Forex News
- NZD/USD retreats to 0.5930 after reversing intraday gains as the US Dollar recovers late in the American session.
- Oil prices pullback as market expects end to war with Iran.
- Markets await US Consumer Price Index on Wednesday and Business NZ PMI from New Zealand on Thursday.
The NZD/USD pair is trading near the 0.5930 price region, reversing its intraday gains late in the American session. At the start of the day, the US Dollar (USD) lost momentum after United States (US) President Donald Trump suggested late Monday that the ongoing conflict in the Middle East could end soon.
Oil prices surged sharply since the US and Israel launched a war with Iran amid concerns over Iran's closure of the Strait of Hormuz. However, Oil retreated after Trump’s remarks and reports that G7 countries are considering a coordinated release of strategic Oil reserves if prices rebound higher. West Texas Intermediate (WTI) trades around $85 a barrel, easing from a three-year peak near $120 posted on Monday. The Iran war is still ongoing, and the market sentiment could take a turn for the worse, reviving USD strength.
Investors’ focus now shifts to the US Consumer Price Index (CPI) report scheduled for Wednesday and the upcoming New Zealand Business NZ Performance of Manufacturing Index (PMI).
Short-term technical outlook
In the 4-hour chart, NZD/USD trades at 0.5929. The near-term bias is neutral as price holds above the 20-period Simple Moving Average (SMA) but below the 100-period SMA. Both are flattening, although the 20-period SMA has turned slightly higher just beneath spot. Meanwhile, the Relative Strength Index (RSI) stands around 52, indicating neutral-to-positive momentum that aligns with a modest recovery stance.
Immediate support is located at 0.5925, the daily low, followed by 0.5907, Monday's low. A sustained hold above these levels would keep buyers in control and leave scope for a grind higher toward initial resistance at 0.5965, the weekly top. A break above 0.5965 would open the door to a more decisive recovery phase, while a drop below 0.5907 would negate the nascent bullish bias and re-expose the broader downtrend.
(The technical analysis of this story was written with the help of an AI tool.)
- USD/CHF rises 0.20% to 0.7786 after rebounding from a 0.7748 session low.
- A break above 0.7810 could expose 0.7878 and the 0.7900 level.
- A drop below 0.7750 risks slideing toward 0.7700 and the 0.7601 support.
USD/CHF recovers some ground on Tuesday, rising a modest 0.20% as the US Dollar (USD) recovers from earlier losses, as risk appetite remains deteriorated in Wall Street, with three of the four US indices ending with losses. At the time of writing, the pair trades at 0.7786 after reaching a daily low of 0.7748.
USD/CHF Price Forecast: Technical outlook
The technical picture shows some consolidation, with USD/CHF unable to continue its downtrend and buyers poised to push the exchange rate past the 50-day Simple Moving Average (SMA) at 0.7810.
Momentum reveals that buyers seem to gather steam, as depicted by the Relative Strength Index (RSI), which has pierced above its neutral level and is aiming higher.
If USD/CHF clears the 50-day SMA, it could rally towards the March 3 high of 0.7878. A breach of the latter will expose the 0.7900 mark ahead of 0.8000.
Conversely, the USD/CHF first support would be the March 6 daily low of 0.7750. If surpassed, the next area of interest would be a support trendline drawn from current year lows of around 0.7601, which passes near the 0.7670-0.7700 range. A breach of the latter will expose the January 28 swing low of 0.7601.
USD/CHF Price Chart – Daily
Swiss Franc Price This week
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies this week. Swiss Franc was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.54% | -0.59% | -0.02% | -0.13% | -1.90% | -1.08% | -0.14% | |
| EUR | 0.54% | -0.06% | 0.51% | 0.38% | -1.39% | -0.56% | 0.40% | |
| GBP | 0.59% | 0.06% | 0.62% | 0.45% | -1.33% | -0.47% | 0.46% | |
| JPY | 0.02% | -0.51% | -0.62% | -0.09% | -1.86% | -1.03% | -0.09% | |
| CAD | 0.13% | -0.38% | -0.45% | 0.09% | -1.78% | -0.94% | -0.01% | |
| AUD | 1.90% | 1.39% | 1.33% | 1.86% | 1.78% | 0.84% | 1.81% | |
| NZD | 1.08% | 0.56% | 0.47% | 1.03% | 0.94% | -0.84% | 0.97% | |
| CHF | 0.14% | -0.40% | -0.46% | 0.09% | 0.00% | -1.81% | -0.97% |
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 Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
UOB economist Ho Woei Chen highlights that strong China exports and imports in early 2026 are supporting growth, with clear diversification away from the US toward ASEAN, EU and regional partners. The report notes rising commodity import volumes and potential disruptions from Middle East tensions, but still projects positive 2026 growth for China’s exports and imports in US Dollar terms.
