 basis points interest-rate cuts this year. Since then, expectations have changed dramatically, due to surging crude Oil prices feeding into inflation fears after the US and Israel carried out a joint operation against Iran.

Although Warsh is likely to be asked about potential policy-easing steps in the near future, he could refrain from offering any preferences, given the uncertainty surrounding the situation in the Middle East. Hence, the market reaction to Warsh's testimony could remain muted, with investors staying focused on US-Iran news.

US President Trump said on Monday that an extension to the US-Iran ceasefire, which is due to expire this Wednesday, was "highly unlikely." Although there are reports suggesting that the second round of talks between the US and Iran could take place before the deadline, Mohammed Bagher Ghalibaf, Iran’s chief negotiator and parliament speaker, said that they will not accept negotiations "under the shadow of threats,” and added that they have been preparing “to reveal new cards on the battlefield.”

• AUD/USD falls as softer USD offsets geopolitical caution.
• Mixed US data and lower yields cap US Dollar strength despite solid labor signals.
• End of ceasefire and Hormuz uncertainty keep markets cautious, limiting the Aussie's gain.

The AUD/USD fell near the 0.7160 level on Tuesday, maintaining a constructive tone as the US Dollar (USD) gained momentum amid destabilizing risk sentiment.

Recent data from the United States (US) has sent mixed signals, which has limited the US Dollar’s potential for growth. Although previous reports indicated robust consumer activity and strong labor conditions. The 4-week average of the ADP Employment Change recently rose to 54.8K from 39K, highlighting strength in the labor market; however, this improvement has not been sufficient to fully boost USD momentum.

Diplomatic efforts to stabilize relations between the US and Iran remain uncertain, with contradictory reports about potential negotiations. A second round of talks is expected to take place in Islamabad, but these discussions face significant credibility challenges. Several media outlets have suggested that Iran might send a delegation for talks. However, Iranian state-affiliated channels have denied these claims, stating that no official delegation has traveled for negotiations, casting doubt on the likelihood of near-term diplomatic progress.

As the temporary ceasefire nears its expiration, markets remain cautious. US President Donald Trump has indicated that extending the truce is unlikely, stressing that the Strait of Hormuz will remain closed unless a formal agreement is reached. This position continues to create uncertainty in global trade and energy markets.

Short-term technical analysis:

On the four-hour chart, AUD/USD trades at 0.7161, consolidating just under a dense cap of nearby resistance. The pair sits above the longer-term 100-period Simple Moving Average (SMA) at 0.7028, preserving the broader uptrend structure, but trades slightly below the 20-period SMA at 0.7167, which now acts as an immediate ceiling alongside the horizontal barriers at 0.7166 and 0.7173. The Relative Strength Index (14) has eased back toward the mid-50s, hinting at fading upside momentum without signaling outright bearish pressure.

On the topside, initial resistance is clustered near the 20-period SMA at 0.7167, with a further hurdle at 0.7173 and a stronger barrier near 0.7185. On the downside, immediate support is located at the horizontal level of 0.7152, while the 100-period SMA at 0.7028 underpins the broader bullish structure on deeper pullbacks.

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

• Strong US Retail Sales and firmer labor data lifted the US Dollar.
• UK jobs data was solid, but wage growth continued to cool.
• Traders now await UK CPI and US jobless claims for direction.

GBP/USD retreats on Tuesday, losing 0.18%, as the US Dollar (USD) recovers following a solid US Retail Sales report. Data in the UK showed the labor market remains solid, while traders digest headlines from the Federal Reserve (Fed) Chair nominee, Kevin Warsh, at the US Senate. At the time of writing, the pair trades at 1.3507, after reaching a daily high of 1.3539.

Sterling eases despite firm UK jobs data and Warsh headlines

Market mood is mixed, though US equities are positive, underpinned by strong earnings reports. Speculation about a possible end to the conflict between the US and Iran looms, yet Tehran has yet to confirm its assistance for the talks in Islamabad, Pakistan.

Data from the US showed that Retail Sales rose by 1.7% MoM in March, up from 0.7% and exceeding forecasts of 1.4%. Higher gasoline prices led to a surge in tickets at gas stations, while tax refunds underpinned spending. Yearly, sales increased 4%, matching the prior month’s reading.

