Forex News
Here is what you need to know on Monday, April 20:
Markets adopt a cautious stance to start the week following a fresh escalation of the tensions in the Middle East. Monday's economic calendar will feature March inflation data from Canada and the Bank of Canada (BoC) will publish its Business Outlook Survey. Nevertheless, investors will remain focused on headlines surrounding the US-Iran war.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.11% | 0.24% | -0.00% | 0.32% | 0.29% | 0.10% | |
| EUR | -0.06% | 0.04% | 0.11% | -0.08% | 0.25% | 0.24% | 0.02% | |
| GBP | -0.11% | -0.04% | 0.09% | -0.10% | 0.21% | 0.19% | -0.03% | |
| JPY | -0.24% | -0.11% | -0.09% | -0.18% | 0.12% | 0.05% | -0.11% | |
| CAD | 0.00% | 0.08% | 0.10% | 0.18% | 0.31% | 0.25% | 0.07% | |
| AUD | -0.32% | -0.25% | -0.21% | -0.12% | -0.31% | -0.03% | -0.23% | |
| NZD | -0.29% | -0.24% | -0.19% | -0.05% | -0.25% | 0.03% | -0.19% | |
| CHF | -0.10% | -0.02% | 0.03% | 0.11% | -0.07% | 0.23% | 0.19% |
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).
Risk flows dominated the financial markets in the early American session on Friday after Abbas Araghchi, the foreign minister of Iran, announced that, following the ceasefire in Lebanon, passage of all commercial vessels through the Strait of Hormuz is declared completely open during the ceasefire period. However, the United States (US) said that the blockade will remain in place. In response, Iran closed the strait again on Saturday and said that any vessels approaching the region will be attacked. On Sunday, US President Donald Trump again threated to strike Iranian power plants and bridges if they fail to reach an agreement at the end of the temporary ceasefire period this Wednesday. Additionally, the US has seized an Iranian cargo ship attempting to get past the US' blockade.
US Vice President JD Vance and top US officials will be in Pakistan for the second of talks on Monday. Reporting on the matter, Iran's Islamic Republic News Agency (IRNA) said that Tehran authorities refuse to sit again with White House representatives amid their "unrealistic expectations," among other things. Additionally, Iran's foreign ministry spokesperson echoed the same sentiment on Monday, saying that there is no plan for a second reound of negotiations with the US.
In the European session, US stock index futures lose between 0.6% and 0.7%. The US Dollar (USD) Index clings to small gains near 98.30, while the barrel of West Texas Intermediate (WTI) trades near $87.50, rising more than 4% on the day.
EUR/USD recovers slightly and trades flat on the day near 1.1760 after opening with a bearish gap.
Gold (XAU/USD) dropped below $4,750 at the weekly opening but managed to erase a portion of its losses. At the time of press, XAU/USD was trading near $4,800, down more than 0.5% on a daily basis.
GBP/USD holds steady above 1.3500 after having touched a weekly low of 1.3475 in the early Asian session.
USD/JPY trades marginally higher on the day near 159.00 after having lost nearly 0.5% in the previous week.
USD/CAD trades in a narrow range near 1.3700 in the European morning on Monday. The Consumer Price Index in Canada is forecast to rise 1.1% on a monthly basis in March.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Dow Jones futures slip as risk aversion rises amid renewed Middle East tensions.
- Tehran refuses to resume US talks, citing “unrealistic expectations” and other concerns.
- Traders adopt caution as persistent US inflation reinforces the Fed’s “higher-for-longer” stance.
Dow Jones futures decline 0.62% below 49,350, with S&P 500 and Nasdaq 100 futures also falling 0.49% and 0.47% to near 7,120 and 26,700, respectively, during European hours on Monday ahead of the United States (US) regular opening.
US stock futures fell amid increased risk aversion due to renewed US–Iran tensions. Iranian state media, the Islamic Republic News Agency (IRNA), reported that Tehran has refused to resume talks with US officials, citing “unrealistic expectations,” among other concerns. Iran has blocked the Strait of Hormuz, reversing a brief reopening after Trump refused to lift port blockades.
