Forex News
Wells Fargo’s international economics team notes that a fragile ceasefire in the Middle East leaves Oil market risks elevated and conviction on the outlook low. They still assume active conflict ends by mid‑2026 and expect Oil to trend lower into H2 2026, but emphasize that large potential supply shut‑ins and slow normalization could keep prices and volatility higher than markets imply.
Ceasefire fails to resolve Oil risks
"The announced ceasefire looks fragile and keeps Middle East risk elevated."
"We still assume active conflict ends by mid‑year and oil trends lower into H2 2026, but conviction on the outlook remains low amid persistent geopolitical stress."
"This is a large and worsening supply shock."
"The IEA estimates potential oil supply shut‑ins near 10 mbpd, roughly 10% of global supply, with conditions deteriorating further through April."
"Ceasefire does not mean normalization. Shipping through Hormuz and energy production will recover slowly, if at all, without durable peace."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Consumer confidence is expected to ease in April.
- One-year inflation expectation picked up pace to 4.8%.
American consumer confidence deflated in early April, as households grew more pessimistic about current conditions and the broader economic outlook, according to preliminary data from the University of Michigan released on Friday.
The closely watched Consumer Sentiment Index receded to 47.6 from 53.3 in the previous month, missing economists’ expectations (52) and falling to the lowest level recorded in the survey's 70-plus-year history.
Furthermore, the Current Conditions index edged lower to 50.1 from 55.8, while the Expectations gauge dropped to 46.1 from 51.7, highlighting a downbeat scenario for the months ahead.
Inflation expectations, meanwhile, are seen picking up pace: the one-year outlook rose to 4.8% from 3.8%, and the five-year forecast increased a tad to 3.4% from 3.2%.
Market reaction
The US Dollar remains well offered, navigating the area of multi-week lows and sending the US Dollar Index (DXY) back to the 98.50 zone.
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 | -0.28% | -0.26% | 0.08% | -0.05% | -0.05% | -0.03% | -0.54% | |
| EUR | 0.28% | 0.02% | 0.37% | 0.21% | 0.22% | 0.25% | -0.26% | |
| GBP | 0.26% | -0.02% | 0.36% | 0.22% | 0.22% | 0.24% | -0.28% | |
| JPY | -0.08% | -0.37% | -0.36% | -0.15% | -0.14% | -0.16% | -0.66% | |
| CAD | 0.05% | -0.21% | -0.22% | 0.15% | -0.01% | 0.02% | -0.50% | |
| AUD | 0.05% | -0.22% | -0.22% | 0.14% | 0.01% | 0.02% | -0.50% | |
| NZD | 0.03% | -0.25% | -0.24% | 0.16% | -0.02% | -0.02% | -0.51% | |
| CHF | 0.54% | 0.26% | 0.28% | 0.66% | 0.50% | 0.50% | 0.51% |
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 extends gains as ceasefire optimism keeps USD on the back foot despite firm CPI.
- US CPI rises in March, driven by higher Oil prices, but core inflation remains contained.
- Attention now shifts to the upcoming US-Iran negotiations in Pakistan this weekend.
The Euro (EUR) edges higher against the US Dollar (USD) on Friday, with EUR/USD extending gains for a fifth straight day, as improving risk sentiment following the US-Iran ceasefire announcement offsets the impact of firm US inflation data and keeps the Greenback under pressure.
At the time of writing, EUR/USD trades around 1.1736, its highest level since early March. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is trading around 98.55, heading for its biggest weekly decline since January.
The latest US inflation data, the first to fully capture the impact of rising Oil prices since the onset of the US-Iran war, highlighted mounting price pressure. Data released by the US Bureau of Labor Statistics showed the Consumer Price Index (CPI) rose 0.9% MoM in March, accelerating sharply from 0.3% in the previous month. Annual inflation increased to 3.3% YoY from 2.4% in February, with both readings in line with market expectations.
Additionally, the Consumer Price Index excluding Food and Energy rose 0.2% MoM in March, unchanged from the previous month and below expectations of 0.3%. On an annual basis, core CPI edged up to 2.6% YoY from 2.5%, also coming in slightly below the 2.7% forecast.