Trade strength offsets geopolitical headwinds
"China’s exports and imports surged in Jan-Feb, up from single-digit growth pace in Dec and were well-above Bloomberg’s consensus forecasts. In USD-terms, exports jumped by 21.8% y/y (Bloomberg est: 7.2%, Dec: 6.6%) while imports rose 19.8% y/y (Bloomberg est: 7.0%, Dec: 5.7%). The trade surplus recorded US$213.62 billion in Jan-Feb, significantly higher than US$169.21 billion in the same period of 2025 though the average for the two months at US$106.81 billion was lower than Dec’s US$114.11 billion due to stronger imports."
"The strong exports data suggests that external demand has continued to anchor China’s economic growth in the first two months of the year. China’s exports continued to pivot towards non-US markets."
"In volume terms, China’s purchase of commodities including metals (copper ore and iron ore) and energy products (coal, crude oil and refined petroleum products) strengthened YTD as of Feb. This points to inventory building as geopolitical tensions in the Middle East were rising."
"For 2026, we expect China’s exports and imports to maintain a positive growth of 2.8% (2025: 5.5%) and 2.0% (2025: flat) respectively."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/USD climbs and hits a three-year high at 0.7168.
- Break above 0.7168 would target 0.7200, then 0.7250 and 0.7300.
- Failure below 0.7100 risks a pullback toward 0.7053 and the 0.7000 level.
The Australian Dollar (AUD) surges nearly 1% on Tuesday on speculation that the Reserve Bank of Australia (RBA) might raise rates at its March meeting. At the time of writing, the AUD/USD pair trades at 0.7131, after reaching a three-year high at 0.7168.
AUD/USD Price Forecast: Terminal outlook
The AUD/USD technical picture is bullish-biased after hitting its highest level since June 2022, poised to extend its gains if it closes daily above the 0.7100 figure.
The Relative Strength Index (RSI) reveals that momentum is bullish, but the index needs to clear the previous high of 64, which could open the door to further upside in the AUD/USD pair.
If AUD/USD surpasses 0.7168, the next resistance would be the 0.7200 figure. A breach of the latter will expose the 0.7250 mark, followed by 0.7300.
Conversely, if AUD/USD tumbles below 0.7100, it opens the door for a pullback. The first support would be 0.7053, the March 10 low, followed by the 0.7000 mark. On further weakness, the next area of demand would be the March 9 swing low of 0.6956.
AUD/USD Price Chart – Daily
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- Gold rises 0.50% to $5,187 as WTI Oil tumbles 14% on de-escalation hopes.
- DXY steadies near 98.86 while markets price around 40 bps of Fed easing.
- Traders await US CPI data, expected at 2.4% headline and 2.5% core YoY.
Gold price (XAU/USD) rallies on Tuesday as the US Dollar (USD) retreats after Oil prices edge lower, reflecting the Greenback's close correlation with crude. At the time of writing, XAU/USD trades at $5,187, up more than 0.50%.
XAU/USD gains as crude drops sharply on hopes the Iran conflict may ease
Geopolitics continues to drive price action. On Tuesday, US President Donald Trump hinted that the US incursion in Iran could end soon. Despite Trump’s comments, the Pentagon revealed that Tuesday is the “most intense day of strikes inside Iran,” according to the Secretary of Defense Pete Hegseth.
US Crude Oil, also known as West Texas Intermediate (WTI), tumbles some 14% in the day amid speculation that the Iran conflict could end soon, according to the White House.
The US Dollar Index (DXY), which measures the performance of the buck’s value against six peers, regained its composure, rising 0.14% to 98.86.
G7 energy ministers met on Tuesday and agreed to delay the release of strategic Oil reserves and asked the International Energy Agency (IEA) to assess the situation before taking their decisions.
