Forex News
- EUR/USD hits session lows below 1.1700, down from Friday's highs near 1.1785.
- Trump's vow to free ships in Hormuz has triggered a verbal escalation with Iran.
- Eurozone Manufacturing PMI confirms that business activity accelerated, despite war pressures, in April.
The Euro (EUR) is retreating further from last week's highs at the 1.1785 area against the US Dollar (USD) on Monday, reaching levels below 1.1700 heading into the US session opening. Investors' concerns about a re-escalation of the US-Iran war are underpinning demand for the safe-haven US Dollar, letting fairly positive Eurozone data go practically unnoticed.
Investors' appetite for risk was hit on Monday amid US President Donald Trump's announcement of a plan to release vessels stranded in the Strait of Hormuz, and the following response by the Iranian authorities, warning that they would respond with “full strength” to any US vessel approaching Iranian waters.
News from the Iranian Fars news agency that a US warship had been hit by Iranian missiles soured sentiment further during the European session, although it was denied by Washington shortly afterward.
Oil prices, however, remain on the rise. The barrel of Brent trades above $110, and the WTI extends its rally beyond $101, adding pressure on the Euro, as Eurozone countries are net Oil importers, and the current energy costs pose a serious challenge for growth
Eurozone economic data released on Monday has fallen on the bright side, but the impact on the pair has been marginal so far. The final HCOB Manufacturing Purchasing Managers’ Index (PMI) has confirmed preliminary figures of a 52.2 reading in April, a 47-month high, and up from 51.6 in March, and the Sentix Investors' Confidence Index improved moderately to -16.4 in May from -19.2 in April
In the US, the focus will be on March Factory Orders, although the highlights of the week will be April’s employment reports, with particular interest in Friday's Nonfarm Payrolls (NFP) reading.
Technical Analysis: Looking for direction around 1.1700
EUR/USD found support above the 1.1650 area and is looking for direction halfway through a broadly 100-pip range, with upside attempts capped below the 1.1785 area.
Recent price action, however, shows a building bearish momentum. The Relative Strength Index (RSI) on 4-hour charts has dived below the key 50 level, with the Moving Average Convergence Divergence (MACD) histogram in the same timeframe also dipping below zero, which shows that sellers are taking the upper hand.
The pair has broken intraday support in the 1.1700 area and approaches a cluster of supports between 1.1645 and 1.1675, which have held bears several times over the last month. The pair is likely to need a fresh catalyst to confirm below those levels
On the topside, daily highs are at 1.1750 ahead of Friday's peak at the 1.1785 area. Further up, the April 17 high at 1.1850 and the February 10 high, near 1.1930, would come into focus.
(The technical analysis of this story was written with the help of an AI tool.)
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.
BNY’s Bob Savage points out that the Euro is holding above 1.1700 even as the US Dollar (USD) firms, with markets weighing divergent European Central Bank (ECB) rhetoric. François Villeroy de Galhau argues for waiting for more data, while Peter Kažimír signals near-certainty of a June rate hike. Eurozone sentiment and Purchasing Managers' Index (PMI) data show improving activity but persistent inflation and cost pressures.
ECB debate and mixed Eurozone data
"The Eurozone Sentix Economic Sentiment Index for May climbed 2.7 points to -16.4, reflecting cautious investor optimism despite ongoing inflation concerns and the Iran conflict."
"The Eurozone manufacturing PMI for April rose to 52.2 points (March: 51.6), setting a 47-month high and indicating stronger manufacturing growth."
"The fear factors of energy prices and supply shocks continue to leave open debates about policy – compare the push by the ECB’s François Villeroy de Galhau to wait for more data against his colleague Peter Kažimír’s near-certainty on a June rate hike."
"The ECB annual report and conference today will add to bond selling, as a June hike remains the consensus view."
"USD is higher despite EUR holding above 1.1700 on the index because of JPY and local holidays."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CHF rises as demand for safe-haven assets strengthens amid geopolitical tensions.
- The US Dollar benefits from defensive flows despite mixed US economic signals.
- Swiss National Bank outlook limits downside potential for the Swiss Franc.
USD/CHF trades around 0.7840 on Monday, up 0.28% on the day, supported by a renewed wave of risk aversion that is boosting the US Dollar (USD). Concerns over a potential escalation in the Middle East dominate market sentiment following conflicting reports about an incident involving a US warship in the Strait of Hormuz. Although some US sources denied a direct missile strike, the lingering uncertainty is prompting investors to reduce exposure to riskier assets.
Tensions escalated after Iran’s Fars news agency reported that two missiles targeted a US warship near the Strait of Hormuz, after it allegedly ignored Tehran’s warnings. The incident comes in an already sensitive context, following a US plan to secure navigation through the area.