US President Trump confirmed on Truth Social that US representatives will travel to Islamabad for negotiations with Iran on Monday. However, he also criticized Tehran’s move to re-close the Strait and reiterated threats to target Iranian infrastructure, including power plants and bridges.
Market sentiment turns sour on fading expectations of Federal Reserve (Fed) rate cuts, driven by persistent inflation concerns linked to elevated energy prices amid Middle East tensions. Last week, the Dow Jones gained 3.19% for its third consecutive weekly gain, while the S&P 500 and Nasdaq 100 rallied 4.54% and 6.84%, respectively, with both benchmarks reaching fresh record highs.
Fed Governor Christopher Waller said Friday that the job market’s break-even rate is likely near zero, adding that a prolonged Middle East conflict could heighten both inflation and employment risks. Meanwhile, San Francisco Fed President Mary Daly noted she is assessing whether rising oil prices are feeding into broader goods and services inflation.
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.
- GBP/USD attracts some dip-buyers following a bearish gap down to a one-week low on Monday.
- Fading Fed rate hike bets counter US-Iran tensions and undermine the USD, supporting the pair.
- The mixed technical setup warrants some caution before positioning for any further appreciation.
The GBP/USD pair builds on its modest intraday recovery from a one-week low and climbs back above the 1.3500 psychological mark during the early European session on Monday. Spot prices have now filled the weekly bearish gap and seem poised to appreciate further amid the emergence of fresh US Dollar (USD) selling.
Despite renewed US-Iran tensions over the Strait of Hormuz, the safe-haven USD struggles to capitalize on its early gains to a one-week high amid diminishing odds for a rate hike by the US Federal Reserve (Fed). This marks a significant divergence in comparison to the Bank of England's (BoE) outlook, which might continue to act as a tailwind for the British Pound (GBP) and validates the positive outlook for the GBP/USD pair.
From a technical perspective, the recent breakout through the 200-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bulls. The subsequent move up, however, stalled near the 61.8% Fibonacci retracement level of the January-March fall , around the 1.3600 mark, or over a two-month high set on Friday, and warrants some caution before positioning for any further appreciating move for the GBP/USD pair.
Meanwhile, momentum signals are mixed, with the Relative Strength Index (RSI) hovering near a neutral 48 and the Moving Average Convergence Divergence (MACD) indicator remaining slightly negative. This hints that upside traction is still tentative and backs the case for a move back towards the 1.3600 neighborhood, or the 61.8% Fibo. retracement level. This is followed by a more significant barrier at the 78.6% level near 1.3716.
Some follow-through buying beyond the recent cycle high zone around the 1.3868 area will reaffirm the near-term positive outlook and pave the way for additional gains. On the downside, immediate support is located at the 50% retracement level at 1.3512, with further cushions seen at the 38.2% Fibo. retracement at 1.3428 and the 200-period SMA at 1.3364. A deeper slide would expose the 23.6% retracement at 1.3324 ahead of the structural low around 1.3156.
(The technical analysis of this story was written with the help of an AI tool.)
GBP/USD 4-hour chart
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | 0.04% | 0.19% | -0.03% | 0.22% | 0.22% | 0.07% | |
| EUR | -0.02% | 0.03% | 0.15% | -0.06% | 0.19% | 0.20% | 0.04% | |
| GBP | -0.04% | -0.03% | 0.13% | -0.07% | 0.17% | 0.18% | 0.00% | |
| JPY | -0.19% | -0.15% | -0.13% | -0.18% | 0.05% | 0.00% | -0.12% | |
| CAD | 0.03% | 0.06% | 0.07% | 0.18% | 0.23% | 0.21% | 0.07% | |
| AUD | -0.22% | -0.19% | -0.17% | -0.05% | -0.23% | -0.01% | -0.17% | |
| NZD | -0.22% | -0.20% | -0.18% | -0.00% | -0.21% | 0.00% | -0.15% | |
| CHF | -0.07% | -0.04% | -0.00% | 0.12% | -0.07% | 0.17% | 0.15% |
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).
- GBP/JPY moves higher to near 214.60 as BoJ policy uncertainty weighs on the Japanese Yen.
- Investors await the UK employment and inflation data.
