Forex News

• DJIA surrendered 700 points after Washington declared the Iran ceasefire over and promised further strikes overnight.
• Crude Oil's near-8% surge dragged Treasury yields and Federal Reserve hike odds higher together, cancelling the safe-haven cushion that once softened geopolitical shocks.
• FOMC minutes land at 18:00 GMT with July hike odds already better than one in three; jobless claims and a New York Fed appearance follow Thursday.

The Dow Jones Industrial Average opened Wednesday within a few points of its 52,847 session high and spent the rest of the day paying down three weeks of ceasefire faith, giving back 700 points through the day. President Donald Trump told the North Atlantic Treaty Organization summit in Ankara that the ceasefire with Iran is over, and equities repriced the region's risk premium in a single session.

One podium in Ankara, one repricing

Trump's declaration followed Tuesday's attacks on three commercial vessels in the Strait of Hormuz, which drew an American response described as a series of powerful strikes against more than 80 Iranian targets, from air defence systems to anti-ship missile batteries. The president dismissed further dealings with Tehran as a waste of time and promised to hit the country hard again overnight, while the Treasury revoked the waiver that had allowed Iranian barrels back onto the world market.

Energy markets did the arithmetic immediately; Brent futures jumped 8% to $80.07 and West Texas Intermediate popped 7.6% to $75.77. NATO Secretary General Mark Rutte called the American strikes absolutely necessary, which told traders the alliance now treats escalation as policy rather than accident. Europe's Stoxx 600 closed nearly 2% lower with energy producers the only group spared.

The safe-haven trade forgot to show up

The classic sequence had missiles flying, Treasuries rallying, the Federal Reserve turning patient, and equity dip-buyers collecting the rebound. Wednesday inverted every step of it; the 10-year yield climbed to 4.58% from 4.55%, against 3.97% before the war began, while Gold slid below $4,100 into a firmer Dollar.

Bank of America's technical desk now maps the 10-year toward 4.65% and potentially 4.82% while the yield holds above 4.45%, and rate futures price roughly one-in-three odds of a hike at the July 29 meeting with better-than-even odds of at least one increase by September. Crude Oil parked in a $70 to $90 band reads as moderately inflationary to a committee that has already stripped out its easing bias, so a supply shock now tightens policy expectations instead of loosening them. That combination taxes equity multiples directly, and the index's rate-sensitive cyclicals paid most of the bill.

Winners, losers, and a stubborn dip bid

Inside the average, Chevron rose 2% on the energy bid while Home Depot fell 3% and McDonald's lost more than 1% as fuel-cost math worked through consumer names. The damage ran wider outside the index; materials tracked toward their worst session in more than a year, travel names sold off, and Marathon Petroleum ran 5% higher as refiners priced the new supply reality.

The tape itself refused to capitulate cleanly even with more strikes promised overnight. A midday rebound stalled at 52,500, the afternoon washout printed 52,056, and buyers still lifted the index more than 130 points off the low into the close. That reflex has paid all quarter, and RBC Wealth Management's strategy desk still treats flare-ups as the base case rather than regime change, yet the daily Stochastic Relative Strength Index rolling over from 79 after this week's record print at 53,333 says the headline hit a stretched tape, not a braced one.

Minutes first, claims later

Federal Open Market Committee minutes due at 18:00 GMT carry the first internal accounting of the new Chair's first meeting, where rates held and the guidance tilted toward further tightening if inflation persists. The Chair has already characterized that debate as contentious, so the size of the hike camp is the detail that moves pricing, and hawkish minutes stapled to a Crude Oil shock would finish what the morning started.

The data backdrop gives the hawks material; Monday's Institute for Supply Management services survey printed 54.0 with prices paid easing to 67.7 from 71.3 and employment back in expansion at 51.2, while the four-week ADP payroll average slipped to 21,000. Thursday brings initial jobless claims at 12:30 GMT, with 218K expected against 215K prior, a New York Fed president appearance at 13:00 GMT, and June existing home sales at 14:00 GMT. Minutes soft enough to cap yields hand the dip bid its opening; anything else leaves rallies for sale.

