Forex News
- DXY regains positive traction following the previous day’s decline to over a one-week low.
- Geopolitical uncertainties and Fed rate hike bets continue to act as a tailwind for the USD.
- The neutral technical setup warrants caution for bulls before positioning for further gains.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, regains positive traction on Tuesday and reverses part of the previous day's slide to a one-week low. The index sticks to modest gains through the early European session and currently trades just above the 99.00 mark, up over 0.10% for the day.
The optimism over a potential US-Iran peace deal fades rather quickly amid reports that US forces conducted self-defense strikes in southern Iran on Monday, targeting missile launch sites and Iranian boats attempting to emplace mines. Moreover, a standoff over Iran's nuclear program and the Strait of Hormuz dampen hopes for an agreement to end a nearly three-month-old Iran war, which, in turn, benefits the safe-haven Greenback.
Meanwhile, the latest developments keep geopolitical risks in play and help Crude Oil prices to recover slightly from an over two-week low, touched on Monday, reviving inflationary concerns. This, in turn, bolsters the case for a more hawkish US Federal Reserve (Fed), which turns out to be another factor underpinning the buck. The USD bulls, however, seem hesitant and opt to wait for further clarity surrounding the Middle East crisis.
From a technical perspective, the DXY found some support and bounced off the vicinity of the 200-period Exponential Moving Average (EMA) on Monday. This configuration suggests a tentative floor emerging in the high-98.00s. The subsequent move up, however, lacks follow-through beyond the 23.6% Fibonacci retracement level of the recent upswing from the monthly low, leaving the near-term tone neutral and warranting caution for bulls.
Meanwhile, the Moving Average Convergence Divergence (MACD) remains slightly negative, and the Relative Strength Index (RSI) around 47 hints at a lack of directional conviction after the recent pullback. In the meantime, initial resistance is located at the cycle high near 99.54, which guards further gains.
On the downside, immediate support is anchored at the 23.6% retracement around 99.08, backed by the 200-period EMA at 98.88. A convincing break below the latter would expose successive Fibo. supports at 98.80, 98.58, and 98.35, with deeper floors at 98.03 and 97.62 if selling pressure accelerates.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar Index 4-hour 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.
- EUR/GBP gains ground to around 0.8630 in Tuesday’s early European session.
- ECB’s Schnabel said the central bank should raise rates in June, even if an Iran peace deal is struck.
- Analysts projected the BoE will hold the benchmark rate steady at 3.75% through the end of 2026.
The EUR/GBP cross gathers strength to near 0.8630 during the early European session on Tuesday. Hawkish remarks from the European Central Bank (ECB) provide some support to the Euro (EUR) against the British Pound (GBP). Traders will take more cues from the preliminary reading of Germany’s inflation data, which are due later on Friday.
ECB board member Isabel Schnabel said on Tuesday that the central bank should raise interest rates in June, even if ongoing peace talks with Iran yield a deal, as the conflict has been far longer than projected and high energy prices are spilling into the broader economy.
Additionally, ECB policymaker Martin Kocher said over the weekend that the central bank is increasingly leaning toward an interest rate hike next month as the Iran conflict adds to inflation pressures. According to the ECB Watch Tool, financial markets are now pricing in nearly an 85% probability of a 25-basis-point hike from the ECB for the June meeting.
Markets have scaled back imminent expectations for a rate hike following softer inflation data and an unexpected rise in the Unemployment Rate to 5.0% for April. Analysts from Oxford Economics and Goldman Sachs see the benchmark rate to stay unchanged at 3.75% through the end of 2026. Goldman Sachs further stated that the bar remains low for a few summer rate rises if energy costs surge again.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
BNY’s John Velis and David Tam note that recent FOMC minutes and comments from Fed Governor Waller point to higher two‑way risk for US interest rates. They have dropped their previous forecast for two rate cuts in 2026 and now expect no policy change unless Oil flows resume through the Strait of Hormuz relatively soon.
FOMC minutes and Waller turn tone
"The recently released minutes of the May FOMC indicate a more hawkish debate than we expected, more so than was indicated by a surprising three dissents regarding the policy orientation of the FOMC statement."
"Fed Governor Waller – an early dissenter in July 2025 citing his concern for the labor market, and who dissented again as recently as January 2026 – argued on the record at an appearance last Friday that rates are just as likely to rise as fall, expressing concerns about short-term inflation expectations bleeding into longer-term ones."
"As readers know, last week we dropped our two-cut outlook for the year and now expect no change in policy unless the Strait of Hormuz reopens relatively soon – sometime in the early- to mid-summer."
