Forex News

• The US Dollar Index drops to near 99.90 on renewed hopes of the US-Iran deal.
• US President Trump said that negotiations with Iran are in final stages and a deal could be announced in two or three days.
• Investors await the US CPI data for May.

The US Dollar (USD) faces slight selling in the European trading session on Tuesday due to renewed hopes of a potential deal between the United States (US) and Iran. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 99.90.

The US-Iran deal prospects have improved, following comments from President Donald Trump that negotiations with Tehran are in “final throes” and suggested that the Strait of Hormuz, a vital passage to almost 20% of global energy supply, could open up in “two or three days” if an agreement with Tehran is secured, The Guardian reported.

Such a scenario is unfavorable for the US Dollar, as it has outperformed in the past few months due to elevated energy prices in the wake of Hormuz closure. Higher energy prices prompted the US inflation and eventually hawkish Federal Reserve (Fed) bets.

On the domestic front, investors await the US Consumer Price Index (CPI) data for May, which will be released on Wednesday. The US headline CPI is expected to arrive higher at 4.2% Year-on-Year (YoY) from 3.8% in April. Signs of US inflationary pressures accelerating would prompt expectations for Fed interest rate hikes.

In the last two trading days, hawkish Fed prospects have intensified after the release of the upbeat US Nonfarm Payrolls (NFP) data for May.

US Dollar Index technical analysis

The Dollar Index Spot ticks lower at around 99.90. However, the near-term bias is bullish as price holds above the 20-day exponential moving average (EMA), which is at roughly 99.30 and comfortably above the rising trend-line support drawn from the 95.55 area, which now comes in near 98.34.

The Relative Strength Index (14) hovers in the low 60s, suggesting firm positive momentum without yet signaling overbought conditions, which reinforces the constructive tone while the index consolidates just under the 100 handle.

On the downside, initial support is seen at the 20-day EMA around 99.30, with the next, stronger layer aligning with the upward-sloping trend-line support near 98.34. A daily close below this latter zone would weaken the current bullish structure and open the door for a deeper retracement. Looking up, the spot could reclaim the one-year high at 100.64 if it breaks above the June 8 high at 100.20.

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

OCBC’s FX Strategist Sim Moh Siong reports that Gold has come under pressure after breaking below its 200-day moving average on a more hawkish Fed narrative and oil-led inflation fears. Prices later stabilised as Middle East tensions eased, but EM policy risks and higher yields weigh on safe-haven demand. OCBC trims its end-2026 Gold forecast, yet maintains that structural bullish drivers remain intact and the uptrend is only delayed.

Safe-haven appeal challenged by EM risks

"The break below the 200-day moving average, driven by a more hawkish Fed narrative, triggered accelerated selling in gold. Prices later stabilised after briefly dipping below USD4,300 as oil pared gains amid signs of de-escalation between Iran and Israel."

"Hawkish Fed expectations, partly fuelled by higher oil prices and strong US labour data, have weakened gold’s traditional safe-haven appeal during geopolitical stress. Sentiment also took a hit after India raised import duties on gold and silver to 15% from 6%, effective 13 May 2026, to curb imports."

"Central bank demand should remain resilient. However, risks are emerging that EM central banks may mobilise gold reserves to raise USD liquidity and defend currencies. Following the outbreak of war in the Middle East, Türkiye’s central bank sold or loaned around 130 tonnes, one of the largest recent reserve drawdowns, to stabilise the TRY. EM currency dynamics remain challenged by elevated energy prices, a firmer USD and the risk of a more hawkish Fed."

"Despite these headwinds, structural bullish drivers including currency debasement, fiscal risks and geopolitical fragmentation remain intact. A moderation in energy-driven inflation is needed for these themes to regain traction. We lower our end-2026 gold forecast to USD5,100/oz from USD5,350/oz."

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

• NZD/USD rises as the New Zealand Dollar rallies on China’s widening May Trade Surplus of CNY723.98 billion.
• China's May Trade Surplus beat expectations, widening to $105.43 billion against the projected $92.1 billion.
• The US Dollar may rise on Middle East ceasefire uncertainty after Netanyahu warned the war against Iran and Hezbollah isn't over.

NZD/USD remains stronger for the second successive day, trading around 0.5830 during the early European hours on Tuesday. The pair appreciates as the New Zealand Dollar (NZD) receives support from China's Trade Balance data, which, in Chinese Yuan (CNY) terms, arrived at CNY723.98 billion for May, widening from the previous figure of CNY585.69 billion. Exports rose 13.8% YoY in May vs. 9.8% in April. The country’s imports climbed 21.5% YoY in the same period vs. 20.6% previously.