Dow Jones Industrial Average technical levels to watch

Resistance: The 52,500 intraday rebound cap is the first obstacle; beyond it sit the 52,850 breakdown origin and the 53,000 round handle, which guard the approach to this week's record at 53,333.

Support: Wednesday's 52,056 session low rests just above the 52,000 round handle, and a daily close through both exposes late-June congestion near 51,600 with the 50-day Exponential Moving Average waiting just above 51,000.

Bias: Lower; rallies into 52,500 are for selling while Crude Oil holds its bid and hike odds climb, and only a daily close back above 52,850 puts the record run back on the board.

Dow Jones daily chart

MUFG’s Lloyd Chan highlights that external pressures on Asia FX persist as the US Dollar and US Treasury yields stay firm, with markets fully pricing another Fed hike by October. He notes that most Asian currencies have weakened against the Dollar since the June FOMC, but domestic fundamentals and central bank actions are set to drive divergent performances across the region.

Regional currencies under external pressure

"Most Asian currencies have weakened against the US dollar since the 18 June FOMC meeting."

"In Indonesia, rupiah volatility has eased considerably following Bank Indonesia's intensified support measures, including policy rate hikes and higher SRBI yields. Nonetheless, the rupiah remains sensitive to higher US yields."

"Meanwhile, the domestic macro backdrop has become somewhat less supportive. Manufacturing activity contracted in June, exports fell 5.8%yoy, the trade balance recorded its largest deficit since April 2019 in May, and inflation rose to 3.3%yoy, moving closer to the upper bound of BI's 2.5%±1% target range."

"As for the Malaysian ringgit, BNM's efforts to encourage government-linked companies and exporters to repatriate overseas earnings have helped limit disorderly currency movements. However, political risks are likely to move increasingly into focus. With the 11 July state election approaching, we could see a modest election-related risk premium being priced into the ringgit in the near term."

"In Thailand, inflation moderated further to 2.4%yoy in June, although signs of underlying economic stress persist. Non-performing loan ratios have continued to deteriorate across several key sectors, highlighting ongoing vulnerabilities in the domestic economy. We continue to expect the BOT to keep the policy rate unchanged at 1.0%, which weighs on the baht's relative carry attractiveness."

"In the Philippines, the peso continues to face headwinds from slowing economic growth, inflation that remains elevated at above 6%, and relatively subdued capital inflows. Further BSP tightening is likely to remain supportive in containing inflation pressures and helping to support the currency."

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

• Gold retreats toward $4,000 as renewed US-Iran tensions weigh on sentiment.
• Higher Oil prices revive Fed rate hike bets, pressuring the non-yielding metal.
• Attention turns to the FOMC meeting minutes for guidance on the Fed's next move.

Gold (XAU/USD) sees a sharp move lower on Wednesday after US President Donald Trump declared that the ceasefire deal with Iran was “over” during the NATO Summit in Ankara, Turkey. However, Reuters later reported that Trump did not repeat those remarks, citing a source familiar with the talks.

At the time of writing, XAU/USD is trading around $4,040, retracing most of the gains recorded in the previous week.

Tensions escalated after renewed fighting between the United States and Iran overnight, following attacks on commercial vessels near the Strait of Hormuz. Trump warned that the US would “probably hit them again tonight” and added that “we may take over Kharg Island.”

The latest flare-up represents the most significant breach of the interim US-Iran agreement since it took effect on June 17, lifting the US Dollar (USD) and Crude Oil prices while dampening demand for the yellow metal.

West Texas Intermediate (WTI) crude Oil is trading around $74.50 per barrel, up more than 8% so far this week.

The rebound in Oil prices rekindled inflation concerns, with the CME FedWatch Tool showing the probability of a September Federal Reserve (Fed) interest rate hike rising to 68% from 58% a day earlier.

Higher borrowing costs tend to weigh on Gold as investors favor interest-bearing assets. US Treasury yields remained elevated, with the benchmark 10-year yield holding around 4.58% on Wednesday, its highest level since late May.

The June Federal Open Market Committee (FOMC) meeting minutes, due later in the American session at 18:00 GMT, will be closely watched for hints about the Fed's next move.