Back to macroeconomics, investors expect a less dovish Federal Reserve, given high energy prices fueled by the Iran conflict. At the time of writing, the swaps market estimates 40 basis points of easing towards the year’s end, according to Prime Market Terminal data.
Earlier, US Existing Home Sales rose in February, improving following January’s -5.9% contraction, jumping by 1.7%. Jobs data, namely the US ADP Employment Change 4-week average, improved to 15.5K, up from the previous week's 12.8K reading.
US inflation data in focus
On Wednesday, the release of the US Consumer Price Index (CPI) for February would shed some light on the Fed’s stance on monetary policy. Headline CPI is projected to come at 2.4% YoY, unchanged from January’s reading, while Core CPI is projected to stay firm at 2.5% YoY, as in the previous month's reading.
XAU/USD Technical outlook: Bullish upside remains, above $5,100
Gold prices continued to seesaw, unable to get a definitive direction, sponsored by geopolitical uncertainty, and despite the yellow metal’s inflation hedge appeal.
The technical picture shows XAU/USD consolidating within $5,100-$5,250, while momentum favors bulls, as depicted by the Relative Strength Index (RSI). Although momentum is bullish, buyers must clear key resistance levels, which could pave the way for further upside.
If Gold clears the March 2 swing high of $5,419, expect a test of the $5,500 figure. On further strength, the next stop is around the record high near $5,600.
Conversely, if XAU/USD tumbles below $5,150, the first support will be $5,100. A breach of the latter will expose the March 9 daily low of $5,014 ahead of the 50-day Simple Moving Average (SMA) at $4,884.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
MUFG’s Senior Currency Analyst Michael Wan argues Asian currencies have been buffeted by Iran-related headlines as Asia’s heavy reliance on Middle East energy and Strait of Hormuz flows magnifies risk. While Trump’s softer stance reduces global recession tail risks, the bank remains cautious on Asia FX given unresolved geopolitical incentives, insurance-driven chokepoints, and potential worsening supply disruptions.
Asia FX sensitive to Hormuz and energy flows
"What we do know is that Asian currencies were taken for a ride to some extent in the midst of all this beyond just oil, and certainly for good reason."
"Asia certainly has an outsized exposure to the Strait of Hormuz, with 90% of the oil through the Strait going to Asian markets."
"In addition, Asian economies depend on the Middle East for around 65% of crude oil imports, 27% of refined petroleum, 17% for natural gas, and 45-50% for Natural Gas liquids such as propane – and these are just averages with certainly some markets more exposed than others each in their own different ways."
"As we pointed out, this time is different for Asia in that the Strait of Hormuz crisis is not just about crude oil prices, but the potential for an looming energy shortage possibly sharply constraining economic activity, coupled with a multitude of indirect channels such as shocks to food production, travel, transportation, and tourism which could well look like a COVID-lockdown and Russia Ukraine combined shock."
"That Trump has backed down to some extent is certainly good for the global economy and reduces the left tail risk of a global recession, but we may not be out of the woods yet."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Here is what you need to know for Wednesday, March 11:
Better market sentiment is taking its toll on the Greenback as stabilizing Oil prices give riskier positions more appeal to investors. According to the EIA Short-Term Energy Outlook, "Once the oil trade through the Strait of Hormuz is reestablished, global oil production will continue to outpace consumption, removing the stagnation fears." The statement maintained markets' optimism late in the American session. Meanwhile, G7 members stand ready to release reserves to keep oil prices under control though they have decided against any release thus far.
President Donald Trump's comment on Monday afternoon that the war he launched alongside Israel against Iran was "largely complete" has left the market rather optimistic that a ceasefire and an opening of the Strait of Hormuz could happen as soon as this week. However, German Chancellor Friedrich Merz told reporters that, "We're concerned at the apparent lack of a joint plan on how this war can quickly be brought to a convincing conclusion."