However, US officials denied any direct strike, while Iranian sources suggested it was a warning shot with no confirmed damage. This uncertainty is keeping markets on edge, especially as Iran warned that any US incursion would be considered a violation of the ceasefire.
The US Dollar is benefiting from these defensive flows, gaining against its major peers. The rise in Oil prices, driven by these geopolitical tensions, is also reinforcing the move, as investors anticipate possible disruptions to global energy supply.
In this context, traders remain cautious ahead of key US data releases, notably the ADP Employment Change report and, above all, Friday’s Nonfarm Payrolls (NFP). These figures, along with speeches from several Federal Reserve (Fed) officials, are expected to provide further clarity on the monetary policy outlook following last week’s hawkish tone.
On the Swiss side, the Swiss Franc’s (CHF) fundamentals remain solid, limiting its downside against the Greenback. Recent data showed an improvement in manufacturing activity, with the SVME Manufacturing Purchasing Managers Index (PMI) rising to 54.5 in April. However, according to Commerzbank, the Swiss National Bank (SNB) has limited room to sustainably weaken the currency. The bank notes that large-scale interventions would be required to influence the Swiss Franc’s trajectory, an option seen as unlikely due to balance sheet risks and political constraints.
Therefore, while the US Dollar is currently supported by safe-haven demand, the Swiss Franc's structural resilience could cap further upside in USD/CHF in the short term.
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 Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.27% | 0.06% | 0.17% | 0.31% | 0.24% | 0.30% | |
| EUR | -0.17% | 0.07% | -0.11% | 0.00% | 0.14% | 0.07% | 0.12% | |
| GBP | -0.27% | -0.07% | -0.19% | -0.06% | 0.08% | -0.01% | 0.07% | |
| JPY | -0.06% | 0.11% | 0.19% | 0.08% | 0.19% | 0.13% | 0.18% | |
| CAD | -0.17% | -0.01% | 0.06% | -0.08% | 0.12% | 0.04% | 0.12% | |
| AUD | -0.31% | -0.14% | -0.08% | -0.19% | -0.12% | -0.09% | -0.03% | |
| NZD | -0.24% | -0.07% | 0.01% | -0.13% | -0.04% | 0.09% | 0.07% | |
| CHF | -0.30% | -0.12% | -0.07% | -0.18% | -0.12% | 0.03% | -0.07% |
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).
OCBC strategists Sim Moh Siong and Christopher Wong highlight that Brent briefly topped USD126 as the Strait of Hormuz closure and inventory drawdowns tightened supply, but optimism on a US–Iran deal has recently weighed on prices. They warn that if Hormuz remains shut for months, materially higher Oil prices will be needed to curb demand and see Brent near USD80 by year-end.
Hormuz closure underpins tighter oil outlook
"Hormuz disruptions linger, keeping physical oil markets tight despite an extended ceasefire and partial pipeline diversions."
"With the Strait of Hormuz still closed, prices would likely be even higher if not for ongoing drawdowns in strategic and commercial inventories."
"If the strait remains shut for months, markets will need to price materially higher oil to force demand destruction."
"Supply recovery, constrained by damaged infrastructure, will be uneven, even after reopening, supporting higher prices for longer into 2H26."
"We now expect Brent to end the year near USD80/bbl, up from USD70/bbl previously."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
A senior Iranian official told Reuters that Iran fired a warning shot against a US warship to prevent its entry into the Strait of Hormuz, adding that it was unclear whether there was any damage.
Meanwhile, citing an unnamed source, Iran's Tasnim News agency reported that Tehran is ready for any possible scenario and that they will not let the US to bully Iran. The outlet reiterated that Iran will not allow US forces to pass through the Strait of Hormuz.
Market reaction
The US Dollar (USD) stays resilient against its rivals in the second half of the day on Monday. At the time of press, the USD Index was up 0.2% on the day at 98.40.
- GBP/USD extends losses below 1.3550 from last Friday's highs at 1.3657.
- Rising tensions between the US and Iran are boosting the safe-haven US Dollar on Monday.
- Trump's plan to free vessels in Hormuz has put investors on their toes.
The Pound (GBP) reverses initial gains against the US Dollar (USD) on Monday and extends its correction from Friday’s highs above 1.3650, to session lows below 1.3550. Concerns about escalating tensions in the Middle East have hammered investors’ appetite for risk and are boosting support for the safe-haven USD.
The Iranian Fars news agency has reported that two missiles have impacted a US warship that ignored Iran’s warning and intended to pass the Strait of Hormuz. The report has triggered a wave of risk-aversion, sending the Oil price and the Greenback higher.
These events occurred after US President Donald Trump announced a plan to free vessels stranded in Hormuz, which would start on Monday. The announcement took investors by surprise and had already triggered a cautious response amid the complexity of the operation and the lack of details.