For now, Gold's price action remains driven by interest rate expectations, overshadowing its traditional role as an inflation hedge and safe-haven asset.

The precious metal is trading nearly 28% below its record high of around $5,600 reached in January and remains vulnerable to further losses amid an unfavorable macro backdrop.

Even so, the longer-term outlook remains underpinned by structural demand from central banks and institutional investors, which could help limit deeper declines.

Technical analysis: XAU/USD slides toward $4,000 support

On the 4-hour chart, XAU/USD retains a bearish near-term tone as price holds below the 100-period Simple Moving Average (SMA) at $4,122.

The yellow metal is retreating from recent highs and remains capped by a dense overhead structure, while momentum indicators reinforce the softer bias: the Relative Strength Index (14) has slipped toward 36, and the Moving Average Convergence Divergence (MACD) has turned negative with a declining histogram, hinting at persistent downside pressure.

On the topside, immediate resistance is located at the 100-period SMA near $4,128, followed by the horizontal barrier at $4,200 and the 200-period SMA at $4,255, before a stronger cap emerges at $4,400.

On the downside, initial support is seen at the horizontal level of $4,000, where a break would likely open the door to a deeper corrective slide, while holding above this floor would keep XAU/USD in a consolidative bearish phase beneath the mentioned moving averages.

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

• The Canadian Dollar outperforms the US Dollar as Oil prices rally sharply.
• Donald Trump says any agreement with Iran is now off the table and warns of fresh US strikes.
• Markets await the Federal Reserve Minutes and Canada's employment report.

USD/CAD trades around 1.4190 at the time of writing on Wednesday, down 0.10% on the day, as the Canadian Dollar (CAD) benefits from a sharp rebound in Oil prices fueled by renewed geopolitical tensions in the Middle East.

United States (US) President Donald Trump said that the memorandum of understanding aimed at ending the conflict with Iran is now "over" and that he no longer wants to negotiate with Tehran. He also stated that the United States could launch new strikes against Iran as early as Wednesday night, raising the possibility of targeting strategic infrastructure, including the country's electricity grid, water treatment facilities and Kharg Island, Iran's main Oil export terminal.

These remarks have reignited concerns about global Oil supply disruptions, with the Strait of Hormuz remaining at the center of investors' attention. The strategic waterway handles around one-fifth of the world's Oil supply, meaning any potential disruption continues to support Crude prices and, in turn, commodity-linked currencies such as the Canadian Dollar.

The Canadian Dollar (CAD) is benefiting directly from the rise in Oil prices, which improves the outlook for Canada's largest export sector. Meanwhile, the NBC noted that Canada's merchandise trade surplus reached its highest level in four years in May, driven by record exports, although the bank warned that lower energy prices following the recent Oil price correction could narrow the surplus in the coming months. NBC also highlighted that ongoing disruptions in the Strait of Hormuz continue to pose risks to global supply chains.

According to Scotiabank analysts, the Canadian Dollar has also held up well despite the volatility triggered by the Iran conflict. The bank noted that sentiment toward the Canadian currency has improved gradually, while the declining premium for upside US Dollar (USD) protection suggests the recent weakness in the CAD may be coming to an end.

Investors are now awaiting the release of the June Federal Open Market Committee (FOMC) Minutes, which could provide fresh clues about the monetary policy outlook of the Federal Reserve (Fed). In Canada, attention will then shift to Friday's June employment report, a key release that could shape expectations for the Bank of Canada's (BoC) next policy decision.

ABN AMRO’s Georgette Boele notes that the Euro’s relationship with energy prices has evolved, with recent Oil and Gas gains again weighing on EUR/USD. Earlier in the US-Iran conflict, higher energy prices hurt the Euro (EUR), but later the pair became more driven by Federal Reserve (Fed) and European Central Bank (ECB) expectations. She now sees EUR/USD guided by central bank expectations, yield spreads and Eurozone energy risks.

Euro sensitivity returns to energy moves

"At the start of the US-Iran conflict, higher energy prices weighed on the euro against the US dollar. During the conflict, however, EUR/USD became less sensitive to energy prices and more sensitive to expectations for the Fed and the ECB."