- BoE’s Bailey sees no rush for monetary policy adjustments despite the energy supply shock.
The GBP/JPY pair trades higher to near 214.60 during the European trading session on Monday. The pair gains as the Japanese Yen (JPY) underperforms its peers amid uncertainty surrounding the Bank of Japan’s (BoJ) interest rate decision, which will be announced on April 28.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.01% | 0.04% | 0.16% | -0.00% | 0.23% | 0.22% | 0.07% | |
| EUR | -0.01% | 0.03% | 0.11% | -0.02% | 0.20% | 0.21% | 0.04% | |
| GBP | -0.04% | -0.03% | 0.09% | -0.04% | 0.16% | 0.18% | -0.00% | |
| JPY | -0.16% | -0.11% | -0.09% | -0.14% | 0.08% | 0.03% | -0.10% | |
| CAD | 0.00% | 0.02% | 0.04% | 0.14% | 0.22% | 0.19% | 0.03% | |
| AUD | -0.23% | -0.20% | -0.16% | -0.08% | -0.22% | -0.01% | -0.19% | |
| NZD | -0.22% | -0.21% | -0.18% | -0.03% | -0.19% | 0.01% | -0.16% | |
| CHF | -0.07% | -0.04% | 0.00% | 0.10% | -0.03% | 0.19% | 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 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).
Investors doubt that the BoJ will deliver an interest rate hike amid the worsening economic outlook in the wake of the negative energy shock.
BoJ Governor Kazuo Ueda said on Friday that Japan is facing rising inflation from a "negative supply shock," which is more difficult to rein in with monetary policy than inflation driven by strong demand.
This week, investors will focus on the National Consumer Price Index (CPI) data for March, which will be released on Friday. National CPI ex. Fresh Food is expected to arrive higher at 1.8% Year-on-Year (YoY) against the previous reading of 1.6%.
Meanwhile, the Pound Sterling (GBP) exhibits a mixed performance at the start of the United Kingdom (UK) data-packed week. Investors will pay close attention to the UK labor market data for the three months ending February and the CPI data for March, which will be released on Tuesday and Wednesday, respectively.
The employment report is expected to show that wage growth cools down, and the ILO Unemployment Rate remained steady at 5.2%. While the inflation data is expected to have grown at a faster pace.
On the monetary policy front, Bank of England (BoE) Governor Andrew Bailey has stated that there is no rush for a monetary policy adjustment in the upcoming policy meeting on April 30, despite having a “very big negative shock”, Reuters reports.
"We’re not going to rush to judgments on those things, because there are a lot of uncertainties around this, not just how it’s going to play out, but also how it’s going to pass through into the UK economy," Bailey said at the International Monetary Fund (IMF) meeting in Washington last week.
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Wed Apr 22, 2026 06:00
Frequency: Monthly
Consensus: 3.3%
Previous: 3%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
ING’s Chris Turner notes the US Dollar (USD) briefly weakened after news that the Strait of Hormuz was fully open, implying US Dollar Index (DXY) around 97.50/98.00 and EUR/USD just over 1.18 if the crisis were resolved. ING economists expect the Dollar to stay near those levels this quarter, with DXY instead likely trading around 98.00/98.50 as Federal Reserve (Fed) easing hopes fade.
Fed expectations and conflict drive DXY
"Friday's headline from Iranian authorities that the Strait of Hormuz was 'fully open' gave us a vision of where the dollar could be trading were this crisis over. That equated to around the 97.50/98.00 area in DXY and just over 1.18 in EUR/USD.
"The stop-start nature of peace talks does focus attention on when energy flows can fully restart and whether high oil prices will start to seep into other areas of the economy. We note another good speech from the Federal Reserve's Christopher Waller, released on Friday ahead of the Fed's blackout period. The speech was entitled 'One Transitory Shock After Another'."
"Recall that Waller voted for a cut in January, and the point he is making now is that the longer energy prices stay high, the greater the risk that this oil shock adds to the tariff shock and de-anchors inflation expectations. For him, the 5-10 year US inflation expectations derived through the 5Y5Y inflation swap look important."
"Any move to the 2.70/2.80% area, as seen in early 2022, could well call time on any hopes of Fed easing this year."