The US Dollar Index (DXY) is trading near 98.70, in a tightly bound range, slipping after market sentiment improved amid easing concerns about oil flows.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.18% | -0.03% | -0.11% | -1.06% | -0.32% | -0.07% | |
| EUR | 0.09% | -0.08% | 0.07% | -0.01% | -0.98% | -0.23% | 0.03% | |
| GBP | 0.18% | 0.08% | 0.13% | 0.06% | -0.90% | -0.15% | 0.12% | |
| JPY | 0.03% | -0.07% | -0.13% | -0.08% | -1.04% | -0.30% | -0.03% | |
| CAD | 0.11% | 0.01% | -0.06% | 0.08% | -0.95% | -0.22% | 0.06% | |
| AUD | 1.06% | 0.98% | 0.90% | 1.04% | 0.95% | 0.74% | 1.01% | |
| NZD | 0.32% | 0.23% | 0.15% | 0.30% | 0.22% | -0.74% | 0.27% | |
| CHF | 0.07% | -0.03% | -0.12% | 0.03% | -0.06% | -1.01% | -0.27% |
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).
EUR/USD is trading near the 1.1640 price zone, reaching a one-week high after three consecutive days of gains following United States (US) President Donald Trump's comments that the end of the war could be at hand.
GBP/USD is trading near the 1.3455 level, rising to a two-week high after the Middle East conflict sparked inflation fears worldwide, prompting market participants to price out a rate cut by the Bank of England (BoE) at the March 19 meeting.
USD/JPY is trading near the 157.70 price zone, steadying after the US Dollar (USD) lost investors' interest over a brief expectation of “resolution” in the Oil flows. The Japanese Yen (JPY) fails to gain more traction amid a weakened USD, as Oil supply disruptions linked to the escalating US-Iran war weigh on the market, given the country’s reliance on imported energy.
West Texas Intermediate (WTI) Oil is trading below $80 per barrel after the United States (US) War Secretary Pete Hegseth said, “If Iran does anything to stop the flow of Oil within the Strait of Hormuz, they will be hit harder than ever.”
Gold is trading at $5,230 as the bright metal draws support from a recently weakened USD, surging above a one-week high and now expected to extend its gains over the week.
What’s next in the docket:
Wednesday, March 11:
- Germany, February, HICP.
- United Kingdom, BoE Monetary Policy Report Hearings.
- United Kingdom, Consumer Inflation Expectations.
- United States, February, CPI.
Thursday, March 12:
- Australia, March, Consumer Inflation Expectations
- UK, January, Industrial Production.
- United States, January, Building Permits.
- United States, January, Housing Starts.
- United States, Initial Jobless Claims.
- United States, February, Monthly Budget Statement.
- New Zealand, February, Business NZ PMI.
Friday, March 13:
- UK, January, GDP.
- UK, January, Manufacturing Production.
- Spain, February, HICP.
- Eurozone, January, Industrial Production s.a.
- Canada, February, Average Hourly Wages.
- Canada, February, Net Change in Employment.
- Canada, February, Unemployment Rate.
- United States, January, Core Personal Consumption Expenditures - Price Index.
- United States, Flash (Q4), Core Personal Consumption Expenditures.
- United States, January, Durable Goods Orders.
- United States, Flash (Q4), Gross Domestic Product Annualized.
- United States, Flash (Q4), Gross Domestic Product Price Index.
- United States, January, Nondefense Capital Goods Orders ex Aircraft.
- United States, January, Personal Consumption Expenditures - Price Index.
- United States, Flash (Q4), Personal Consumption Expenditures Prices.
- United States, January, Personal Income.
- United States, January, Personal Spending.
- United States, Flash March, Michigan Consumer Expectations Index.
- United States, Flash March, Michigan Consumer Sentiment Index.
- United States, Flash March, UoM 1-year Consumer Inflation Expectations.
- United States, January, JOLTS Job Openings.
- United States, Flash March, UoM 5-year Consumer Inflation Expectation.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- WTI crude swings sharply as traders react to Middle East developments and conflicting reports about the Strait of Hormuz.
- Ongoing uncertainty around tanker security in the Strait of Hormuz keeps supply disruption fears alive.
- WTI briefly dipped below $76 after rallying to a nearly four-year high of $113.28 on Monday.
West Texas Intermediate (WTI) remains volatile on Tuesday, with sharp two-way swings as traders continue to assess the evolving geopolitical situation in the Middle East and its impact on global energy markets.
At the time of writing, the US benchmark is trading around $85.36, up roughly 2.40% on the day after briefly sliding below the $76 mark.