"When a Memorandum of Understanding was announced, energy prices fell sharply, but the euro gained little against the US dollar because markets were focused on expectations of Fed rate hikes."

"As a result, oil and gas prices rose strongly, supporting the currencies of energy exporters such as the Norwegian krone, Canadian dollar and US dollar. At the same time, currencies of energy importers weakened."

"The euro again declined against the US dollar as energy prices rose."

"Going forward, the direction in EUR/USD will depend on expectations for the Fed and the ECB, inflation expectations, changes in nominal and real yield spreads between the US and Europe, and perceptions of possible energy shortages in the eurozone."

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

• US-Iran attacks revive Hormuz fears and lift crude prices.
• FOMC minutes could clarify Warsh’s first policy debate.
• Burnham’s chancellor pick keeps UK political uncertainty elevated.

The Pound Sterling (GBP) posts modest gains during the North American session on Wednesday amid growing tensions in the Middle East, as US President Donald Trump's said the deal with Iran was “over” after both countries exchanged attacks over the last couple of days. At the time of writing, the GBP/USD pair trades at 1.3371, up 0.09%.

GBP/USD steadies as geopolitical risk offsets Dollar strength

During the last couple of days, Tehran and Washington exchanged blows after Iran hit two vessels sailing through the Strait of Hormuz, triggering a response from the US. The US CENTCOM reported that it attacked 80 targets during the last two days. In addition to the attacks, the US reimposed sanctions on Iran’s Oil, while Trump threatened to resume the blockade in Hormuz.

Energy prices jumped, with the US crude Oil benchmark, West Texas Intermediate (WTI), rising nearly 5% to $75.60.

The US economic docket will feature the release of the June FOMC minutes, the first under the new Chair, Kevin Warsh. Aside from this, geopolitical developments and improved relations between the US and Iran might be catalysts for the trading session.

In the meantime, the US Dollar Index (DXY), which measures the performance of the American currency against the other six, is up 0.10% to 101.19, bolstered by the rise in WTI.

Money markets remain confident that the US Federal Reserve (Fed) might increase borrowing costs at least once in 2026, with odds of 94%. For the July meeting, traders had priced in a 65% chance of a rate hold, according to Prime Terminal data.

On Thursday, the US economic schedule will feature the release of Initial Jobless Claims for the week ending July 4.

In the UK, uncertainty over the pick of a finance minister for the upcoming Prime Minister, Andy Burnham, keeps investor tensions high. According to Polymarkets, there’s a 51% chance that the left-leaning former energy minister Ed Miliband will take on the role.

Bank of England (BoE) Deputy Governor Sarah Breeden will cross the wires amid a scarce economic docket.

GBP/USD Price Forecast: Technical outlook

On the daily chart, GBP/USD trades at 1.3365, keeping a mildly bearish near-term tone as it holds under the cluster of simple moving averages around 1.3401 and remains capped well below the descending resistance trend line near 1.3509. The Relative Strength Index (14) at 53.8 drifts just above neutral, hinting at a modest recovery in momentum, yet this improvement is not sufficient to offset the overhead technical barriers that continue to weigh on the pair.

On the topside, initial resistance is located at the grouped 50-, 100- and 200-day simple moving averages around 1.3401, with a subsequent hurdle at the downward-sloping trend line break level near 1.3509. On the downside, the structural floor is defined by the upward support trend line originating from 1.3159, and a clean break toward that zone would likely reinforce the prevailing bearish bias despite the currently stabilizing momentum backdrop.

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

• US Dollar Index climbs to a four-day high as renewed US-Iran tensions support safe-haven demand.
• Rising Oil prices lift September Federal Reserve rate hike expectations.
• Traders turn their attention to the June FOMC Minutes.

The US Dollar Index (DXY) consolidates modest gains on Wednesday as traders assess renewed tensions between the United States and Iran and the potential economic fallout. At the time of writing, the index, which tracks the Greenback's value against a basket of six major currencies, is trading around 101.20, hitting a four-day high.