"However, we wouldn’t be surprised to see rate cuts back on the agenda if oil does start to flow through the Persian Gulf."
"Thursday’s PCE inflation report is likely to show – unsurprisingly – accelerating consumer prices, reinforcing the Fed’s hawkish lean."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Here is what you need to know on Tuesday, May 26:
The US Dollar (USD) stays resilient against its peers in the European session on Tuesday, following Monday's bearish movement. Although markets remain optimistic about a peace deal between Iran and the United States (US), escalating tensions in the Strait of Hormuz don't allow risk flows to dominate the action. In the second half of the day, the US economic calendar will feature the Conference Board's (CB) Consumer Confidence Index data for May and the Federal Reserve Bank of Dallas will publish the Manufacturing Business Index.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.17% | 0.11% | 0.05% | 0.09% | 0.34% | 0.19% | |
| EUR | -0.08% | 0.13% | 0.06% | -0.01% | 0.05% | 0.29% | 0.11% | |
| GBP | -0.17% | -0.13% | -0.06% | -0.11% | -0.08% | 0.15% | 0.00% | |
| JPY | -0.11% | -0.06% | 0.06% | -0.05% | 0.00% | 0.22% | 0.10% | |
| CAD | -0.05% | 0.00% | 0.11% | 0.05% | 0.07% | 0.31% | 0.14% | |
| AUD | -0.09% | -0.05% | 0.08% | -0.01% | -0.07% | 0.24% | 0.05% | |
| NZD | -0.34% | -0.29% | -0.15% | -0.22% | -0.31% | -0.24% | -0.16% | |
| CHF | -0.19% | -0.11% | -0.00% | -0.10% | -0.14% | -0.05% | 0.16% |
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).
The positive shift seen in risk mood on Monday made it difficult for the USD to find demand as investors reacted to news suggesting that the US and Iran were moving closer to signing a deal to extend the ceasefire for another 60 days, open the Strait of Hormuz fully and negotiate the remaining issues, such as Iran's nuclear program, during the truce period. However, reports of the US military targeting Iranian missile launch sites and mine-laying vessels in southern Iran in what it called "self-defense strikes" caused investors to adopt a cautious stance late Monday.
Iran's Fars news agency reported that a senior spokesperson for Iran’s Armed Forces said that any new aggression against Iran will be met with a "far more severe" response that extends beyond the region.
In the meantime, Iranian negotiators are meeting with Qatari mediators in Doha to finalize a memorandum of understanding (MOU) with the US. Reportedly, language over Iran's nuclear program and sanctions remain as point of contentions.
The USD Index clings to modest daily gains above 99.00 after losing 0.3% on Monday. The benchmark 10-year US Treasury bond yield is down about 1% on the day near 4.5% and US stock index futures rise between 0.7% and 0.9%.
EUR/USD struggles to build on Monday's gains and moves sideways below 1.1650 in the European morning on Tuesday.
GBP/USD climbed to its highest level in 10 days above 1.3500 on Monday but lost its bullish momentum early Tuesday. At the time of press, the pair was trading near 1.3480, losing 0.2% on the day.
USD/JPY stays relatively quiet at around 159.00 after closing marginally lower on Monday.
Gold (XAU/USD) reverses its direction after rising more than 1% on Monday and declines toward $4,500 early Tuesday.
NZD/USD stays under bearish pressure and loses more than 0.3% on the day near 0.5850. In the Asian session on Wednesday, the Reserve Bank of New Zealand (RBNZ) will announce monetary policy decisions. Markets widely expect the RBNZ to leave the interest rate unchanged at 2.25%.
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.
Volkmar Baur at Commerzbank expects the Reserve Bank of New Zealand (RBNZ) to keep its policy rate unchanged, maintaining a wait‑and‑see stance unlike the Reserve Bank of Australia (RBA). He argues that contained core inflation and anchored expectations allow patience, while markets price only a small chance of a hike. The New Zealand Dollar’s (NZD) outlook remains tied to Iran‑driven Oil dynamics.
Policy on hold as oil risk lingers
"When the Reserve Bank of New Zealand meets tomorrow morning for its monetary policy meeting, the key interest rate is expected to remain unchanged."
"Unlike in Australia, where the key interest rate has already been raised three times this year, the central bank in New Zealand is expected to maintain its wait-and-see stance tomorrow as well."
"The central bank can therefore afford to wait and see for now and keep an eye on potential second-round effects."
"The market currently prices in a 15% probability of an interest rate hike tomorrow."