WTI surged to $113.28 on Monday, its highest level since June 2022, before quickly reversing after reports that G7 countries are discussing a coordinated release of Oil reserves through the International Energy Agency (IEA). The selloff accelerated after CBS reported that US President Donald Trump said, “I think the war is very complete, pretty much.”
Meanwhile, Trump has floated the idea that the United States could waive some Oil-related sanctions and deploy the US Navy to escort commercial tankers through the Strait of Hormuz.
On Tuesday, US Energy Secretary Chris Wright said in a post on X that the US had escorted an Oil tanker through the Strait of Hormuz. However, he later deleted the post, while a spokesperson for Iran’s Islamic Revolutionary Guard Corps also denied that any tanker had been escorted by the US military through the strategic waterway, according to Iranian media.
Following these conflicting reports, WTI erased its earlier losses as traders remain concerned about prolonged supply disruptions through the Strait of Hormuz, a vital chokepoint that handles around 20% of global Oil flows.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Standard Chartered economists maintain their call for Bank Indonesia to cut its policy rate by 25 bps in Q2-2026, but note that higher Oil prices and inflation now tilt risks toward a prolonged hold. They highlight fiscal constraints, government fuel subsidy policy, and FX stability concerns as key factors for Bank Indonesia.
Oil shock complicates BI rate outlook
"We expect Bank Indonesia (BI) to cut its policy rate by 25bps in Q2-2026."
"Due to the Middle East conflict, the risk to our inflation forecast is now to the upside, although we think the government will try to minimise the crude oil price pass-through by cutting non-subsidy spending."
"Government estimates suggest that a 10% increase in oil prices lifts revenues by 0.1% of GDP but raises energy subsidies and compensation by 0.3% of GDP; this widens the fiscal deficit by 0.2% of GDP."
"The rise in global oil prices now significantly increases the risk of BI staying on hold in the coming months."
"Moreover, due to heightened risk sentiment, BI may be wary of a negative impact on FX stability if it cuts further in this environment."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- The US Dollar Index eased on Tuesday as markets find their risk bids.
- Market tensions remain half-cocked after US Energy Secretary Wright walked back a claim that the US had escorted a ship through the Strait of Hormuz.
The US Dollar Index (DXY) fell to 98.50 on Tuesday, pulling back from last week's highs as safe-haven demand eased following US President Donald Trump's comments suggesting the Iran war is nearing its end.
The session told a story of conflicting narratives. On one hand, US President Trump repeated that the war was "very complete, pretty much," and Oil prices plunged around 10% as the International Energy Agency (IEA) convened an emergency meeting on strategic crude reserve releases. On the other, Defense Secretary Pete Hegseth said Tuesday would be the US military's "most intense day of strikes" of the entire campaign, with reports of heavy bombardment targeting Kish Island off Iran's southern coast. Adding to the confusion, Energy Secretary Chris Wright posted on social media that the US Navy had successfully escorted an oil tanker through the Strait of Hormuz, then deleted the post. Reuters subsequently confirmed the withdrawal. The episode raised fresh questions about whether escort operations are actually underway and dented the credibility of the administration's assurances on restoring Crude Oil flows through the critical chokepoint.
Key US inflation data rounds the corner
The week ahead is loaded with high-impact US data that will shape the Dollar's next move. Wednesday's Consumer Price Index (CPI) report for February at 12:30 GMT is the main event, with headline CPI expected at 0.3% month-over-month and 2.4% year-over-year, and core CPI forecast at 0.2% month-over-month. The data was collected before the Iran war began, so it won't reflect the energy price shock — but any upside surprise would reinforce the Fed's hawkish hold. Thursday brings initial jobless claims (consensus 215K) and a speech from Fed Governor Bowman at 19:00 GMT. Friday is packed: preliminary Q4 Gross Domestic Product (GDP), January core Personal Consumption Expenditures (PCE) at 12:30 GMT, plus the University of Michigan (UoM) consumer sentiment index and Job Openings and Labor Turnover Survey (JOLTS) data later in the session.
The big picture
The big picture driver remains the Iran conflict. If geopolitical risks escalate again or Oil prices reverse higher, the Dollar's safe-haven bid could return quickly. But if the conflict winds down as Trump has suggested, DXY is vulnerable to further downside as the war premium unwinds and rate cut expectations recalibrate. Wednesday's CPI is the next catalyst.
DXY daily 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.
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