In US Dollar terms, China's Trade Surplus widened far more than anticipated in May, reaching $105.43 billion against an expected $92.1 billion and a previous reading of $84.82 billion. This strong performance was driven by a robust acceleration in both trade segments: year-over-year exports surged by 19.4%, easily beating the 15.0% consensus, while imports jumped 27.4%, outpacing the projected 25.0% growth rate.

The NZD/USD pair gains ground as the US Dollar (USD) loses ground after Iran and Israel agreed to halt mutual attacks. The de-escalation came after an appeal from US President Donald Trump, boosting hopes that peace negotiations could move forward.

However, the US Dollar may regain ground amid uncertainty surrounding the Middle East ceasefire. Israeli Prime Minister Benjamin Netanyahu stated the war against Iran and its Lebanon-based proxy, Hezbollah, "has not yet ended," though he insisted both entities are weaker than ever. Netanyahu’s remarks followed a statement from Iran’s military confirming it had ceased strikes against Israel. Nevertheless, Iran’s central military command issued a stern warning, declaring that if Israel continues its attacks, including those in southern Lebanon, "much harsher and more crushing actions than before will be on the way."

The ongoing geopolitical friction, combined with strong US jobs data, has fueled inflation fears and heightened expectations of Federal Reserve rate hikes. According to the CME FedWatch tool, traders have raised the probability of a December quarter-point rate hike to 43%, up from 14% a month ago. The market is now bracing for Wednesday's US Consumer Price Index (CPI) and Thursday's Producer Price Index (PPI) data to gauge the Fed's next move.

The British Pound (GBP) is struggling as mounting political uncertainty and deteriorating economic indicators complicate the United Kingdom's outlook.

Ahead of the key Gross Domestic Product (GDP) April data to be released on Friday, financial markets are balancing the risk of an economic contraction against the probability of further interest rate hikes by the Bank of England (BoE) to rein in energy-driven inflation. 

With internal political friction intensifying due to a high-stakes leadership challenge within the ruling Labour Party, major financial institutions are turning increasingly cautious on the Pound’s near-term trajectory.

Sluggish economic growth and fiscal concerns threaten to drag Pound lower

Macro strategists at Brown Brothers Harriman (BBH) warn that the combination of a potentially contracting UK economy and stagflationary pressures leaves the British Pound deeply exposed to a downward correction against the US Dollar. They emphasize that while anticipated central bank interventions may try to curb price pressures, structural damage to the UK's fiscal credibility from potential political reshuffling could rapidly worsen a currency undershoot.

We expect GBP/USD to fall to 1.3100, reflecting a stronger US growth outlook relative to the UK. BOE rate hikes in a sluggish growth, high inflation environment, is not bullish for GBP but should help cushion the downside.

Uncertainty over the next BoE moves

Economists at Societe Generale suggest that any near-term political noise surrounding Manchester Mayor Andy Burnham's bid for the Labour leadership will likely yield limited radical change. On the monetary front, they acknowledge that while hawkish voices within the BoE’s Monetary Policy Committee (MPC) are pushing hard for an immediate rate increase, the broader consensus will likely favor a more conservative wait-and-see strategy.

We expect these members [those opting for a rate hike] to remain in the minority and for the BoE to keep rates on hold in June.

Banks anticipate a downward-biased trajectory for the British Pound

The banks anticipate a soft trend for the British Pound. Brown Brothers Harriman maintains an explicitly bearish outlook, forecasting a drop to the 1.3100 mark for the GBP/USD pair as weak growth narratives underperform compared to the US economy. Meanwhile, Societe Generale highlights a more range-bound, anchored path where the currency lacks immediate upward momentum because the central bank is projected to keep interest rates on hold rather than following more aggressive tightening paths.

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

ING’s Chris Turner notes that risk assets and Asian currencies have stabilised, but expects the US Dollar (USD) to stay supported on dips as markets await key US data and central bank meetings. He highlights focus on United States (US) Consumer Price Index (CPI) and Producer Price Index (PPI), a less dovish Federal Open Market Committee (FOMC), and sees US Dollar Index (DXY) finding support near 99.80 before retesting the upside.

Dollar steadies as traders eye data

"The good news for investors is that Friday's sell-off in tech stocks saw little follow-through selling yesterday. And overnight, some of those stocks which led the sell-off, such as the Korean chipmakers, have bounced back strongly."