Earlier, the ADP Employment Change 4-week average improved from 39K in the previous print to 54.8K, an indication of strength in the job market.

In the UK, the Unemployment Rate fell from 5.2% to 4.9% in the three months to February, though most of the data suggested this was due to an increasing share of students not looking for a job. Average Earnings excluding bonuses in the 3-month rollover until February stood at 3.6% YoY, down from 3.8% in the previous month, indicating that the labor market would not be the driver of inflationary pressure.

Political turmoil in the UK could depreciate Sterling amid rumors that a former UK official was tasked with clearing Peter Mandelson’s clearance to become US ambassador from the Prime Minister’s office.

Meanwhile, the Fed Chair nominee Kevin Warsh noted that he does not believe in forward guidance, adding that both interest rates and the balance sheet are important tools. He reiterated the Fed’s independence, adding that the US President Trump never asked him to commit to any rate decision.

Ahead, the US docket will feature jobless claims data. In the UK, traders will be entertained by the release of March inflation data, with estimates of Core CPI to remain unchanged at 3.2% YoY from February’s, and CPI to rise from 3% to 3.3% YoY for the same period.

GBP/USD Price Forecast: Technical Outlook

In the daily chart, GBP/USD trades at 1.3505, holding above the clustered simple moving averages around 1.3419 and keeping a constructive near-term bias. Price action remains supported by this underlying moving average base, while the broader downward resistance line drawn from the 1.3869 region still looms overhead and hints that gains could increasingly meet supply as the pair approaches the mid‑1.38s.

On the topside, initial resistance is seen near the former uptrend break zone around 1.3850, followed closely by the descending trend line originating at 1.3869, which together define a dense cap for any extension higher. On the downside, immediate support is aligned with the latest close around 1.3505, with a deeper cushion provided by the triple simple moving average cluster near 1.3419, where buyers would be expected to re‑emerge if a corrective pullback develops.

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

(This story was corrected on April 21 at 16:20 to say that the US Retail Sales forecast for March was 1.4% instead of 0.4%.)

• WTI trades around $98.25 on Tuesday, slightly higher on the day but still below its recent highs.
• Investors remain focused on renewed negotiations between Washington and Tehran aimed at ending the conflict.
• Ongoing disruptions in the Strait of Hormuz continue to pose significant risks to global energy supply.

West Texas Intermediate (WTI) US Oil trades around $98.25 at the time of writing on Tuesday, up 0.21% on the day. The US benchmark remains below the recent highs reached earlier in the week, as markets adopt a cautious stance ahead of a new round of negotiations between the United States (US) and Iran.

Hopes of a geopolitical de-escalation are currently limiting further gains in Oil prices. According to several media reports, Iran plans to send a delegation to Islamabad to participate in a second round of talks with Washington. US President Donald Trump indicated that Vice President JD Vance could travel to Pakistan to resume negotiations, as the current ceasefire between the two countries approaches its expiration.

Despite these diplomatic prospects, the situation in the Strait of Hormuz continues to disrupt global energy flows. This strategic passage handles about 20% of global Oil trade and nearly 30% of the world’s Gas production. Military tensions and recent maritime incidents have significantly slowed shipping traffic in the area, heightening concerns about supply.

The head of the International Energy Agency (IEA), Fatih Birol, stated on Tuesday that the conflict involving Iran has triggered “the worst energy crisis in history,” suggesting that its impact could exceed the Oil crises of 1973, 1979, and 2022 combined.

Several financial institutions believe markets may be underestimating the scale of the current disruptions. Analysts at ING argue that optimism surrounding the negotiations is masking the risk of prolonged supply interruptions, which could keep a higher price floor for Oil throughout the rest of the year.

Investors now await the weekly US Crude inventory data from the American Petroleum Institute (API). Market consensus expects a draw of about 1 million barrels for the week ending April 17, following a sharp increase of 6.1 million barrels in the previous week.

• EUR/USD trades lower as USD steadies after recent weakness.
• US Retail Sales come in stronger than expected, driven by higher gasoline prices.
• US-Iran tensions and the ceasefire deadline keep market sentiment cautious.