"We are not in the camp looking for an immediate return of the benign dollar decline that characterised the start of the year, and suspect DXY can trade in ranges near the 98.00/98.50 area."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
HSBC Asset Management highlights that global stock indices have stayed resilient through the Oil shock, while valuations and risk premia have adjusted more meaningfully. In the US, weaker prices and stronger earnings expectations have compressed the S&P 500 multiple, and higher earnings yields versus bond yields have lifted equity risk premia, leading the bank to argue that expected equity returns have risen.
Multiples compress and risk premia widen
"Stock indices have been resilient through the oil shock. But the real adjustment has been taking place under the surface – in market multiples and risk premia."
"First, in the US, the combination of weaker stock prices, alongside a likely strong Q1 corporate earnings season, and an upgraded 2026 profits scenario – means the market multiple has dropped to around 20x."
"Resilient profits and higher earnings yields have outpaced the rise in bond yields so far."
"US real rates, as measured by long-term Treasury inflation-protected securities, are steady year to date, at around 1.9%. That means the equity premium has moved higher, especially in some EMs."
"The bottom line is that expected returns have moved higher, even if that’s hard to see from price charts alone."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Danske Research Team highlights that Brent crude has rebounded toward USD 95/bbl as US–Iran tensions around the Strait of Hormuz intensify. They note that Oil is likely to stay volatile this week as negotiations continue and warns that if flows through the strait do not resume, prices could climb back above USD 100/bbl, with broader market implications.
Strait of Hormuz turmoil underpins Brent
"The Middle East conflict seesawed over the weekend, starting on Friday with Iran declaring the Strait of Hormuz open for the remainder of the 10-day US-brokered truce between Israel and Lebanon - a key Iranian demand. Brent crude closed at 90USD/bbl on Friday, buoyed by optimism surrounding a lasting peace deal."
"However, Iran quickly reversed course, re-closing the strait after the US confirmed its shipping blockade would continue. Tensions escalated further as Iran was accused of firing on vessels near the strait."
"The Middle East conflict escalated early this morning as the US intercepted an Iranian cargo ship trying to breach its maritime blockade, prompting Iran to vow retaliation. The prospects for a second round of negotiations remain uncertain ahead of the ceasefire's expiration on Tuesday, with Iran refusing to participate unless the blockade is lifted. "
"Meanwhile, the US Treasury has extended Russian oil sanctions exemptions by one month, casting doubt on Washington's confidence in a swift resolution."
"Oil prices rebounded, with Brent crude trading at USD 95/bbl this morning, as the market digested the turmoil around the Strait of Hormuz. The market is likely to stay volatile this week as US and Iran will try and negotiate a deal. If oil does not start flowing through the strait soon, oil prices are likely to rise further and above USD 100/bbl again. "
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CHF holds gains amid strengthening Fed “higher-for-longer” policy stance amid persistent US inflation.
- Fed’s Waller warns prolonged Middle East conflict raises inflation and employment risks.
- SNB policymakers remain ready to intervene in FX markets to curb excessive Swiss Franc appreciation.
USD/CHF inches higher after registering modest losses in the previous trading day, hovering around 0.7820 during the early European hours on Monday. The pair advances as the US Dollar (USD) strengthens on fading expectations of Federal Reserve (Fed) rate cuts, driven by persistent inflation concerns linked to elevated energy prices amid Middle East tensions.
Fed Governor Christopher Waller said Friday that the job market’s break-even rate is likely near zero, adding that a prolonged Middle East conflict could heighten both inflation and employment risks. Meanwhile, San Francisco Fed President Mary Daly noted she is assessing whether rising oil prices are feeding into broader goods and services inflation.
The Greenback also benefits from increased safe-haven demand amid renewed US–Iran tensions. The Guardian reported Monday that Iran’s Foreign Ministry spokesman Esmail Baghaei described the US blockade of Iran’s ports and coastline as an act of aggression and a violation of the ceasefire. Baghaei stated on social media that deliberately imposing collective punishment on Iran’s population amounts to a war crime and crime against humanity.