"The volatility of tech stocks, however, looks to be a distraction to the dominant cyclical story in FX markets, which is the potential for the Fed to tighten policy. Last week was all about the strength of the US labour market and this week the market will be focused on US price data. "

"Today's focus is on the NFIB small business optimism data, the weekly ADP jobs data and the April trade balance. On the subject of trade, China released another healthy set of trade data overnight, which is lending some support to the renminbi and the Asian currency complex in general."

"On a related subject, the US Treasury market should take note of likely FX intervention across a large swathe of Asia and what it means for US Treasury sales. Fed custody holdings data show another $71bn decline in foreign official holdings of Treasuries since the start of May – which will add further pressure to the market."

"This starts with tomorrow's May CPI and is followed by PPI on Thursday. The market looks positioned for some firm data here and a far less dovish FOMC meeting in a week's time."

"DXY is consolidating after a strong rally on Friday, and we would expect it to find support around the 99.80 area before another look at the upside later this week."

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

• EUR/JPY holds gains as a stronger Euro is supported by robust Germany’s Industrial Production.
• Germany’s seasonally adjusted industrial output rebounded by 0.4% in April, meeting market expectations and recovering from March’s 0.1% decline.
• The Japanese Yen steadies as lower oil prices temper energy inflation fears, easing market pressure for aggressive rate hikes.

EUR/JPY extends its gains for the second successive day, trading around 184.90 during the Asian hours on Tuesday. The currency cross holds gains as the Euro (EUR) remains stronger following the release of Industrial Production and Trade Balance data.

Industrial Output, in the Eurozone’s economic powerhouse Germany, rose by 0.4% over the month in April, the federal statistics authority Destatis said in figures adjusted for seasonal and calendar effects, compared with the expected 0.4% rise and a decline of 0.1% recorded in March (revised from -0.7%). Annually, the German Industrial Production came in at -0.5% in the same period, following March’s revised 3.4% fall.

Germany’s trade surplus narrowed to €14.5 billion in April 2026 from an upwardly revised €14.7 billion in March, falling short of market expectations of €15.0 billion. It was the smallest trade surplus since November, as imports grew faster than exports. Exports unexpectedly increased by 0.9% month-on-month to a near 3½-year high of €136.6 billion, accelerating from a downwardly revised 0.3% gain in March and easily beating expectations of a 0.3% decline. Meanwhile, imports climbed 1.2% month-on-month to €122.1 billion, the highest level since November 2022, though easing from a downwardly revised 4.5% increase in March.

The upside for the EUR/JPY cross remains limited as a stabilizing Japanese Yen (JPY) acts as a structural headwind. Recent pullbacks in global oil prices have helped temper fears of a severe energy-driven inflation spike, consequently easing immediate market pressure for hyper-aggressive rate hikes.

However, the Bank of Japan (BoJ) is still widely anticipated to tighten monetary policy later this month. Policymakers continue to grapple with underlying inflationary pressures stemming from historically elevated energy costs. In tandem with potential rate hikes, reports indicate that the BoJ will review its bond-tapering framework, with a high likelihood of scaling back its monthly asset purchases. Market participants are now turning their focus to Wednesday’s 30-year Japanese Government Bond (JGB) auction, which will serve as a key barometer to gauge investor demand within this shifting, higher-yield environment.

• AUD/USD hits session highs at 0.7070, although it remains near eight-week lows.
• Bright Trade Balance data from China has provided a moderate impulse to the Aussie.
• Markets show some relief as hostilities in the Middle East stop.

The Australian Dollar (AUD) posts moderate gains against the US Dollar (USD) on Tuesday, regaining some of the ground lost last week, although it remains at its lowest level in nearly two months. News that Israel and Iran halted hostilities has triggered a mild relief rally. At the same time, upbeat Chinese trade data has provided additional support for the Aussie, as China is Australia’s major trading partner.

Data released by the Chinese Government earlier on Tuesday showed that the Asian giant’s trade surplus rose to USD 105.43 billion in May, its highest level since January and well beyond market expectations of USD 92.1 billion. In April, China's trade surplus amounted to USD 84.82 billion.

China's exports bloom with the AI rush

In May, exports showed a 19.4% year-over-year (y-o-y) growth, following a 14.1% increase in April, also beating expectations of a 15% increment. Strong demand for chips, amid the sharp increase in AI investment, has been the main driver for May’s surplus, offsetting the negative impact of the energy shock on global demand.