EUR/USD trades under pressure on Tuesday as the US Dollar (USD) steadies after recent weakness, with upbeat US economic data and weaker Eurozone sentiment adding further downside pressure on the Euro (EUR). However, the pair lacks follow-through selling and remains near recent highs, as market sentiment stays cautious amid uncertainty surrounding potential US-Iran peace talks.

At the time of writing, EUR/USD is trading around 1.1755. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is hovering around 98.32.

US data released earlier in the day showed that headline Retail Sales rose by 1.7% MoM in March, beating expectations of 1.4% and accelerating from February’s 0.7% increase driven largely by a sharp increase in gasoline prices amid escalating tensions with Iran.

The Retail Sales Control Group, which feeds into GDP calculations, increased by 0.7%, while Retail Sales excluding Autos rose by 1.9%, both above expectations. At the same time, labor market data showed strength, with the ADP Employment Change 4-week average rising to 54.8K from 39K.

Overall, the latest data suggest the US economy remains resilient, despite ongoing geopolitical uncertainty, which could force the Federal Reserve (Fed) to maintain its current policy stance for longer, particularly with Oil-driven inflation risks still in focus.

Traders are also digesting comments from Kevin Warsh, the Fed Chair nominee, who called for a new inflation framework and a “regime change” in policy, while criticizing the Fed for holding onto its forecasts for too long.

However, attention remains firmly on US-Iran developments ahead of the ceasefire deadline on Wednesday. In an interview with CNBC, US President Donald Trump reiterated that he does not intend to extend the current truce, stating that the US is in a “very strong negotiating position” and is “ready to go militarily” if talks fail, highlighting the risk of renewed escalation.

Prospects for a second round of peace talks expected in Pakistan remain uncertain following the weekend flare-up in the Strait of Hormuz, which has dampened expectations that negotiations will resume, with Iran yet to confirm its participation.

TD Securities' Senior Commodity Strategist Daniel Ghali frames Gold within what he calls the Hegemon trade, tied to perceptions of US power and fiscal sustainability. He argues that a strong currency-defense phase in the Iran war is currently negative for Gold as nations prioritize energy and stability. However, an unfavorable ceasefire or abandonment of currency defense could trigger the next leg of Gold’s bull market via accelerated reserve diversification.

Hegemon trade shapes bullion outlook

"Last year, the debasement trade captured the zeitgeist, most evidently in precious metals."

"Both ultimately relate to the USD's store-of-value function."

"Perceptions of power will play a more critical role in how foreign creditors, central banks, and broader markets assess the hegemon's fiscal sustainability, linking geopolitical staying power to its ability to defend this exorbitant privilege."

"The currency defense stage of this conflict is bearish gold as long as perceptions of complete victory are rising, ultimately deterring gold purchases as nations prioritize energy imports, economic and currency stabilization over reserve diversification."

"Conversely, abandoning the currency defense stage (including via an unfavorable ceasefire) could catalyze the next leg of gold's bull market, amplifying reserve diversification in favor of gold, which captures the lost 'store-of-value' status of US debt, with additional focus on the debt overhang."

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

Rabobank’s Senior FX Strategist Jane Foley argues that UK politics, including questions over Prime Minister Starmer’s position and Labour’s prospects in May elections, will weigh on GBP sentiment. She stresses that GBP’s prior strength reflected aggressive Bank of England tightening expectations, which have since been pared back, leaving the Pound vulnerable as inflation and rate volatility remain elevated.

UK politics and BoE expectations

"This week UK politics, and particularly Starmer’s vulnerability, has hit the headlines once again after he had to defend his position in the House of Commons over the hiring of Mendelson as US ambassador."

"GBP’s stalwart performance since the beginning of the Middle East war is related to last month’s very sharp about turn in expectations regarding BoE policy."

"In March, the market swung from expecting two 25 bps rate cuts this year to anticipating rate hikes."

"As a result, GBP has fallen down the G10 performance leader board this month as March’s rate hiking expectations were softened."

"Even though GBP benefitted from these inflation concerns last month, we would expect UK political clouds to worry UK markets this spring."

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