Tehran, in turn, has warned that any incursion by the US Military in Iranian waters would be considered a violation of the ceasefire and would be responded to with “full strength.”
In the macroeconomic front, the UK calendar is thin on Monday, while in the US, March Factory Orders is the only event worth mentioning, apart from the speech by the New York Federal Reserve (Fed) President John Williams.
Later this week, the US ADP Employment Change on Wednesday and, above all, Friday’s Nonfarm Payrolls (NFP), and a slew of Fed speakers throughout the week would add some context to the hawkish tilt of last week’s monetary policy meeting.
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.
BNY’s Bob Savage highlights that the European Central Bank (ECB) is now clearly leaning toward a June rate move, contrasting with the Bank of England's (BoE) preference to wait for fuller confirmation. He sees this directional guidance as a break from the prior “policy in a good place” stance. Divergent paths for Norges Bank and Riksbank versus ECB expectations are likely to drive NOK–SEK and Euro-area rate pricing into year-end.
June move bias and Nordic spillovers
"Our take: The ECB and BOE decisions for April have largely set the tone for the rest of the continent. The ECB is clearly leaning toward a June move at this point, with President Christine Lagarde stating at the post-decision press conference that while the economy was not seen as facing second-round effects, she knew “where the ECB is headed on interest rates.”"
"The fact that there is even a direction in place moves squarely against the notion of the “policy in a good place” designation before the conflict. This also stands in contrast to BOE Governor Andrew Bailey’s notion that unchanged rates were “a reasonable place” for the BOE."
"Transposing such views onto Norges Bank and the Riksbank, which decide in the coming days, we believe a similar approach is needed as markets continue to expect multiple hikes toward year end at both. As we have stressed, domestic conditions already justified aggressive moves from Norges."
"For the Riksbank, considering their low policy starting point, matching the ECB would have been understandable, but the surprisingly soft inflation prints for March (sequential decline in both CPI and CPI-F) and lackluster growth expectations forced out almost 50bp in tightening through mid-April, though expectations are ticking up again due to ceasefire uncertainty. We don’t see the Riksbank moving this year either, and NOK–SEK divergence will likely become more apparent in the coming cycles."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold extends losses below $4.550 on risk-off markets on Monday.
- Escalating tensions in the Strait of Hormuz have provided a fresh boost to the USD.
- Gold bears are aiming to test support at the $4,500 area.
Gold (XAU/USD) accelerates its downtrend in Monday’s European session, trading right below $4,550 at the moment of writing, with bears aiming for last Thursday’s lows, right above $4,500. The risk-averse market, amid escalating tensions between the US and Iran, has provided additional support to the safe-haven US Dollar and is weighing on precious metals.
US President Donald Trump announced on Monday a plan to free vessels blocked in the Strait of Hormuz, but did not provide details of the operation. Iranian authorities reiterated that the critical waterway will remain closed and that any incursion of the US military in the area would be considered a violation of the ceasefire and responded with “full strength.”
Technical Analysis: Bears aim for the $4,500 area
XAU/USD maintains a bearish near-term bias from mid-April highs, with technical indicators on the 4-hour chart endorsing the negative view. A softer Relative Strength Index (RSI) near 36 and a Moving Average Convergence Divergence (MACD) reading, slipping into negative territory, hint that downside momentum is still dominating rebounds.
Bears are aiming for the support area between the April 29 low, at $4,510, and the late March lows right below $4,500. Further down, the March 26 low at the $4,350 area, and the March 23 low near $4,100 emerge as the next likely target.
Upside attempts, on the other hand, are likely to be tested at Friday's high of $4,660, ahead of the mentioned mid-April highs, below $4,900.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Axios journalist Barak Ravid reported on Monday, that a senior US official denied that a US was ship was hit by Iranian missiles.
Earlier in the day, several Iranian news outlets reported that a US warship was hit after it ignored warnings against attempting to pass the Strait of Hormuz.
Market reaction
Markets remain risk-averse in the second half of the day. At the time of press, US stock index futures were down between 0.1% and 0.5% on the day. Meanwhile, the US Dollar Index was up 0.1% at 98.30.
Crude Oil prices gathered bullish momentum in the European session on Monday on news pointing to a further escalation of the conflict in the Middle East.
At the time of press, the barrel of West Texas Intermediate (WTI) was trading near $103.50, rising about 4% on the day, while the barrel of Brent was up 4.1% at $112.
Iran's Fars News Agency reported a US warship attempting to pass through the Strait of Hormuz was targeted and hit by two missiles after it ignored Iran's warnings. Reporting on the matter, Iran's state TV said the warship turned back and Iran was able to prevent its entry in the strait.
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.
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