Forex News
The Eurozone industrial sector activity rises 0.4% in February, faster than estimates of 0.3%, according to data published by Eurostat on Wednesday. In January, the Industrial Production data declined by 0.8%, revised higher from -1.5%.
On an annualized basis, the industrial output declined steadily by 0.6%, while it was expected to have contracted at a faster pace of 1%. The January reading was revised higher from -1.2%.
Market reaction
There is a slight negative reaction by the EUR/USD pair after the data release. However, the impact appears to be the outcome of a slight uptick in the US Dollar (USD). As of writing, EUR/USD trades marginally lower to near 1.1785.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Antje Praefcke at Commerzbank highlights that Norges Bank has turned more hawkish after the Middle East war pushed up energy prices and inflation risks. The policy rate remains at 4%, but guidance and the rate path now signal a hike in June and possibly further moves later in 2026. However, she stresses that developments in the Middle East and Oil prices remain the main drivers for NOK.
Norges Bank signals June rate hike
"At its meeting in late March, Norges Bank made a U-turn."
"Despite leaving the policy rate unchanged at 4%, they noted: It will likely be appropriate to raise the policy rate at one of the forthcoming monetary policy meetings."
"According to Norges Bank, higher energy prices will likely reduce global growth and push up inflation both abroad and in Norway."
"For this reason, the Committee judges that a more restrictive monetary policy stance is needed to bring inflation back to the 2% target within a reasonable time horizon."
"It adjusted its interest rate path accordingly; this now signals a rate hike in June."
"Depending on how economic and inflation outlooks develop, however, the policy rate could be raised further in the second half of the year."
"Therefore, developments in the Middle East conflict and oil prices remain the main drivers for the NOK."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/JPY rises as improved risk sentiment from potential US–Iran talks supports the Australian Dollar.
- Trump said he isn’t considering extending the ceasefire, adding he sees no need for it.
- The Japanese Yen struggles as rising oil prices highlight Japan’s heavy reliance on Middle East energy imports.
AUD/JPY remains stronger for the third successive day, trading around 113.40 during the European hours on Wednesday. The currency cross appreciates as the Australian Dollar (AUD) receives support from positive market sentiment, which could be attributed to the potential second round of United States (US)-Iran talks.
US President Donald Trump said he is not considering extending the ceasefire, adding that he does not see it as necessary. “I think you’re going to be watching an amazing two days ahead. I really do,” Trump said in an ABC News interview on Wednesday. Earlier, He signaled negotiations could resume this week, while also opposing a 20-year suspension of Iran’s nuclear enrichment program.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser warned on Tuesday during a fireside chat that the months ahead will be challenging for Australia amid the energy crisis driven by Middle East tensions and elevated inflation pressures. Hauser noted that the economy is struggling to absorb the shock due to persistent inflation and supply constraints, increasing the risk of a stagflation-like scenario.
The AUD/JPY cross receives support as the Japanese Yen (JPY) struggles, reflecting Japan’s heavy dependence on Middle East oil imports, on improving oil prices. Oil prices rise amid uncertainty over flows through the Strait of Hormuz after the US military imposed a blockade, tightening supply and casting doubt on further Iran talks.
However, the JPY may receive support from speculation surrounding potential Japanese intervention. Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda said policymakers must remain vigilant to the economic fallout from the Middle East conflict, warning that higher oil prices could weigh on Japan’s growth outlook.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- GBP/USD trades firmly near a fresh two-month high of 1.3565 amid upbeat market sentiment.
- The hopes of a US-Iran permanent ceasefire have improved demand for riskier assets.
- Investors await BoE Bailey’s remarks and the UK monthly GDP data.
The GBP/USD pair trades flat around 1.3565 during the European trading session on Wednesday, but is close to its almost two-month high of 1.3590 posted the previous day. The Cable demonstrates strength as hopes of a permanent ceasefire between the United States (US) and Iran have improved the market sentiment.
During the press time, S&P 500 futures hold onto Tuesday’s gains near 6,970, reflecting an upbeat market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to an over six-week low of 98.00.
US President Donald Trump has stated in an interview with ABC News, earlier in the day, that he doesn’t see any need to extend the two-week ceasefire while remaining confident that a permanent truce could be reached in the next two days. "I think you’re going to be watching an amazing two days ahead. I really do," Trump said.
Meanwhile, investors await comments from Bank of England (BoE) Governor Andrew Bailey’s in a panel discussion at the IMF later in the day, and the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for February, which will be released on Thursday.
GBP/USD technical analysis
GBP/USD trades firmly near 1.356 as of writing, maintaining a constructive bullish bias while holding above the 20-period exponential moving average (EMA) at 1.3395 and the mid-range 50% Fibonacci retracement at 1.3516.
The rising Relative Strength Index (14) near 62 reinforces upward momentum, hinting that buyers retain control, although conditions are edging toward overbought territory.
On the downside, immediate support is located at the 50% Fibonacci retracement at 1.3516, with further protection at the 38.2% retracement around 1.3432. Looking up, initial resistance is defined by the 61.8% Fibonacci retracement at 1.3599; a clear break above this barrier would open the door to the 78.6% retracement at 1.3718, en route to the 1.3870 cycle high.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
BoE's Governor Bailey speech
Andrew Bailey is the Bank of England's Governor. He took office on March 16th, 2020, at the end of Mark Carney's term. Bailey was serving as the Chief Executive of the Financial Conduct Authority before being designated. This British central banker was also the Deputy Governor of the Bank of England from April 2013 to July 2016 and the Chief Cashier of the Bank of England from January 2004 until April 2011.
Read more.Next release: Wed Apr 15, 2026 15:50
Frequency: Irregular
Consensus: -
Previous: -
Source: Bank of England
- The US Dollar consolidates losses near 98.00 on hopes of a peaceful resolution of Iran's war.
- The DXY has dropped more than 2% since the ceasefire was announced last week.
- Weaker-than-expected PPI data from March eased pressure on the Fed to hike rates immediately.
The US Dollar (USD) remains the worst-performing G8 currency this week. The Dollar Index, which measures the value of the USD against a basket of six peers, trades right above 98.00 at the time of writing, its weakest level since the war in the Middle East started on February 28.
Market hopes that the peace talks between the US and Iran will resume soon have boosted risk appetite this week, prompting investors to cut down US Dollar long positions. The USD Index has lost nearly 1% this week so far, and is more than 2% lower since the ceasefire was announced last week.
US President Donald Trump added pressure on the safe-haven dollar on Tuesday, suggesting in an interview with the New York Post that negotiations with Iran might resume soon. Iranian authorities did not make any comment, but the United Nations Secretary-General Antonio Guterres affirmed that peace talks are likely to restart this week.
In the macroeconomic front, the US Producer Prices Index (PPI) data from March, released on Tuesday, confirmed that the war in Iran has boosted inflationary pressures, although the PPI rose below expectations in March, easing pressure on the US Federal Reserve (Fed) to raise interest rates immediately.
Inflation at factory gates rose to a 4% year-on-year rate last month, from 3.4% in February, but remained below the 4.6% market consensus. Excluding food and energy, the core PPI rose at a steady 3.8% yearly rate, unchanged from February, against expectations of a 4.2% increment.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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