"The only certainty is that the longer the conflict persists and the more the oil price rises, the more the kiwi will continue to be on the losing side."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
UOB’s Quek Ser Leang and Lee Sue Ann describe EUR/USD as neutral after a sharp opening rise, with only modest upward momentum. They see scope for the Euro to edge higher but doubt a sustained break of nearby resistance. Over the coming weeks, they expect EUR/USD to trade within a defined range while noting that a break of an ascending trendline could open deeper downside.
Euro holds in defined trading range
"24-HOUR VIEW: After EUR opened and rose sharply yesterday, we highlighted that “upward momentum is starting to build,” and we were of the view that EUR “could rise toward 1.1660.” We also highlighted that “the major resistance at 1.1685 is unlikely to come into view.” Our view did not materialise, as EUR edged to a high of 1.1653 during the early NY session before settling at 1.1643 (+0.35%). Although there has been no significant increase in upward momentum, EUR could still rise toward 1.1660. A clear break above this level appears unlikely, and the major resistance at 1.1685 is also unlikely to come into view. Support is at 1.1635, followed by 1.1620."
"1-3 WEEKS VIEW: After holding a negative view for more than a week, we indicated yesterday (25 May, spot at 1.1620) that EUR “is neutral now, and it is likely to trade between 1.1590 and 1.1685.” We continue to hold the same view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Danske Research Team reports that US strikes on Iranian missile launch sites and mine-laying boats have pushed Brent crude to 98.1 USD/bbl, still below Friday’s 103.5 close. The bank links price action to fragile ceasefire dynamics and evolving US-Iran negotiations, with officials signaling that opening the Strait of Hormuz remains a priority, potentially by force if necessary.
Brent trades near 98 as war risk lingers
"In the US-Iran war, the US conducted strikes on Iranian missile launch sites and mine-laying boats in southern Iran overnight, with Centcom citing self-defence."
"The attacks once again put the fragile ceasefire from April under pressure. This follows a weekend in which President Trump signalled the two sides were close to a deal, posting that talks were "proceeding nicely"."
"The strikes are said to be defensive in nature, according to a US spokesperson, and the market seemingly agrees with Brent oil trading around USD 98/bbl, the same level at which it traded most of yesterday after the initial drop."
"Hopes of a US-Iran agreement grew over the weekend after President Trump stated that the "final aspects and details" were being discussed, with the proposed framework unfolding in three stages, according to Reuters: formally ending the war, reopening the Strait of Hormuz and opening an extendable 30-day window for broader negotiations on nuclear issues and sanctions relief. Efforts to finalise details continued into Monday, with Iran's foreign minister Araghchi travelling to Doha for talks with Qatar's prime minister."
"However, Secretary of State Rubio tempered expectations early on Tuesday, saying a deal could "take a few days", and warned that the Strait of Hormuz would be opened "one way or the other" following overnight US strikes on Iranian mine-laying boats and missile launch sites."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CAD rises as safe-haven demand boosts the US Dollar, offsetting the Canadian Dollar's gains from higher oil prices.
- WTI rises on renewed supply concerns following US "self-defense strikes" in southern Iran on Monday.
- The CME FedWatch tool shows markets pricing a 41% chance of a 25-basis-point Fed rate hike by year-end.
USD/CAD inches higher after registering minor losses in the previous day, trading around 1.3810 during the Asian hours on Tuesday. The commodity-linked Canadian Dollar (CAD) is struggling against the US Dollar (USD), as rising risk aversion offsets any gains from higher crude oil prices. It is important to note that Canada is one of the world's largest producers and exporters of crude oil, with its energy sector making up a massive portion of its economy.
West Texas Intermediate (WTI) oil price gains ground after four days of losses, trading around $91.50 per barrel at the time of writing. Crude oil prices advance on renewed supply concerns after the United States (US) forces conducted "self-defense strikes" in southern Iran on Monday.
The US Central Command spokesperson said that the strikes targeted missile launch sites and Iranian vessels attempting to deploy mines. While the US military emphasized its commitment to protecting its forces and maintained that it is still exercising restraint during the ceasefire, US President Donald Trump stated that negotiations for a deal to end the conflict and reopen the Strait of Hormuz were "proceeding nicely."
Moreover, the USD/CAD pair holds ground as the US Dollar remains steady, backed by safe-haven flows from geopolitical tension and expectations of a hawkish Federal Reserve outlook. According to the CME FedWatch tool, market participants are now pricing in a nearly 41.0% probability that the Fed will implement a 25-basis-point interest rate increase by the end of the year. Traders are likely awaiting the upcoming PCE inflation data for clearer signals on the Fed’s future policy path.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
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