Imports also accelerated, with a 27.4% year-on-year increase in May after 25.3% year-on-year growth in April, suggesting that domestic demand is picking up pace after months of sluggish consumer spending.

Meanwhile, news reporting a pause in the hostilities between Israel and Iran has triggered a moderate pullback in Oil prices, providing a mild risk-appetite. US President Donald Trump affirmed earlier on Tuesday that he might have a proposal for a peace agreement with Iran and showed optimism about an upcoming deal.

In the US, the strong macroeconomic figures released last week, namely Friday's Nonfarm Payrolls report, have boosted expectations that the Fed will be able to hike interest rates in the second half of the year, if inflationary pressures remain high. In that sense, the US Consumer Price Index (CPI) release, due on Wednesday, will be key to confirm the market's expectations and is likely to set the US Dollar's near-term direction.

Here is what you need to know on Tuesday, June 9:

The US Dollar (USD) retreats from a two-month high to around 99.85 in early European trading on Tuesday as Middle East hostilities ebbed. Traders await the release of the US Consumer Price Index (CPI) inflation report on Wednesday and the Producer Price Index (PPI) data on Thursday for more clues on the Fed's interest rate path.

Traders are now pricing in a 43.2% chance of a 25 basis points (bps) rate hike in December, up from just about 14% a month ago, according to the CME FedWatch tool.  

US President Donald Trump said on Tuesday that he might have a proposal for the Iran agreement within days, per Reuters. Early Monday, Israeli Prime Minister Benjamin Netanyahu said that the war against Iran and its Lebanon-based proxy Hezbollah “has not yet ended,” though he insisted both are weaker than ever. 

Meanwhile, Iran had announced an end to its military operations against Israel. However, its central military command warned that if Israel continued to attack, including in southern Lebanon, “much harsher and more crushing actions than before will be on the way." 

Data released by the General Administration of Customs on Tuesday showed that China's Trade Surplus surged to $105.43 billion in May, widening from $84.82 billion recorded in April. Additionally, Exports rose by 19.4% YoY in May, compared to 14.1% in April, better than the 15.0% expected. Imports climbed 27.4% YoY in May, versus 25.3% prior, above the market consensus of 25.0%. 

Germany’s Industrial Production grew for the first time since the war broke out in Iran, with the figure rising 0.4% MoM in April, Destatis reported on Tuesday. This reading followed a decline of 0.1% in March and was in line with the market expectations. Annually, German Industrial Production came in at -0.5% in the same period, compared to March’s revised 3.4% decrease.

EUR/USD gathers strength to near 1.1550 in the European morning. The European Central Bank (ECB) is set to raise its key interest rate for the first time in almost three years at the upcoming June policy meeting on Thursday. 

GBP/USD gains momentum above 1.3350, rebounding from a three-week low. 

USD/JPY holds steady around 160.15 in the European morning on Tuesday. Markets are on high alert for foreign exchange intervention from Japanese authorities. Japan’s Finance Minister Satsuki Katayama on Tuesday emphasized that the stance is unchanged and authorities are prepared for decisive measures.

Gold posts modest gains near $4,340 on Tuesday. However, the yellow metal remains near its lowest since March 24 amid uncertainty in the Middle East and rising bets of a US interest rate hike. 

Commerzbank’s Tatha Ghose notes that Russia’s central bank has shifted EUR/RUB pricing to derive from USD/RUB, despite thin hard-currency trading. Recent strength in Oil revenues, with Urals averaging about $90 per barrel in April–May, is currently supporting the Ruble. However, Commerzbank expects Oil prices to drift lower by year-end, with a weakening economy likely to pressure the currency again.

Oil support seen as temporary

"Russia’s central bank (CBR) has just changed its EUR/RUB pricing mechanism due to sparse trading volume since the Moscow exchange (MOEX) was sanctioned; going forward, the CB will derive it from USD/RUB."

"This does not seem to make sense fully because, arguably, no practical USD/RUB exchange rate exists either. Probably oil exports can provide a weak anchor for USD/RUB valuation, but overall, we cannot say that hard currency FX markets work in Russia."

"This topic aside, what is of interest, lately, is that oil and gas revenue does show significant improvement recently because the Urals oil price managed to average quite a decent $90/bbl during April-May."

"This is supporting the exchange rate at present. We, however, think that the oil price will drift down from here by the end of the year. "

"Once the oil price bonanza is out of the way, a weakening economy will pressure the currency once again."

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