However, the Swiss Franc (CHF) could also find support from safe-haven inflows amid escalating tensions, alongside rising concerns over a prolonged energy-driven inflation shock, which may reinforce expectations of a more hawkish Swiss National Bank (SNB). Meanwhile, SNB meeting minutes from March highlighted growing uncertainty surrounding Switzerland’s economic outlook.
SNB policymakers noted that, given heightened geopolitical tensions and safe-haven flows, the SNB is likely to remain highly willing to intervene in FX markets to curb a rapid and excessive appreciation of the CHF.
On the data front, the Swiss Trade Balance data will be eyed on Tuesday. Traders will shift their focus toward US Retail Sales data due later in the North American session.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
According to the Iranian Republic News Agency, Iran President Masoud Pezeshkian said during European trading hours on Monday that the "war is in no one's interest”, and “every rational and diplomatic path should be used to reduce tensions”.
The comments from Iran President Pezeshkian came at time when market participants doubt the resumption of negotiations between the US and Iran anytime soon.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Gold attracts some dip-buyers following a bearish gap opening, though it lacks follow-through.
- Renewed US-Iran tensions provided a modest lift to the USD and weighed on the precious metal.
- Fading Fed rate hike bets keep a lid on any further USD appreciation and support the bullion.
Gold (XAU/USD) looks to build on its modest intraday recovery from the $4,737-$4,738 region or a one-week low touched earlier this Monday, and trades around the $4,800 mark heading into the European session. The US Dollar (USD) retreats from a one-week high and, for now, seems to have stalled its recovery move from a nearly two-month low set on Friday. This turns out to be a key factor lending some support to the commodity. However, an intraday rally in Crude Oil prices revived inflationary concerns and triggered a modest rise in US Treasury bond yields, which, in turn, might keep a lid on any meaningful upside for the non-yielding yellow metal.
The US-Iran standoff over the Strait of Hormuz tempers hopes for more peace talks before the current ceasefire ends on April 22. The US Navy intercepted and seized an Iranian-flagged cargo ship in the Gulf of Oman as part of its blockade. Iran viewed this as a breach of the ceasefire agreement and once again closed the strategic waterway after briefly opening it following a 10-day truce between Israel and the Lebanese group Hezbollah on Friday. Meanwhile, US President Donald Trump said that the naval blockade of Iranian ports would continue until a peace deal was agreed between the two countries.
The White House confirmed that US Vice President JD Vance would lead another delegation for a second round of talks on ending the war with Iran. Iranian state media has reported that officials will not participate while the US blockade remains in place. This dampens hopes for a peace agreement before the current ceasefire ends on April 22, which, in turn, triggers a fresh wave of the global risk-aversion trade and benefits the Greenback reserve currency status. The USD bulls, however, refrain from placing aggressive bets amid diminishing odds for an interest rate hike by the US Federal Reserve (Fed).
Instead, the CME Group's FedWatch Tool indicates that there is a roughly 40% chance of a Fed rate cut by the year-end, which keeps a lid on any meaningful USD appreciation and acts as a tailwind for the non-yielding Gold. The lack of follow-through buying, however, warrants some caution before positioning for the resumption of the precious metal's recent move up from the March swing low, around the $4,100 mark. There isn't any relevant market-moving economic data due for release from the US, leaving the USD and the commodity at the mercy of fresh developments surrounding the US-Iran saga.
XAU/USD 1-hour chart
Gold bulls await sustained strength and acceptance above 100-hour SMA/$4,800
The XAU/USD pair struggles to capitalize on the intraday recovery beyond the 100-hour Simple Moving Average (SMA) or find acceptance above the $4,800 mark. Moreover, the Relative Strength Index (RSI) around 44 hints at fading upside momentum, while the Moving Average Convergence Divergence (MACD) indicator stays in negative territory with the line below its signal and a negative histogram. This reinforces the idea that sellers retain control unless the Gold can push decisively back over the nearby average.
The said SMA at $4,805.60 is the first and only clear resistance, and a sustained break above this barrier would be needed to ease the current downside bias and open the door for a stronger recovery. As long as the XAU/USD pair trades under the said barrier, rallies are likely to face selling interest rather than signal a durable bullish reversal.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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