From a monetary policy perspective, the mixed inflation picture reinforces expectations that the Federal Reserve (Fed) will remain on hold in the near term. While the energy-driven surge in headline CPI highlights upside risks to inflation, the softer core readings suggest underlying price pressures remain contained.
Fed policymakers have repeatedly flagged that progress on disinflation has slowed, while labor market conditions are showing signs of strain. In this context, markets are likely to expect a data-dependent approach, with the Fed needing clearer evidence that inflation is moving sustainably toward its 2% target before considering any rate cuts.
On the geopolitical front, the two-week ceasefire between the US and Iran has eased fears of a major escalation, although the fragile nature of the agreement continues to keep markets cautious, with upcoming negotiations in Pakistan over the weekend in focus.
Any meaningful breakthrough, particularly a full reopening of the Strait of Hormuz, could further weigh on the US Dollar and allow the Euro to extend its recovery. At the same time, a sustained decline in Oil prices would help ease inflation pressures and reduce the need for the Fed to keep interest rates higher for longer.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Oscar Munoz and the TD Securities US macro team judge that, although core CPI surprised on the soft side and tariff pass-through moderated, it is too early for markets to extrapolate a dovish signal. They expect core inflation to firm again in April on airfares and shelter, and still project two 25 bps Federal Reserve cuts in the second half of 2026 as inflation normalizes.
Soft core CPI but cuts still seen in 26H2
"Tariff pass-through moderated today after firmer Jan and Feb data, with the CPI's supercore slowing to 0.18% m/m—a four-month low."
"We expect this to translate into a softer core PCE at 0.23% m/m in March."
"We think it is too early for the market to run with today's positive signal from the core CPI given the strong start to the year for consumer prices—along with the forming clouds that will surely rain on core inflation in coming months."
"Strengthening airfares and the delayed payback from an unusually soft October shelter will lift the core CPI in April."
"We still see room for two 25 bps rate cuts in 26H2 on inflation normalization."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
ING’s Senior Economist Min Joo Kang notes that the Bank of Korea kept its policy rate at 2.5% and stressed a data-dependent stance as inflation pressures rise and GDP growth projections weaken. The report argues overall policy direction is still tilted hawkish, with supply shocks and weaker KRW raising inflation risks, and suggests the next move in rates should be a hike, potentially in July.
BoK holds but leans toward future hikes
"In its meeting statement, the Bank of Korea highlighted the challenge of balancing support for economic growth and curbing inflation. The BoK observed that price pressures have risen significantly since early March, with annual consumer price index growth likely to exceed February’s forecast of 2.2%. GDP growth, meanwhile, is now projected to fall below the earlier 2.0% forecast."
"BoK Governor Rhee has consistently adhered to a principle: temporary external shocks do not warrant monetary policy responses. However, if such shocks start to raise inflation expectations and cause secondary effects, the BoK will adjust its policy accordingly."
"The BoK now projects that both headline and core inflation will likely rise more than previously forecasted. The emphasis on high inflation sensitivity and upside risks to core inflation signals that the BoK is leaning towards a more hawkish policy stance, in our assessment."
"If we’re right about supply constraints, which would have a larger impact on inflation than growth, the BoK is likely to respond with rate hikes. It could happen as early as July."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Commerzbank’s Bernd Weidensteiner notes that U.S. inflation jumped to 3.3% in March, driven mainly by higher gasoline prices linked to the war in Iran, while core inflation remains moderate. The bank expects headline inflation to approach 4% by May before easing in the second half of 2026, with the Federal Reserve likely keeping interest rates unchanged until late 2026.
Energy shock lifts prices and risks
"U.S. inflation jumped to 3.3% in March, up from 2.4% in February. The main reason is the rise in gasoline prices due to the war in Iran."
"Excluding energy and food (the “core rate”), price pressure was actually slightly lower than expected at 0.2% month-on-month in March."
"For other goods and services, the energy price shock will not become apparent until the coming months."
"We expect the overall inflation rate to rise to nearly 4% by May."
"Assuming that the situation in the Middle East then eases and the oil price falls back to $80, inflation should ease again in the second half of the year, but not fall below 3% until spring 2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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