The US Dollar (USD) strengthened after US President Donald Trump declared that the ceasefire deal with Iran was "over." However, Reuters later reported, citing a source familiar with the talks, that Trump did not repeat those remarks during the closed NATO leaders' meeting.

Tensions escalated after renewed fighting between the United States and Iran overnight, following attacks on commercial vessels near the Strait of Hormuz. Trump warned that the US would “probably hit them again tonight” and added that “we may take over Kharg Island.”

Meanwhile, Iran's Press TV, citing an informed source, reported that Tehran would close the Strait of Hormuz in the event of any fresh attacks.

The latest flare-up has pushed Oil prices higher, reviving inflation concerns. West Texas Intermediate (WTI) crude Oil is trading around $74.50 per barrel, up more than 8% so far this week.

According to the CME FedWatch Tool, markets are now pricing in a 68% probability of an interest rate hike at the September meeting, up from 58% a day earlier.

Attention now turns to the June Federal Open Market Committee (FOMC) meeting minutes, due later in the American session at 18:00 GMT, for fresh clues on the Federal Reserve's (Fed) interest rate path.

ING FX strategist Francesco Pesole wrote in a note, "Today’s minutes will clarify how serious members are about the possibility of rate hikes. Based on post-meeting communication, we see limited risk of a dovish surprise in the minutes."

Pesole added that he expects the minutes to "cement the hawkish message" and support the US Dollar, although he does not expect them to trigger a major repricing of interest rate expectations following last week's softer US jobs report.

On the US Dollar Index, Pesole said: "We expect mostly range-bound DXY in the very near term, with some upside risks to 101.50-102.0 unless large JPY interventions cause a mechanical correction."

Scotiabank strategists Shaun Osborne and Eric Theoret highlight renewed weakness in the Japanese Yen (JPY), which is underperforming G10 peers and threatening fresh multi-decade lows as USD/JPY trades at levels last seen in 1986. They stress that surging Oil prices are a clear downside risk via Japan’s terms of trade, while the chart offers little guidance on resistance after the recent powerful rally.

Multi-decade highs and downside risks

"The yen is soft, down 0.2% vs. the USD and underperforming most of the G10 currencies into Wednesday’s NA session."

"The renewed weakness is worrisome following last week’s failed recovery and the yen looks to be threatening a break to fresh multi-decade lows."

"The latest resurgence in geopolitical tensions presents a clear downside risk for the yen, as surging oil prices deliver a crushing blow to Japan’s terms of trade."

"The USD/JPY chart offers little clarity in terms of framing major resistance levels, given that the recent rally has delivered a push to fresh multi-decade highs reached levels last seen in 1986."

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

ING’s Francesco Pesole reports that the Reserve Bank of New Zealand (RBNZ) raised rates to 2.50%, delivering a more hawkish message than expected and signalling further tightening is likely. He notes consensus within the Committee, sees another hike around September or October, but stresses dovish risks later in 2026 and maintains a 0.59 NZD/USD target by year-end.

Further tightening signalled by rbnz

"The Reserve Bank of New Zealand hiked rates by 25bp to 2.50% today, in line with our call. The accompanying message had a more hawkish tone overall than we had anticipated, though. The statement reads that further hikes “appear likely at upcoming meetings”, even if their timing is “highly uncertain”."

"There is still plenty of uncertainty around the inflation outlook, but the Bank stressed how non-tradable inflation had been persistent even before the war."

"We had suspected a close vote split (4-2) could send dovish vibes, but the minutes said the Committee “reached consensus” to increase rates. This can definitely mean one or two members (we suspect Conway and Silk) preferred a hold, but not casting a dissenting vote means – in our view – there is interest in preserving the market’s hawkish pricing."

"OIS-embedded expectations are for 38bp of tightening by year-end. This meeting has reinforced our previously narrow call for another hike in September/October. Still, risks remain on the dovish side, as a delay in tightening looks more likely than two more interest rate increases, as the next round of projections should show inflation falling back to target by mid-2027."

"NZD’s post-hike rally looks more sustainable in the near term than we had anticipated. The dovish risks highlighted above may only emerge later in the year, when we expect AUD to outpace NZD again. We still target 0.59 in NZD/USD by year-end."

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