Forex News

Bob Savage at BNY emphasizes that investors are using traffic through the Strait of Hormuz as a key gauge of energy risk, with ceasefire doubts keeping volatility high. A potential U.S. Senate authorization for renewed strikes on Iran and ongoing war-related supply concerns are central to Oil pricing. Despite this, Brent and WTI are currently lower, while Omani and Dubai benchmarks rise.

Hormuz tensions and Iran risks in focus

"Tracking the ships going through the Strait of Hormuz continues to be the key risk barometer for investors as they watch for supply relief in energy. Ceasefire doubts rose yesterday after Iran and the U.S. exchanged fire and UAE suffered significant missile attacks, but that has not escalated today."

"A group of Senate Republicans is drafting a military authorization for potential renewed strikes on Iran, anticipating a fresh notification if hostilities resume. Under the War Powers Act, such authorization could receive expedited Senate consideration within the first 30 days of renewed conflict."

"The proposed authorization is expected to limit the deployment of ground troops and set a finite timeframe for the conflict. This move follows President Trump’s recent statement that the initial period of conflict has ended and an increase in tensions over control of the Strait of Hormuz."

"The focus for the day will remain on the truce with Iran and the ongoing hopes that Project Freedom will deliver energy relief."

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

National Bank of Canada (NBC) strategists Stéfane Marion and Kyle Dahms note that the Japanese Yen’s (JPY) sharp rebound after USD/JPY breached 160 was driven by intervention rather than a shift in fundamentals. Wide front-end rate differentials and limited near-term Bank of Japan (BoJ) tightening keep JPY vulnerable. A more durable recovery is seen requiring higher Japanese short rates, broader Dollar weakness or a clearer BoJ normalization signal.

Policy gap keeps yen under pressure

"The yen was back at the centre of FX markets recently as USD/JPY moved through 160, prompting stronger official warnings and reported yen-buying intervention. The subsequent rally in JPY was sharp, but in our view the move is better understood as intervention buying time rather than changing the underlying regime."

"The key issue remains the front end. Short-term rate differentials continue to favour the dollar, and the BoJ’s decision to leave rates unchanged at 0.75% in the April meeting did little to alter that arithmetic."

"As long as markets see limited near-term BoJ tightening and U.S. rates remain comparatively high, the yen is likely to struggle to generate sustained support from monetary policy alone."

"The long end sends a more complicated signal. Japan’s 10-year yield has risen to levels last seen in the late 1990s, reflecting sticky inflation, gradual BoJ normalization risk and a larger term premium."

"A more durable recovery likely requires a narrower front-end rate differential, a broader USD decline, or a clearer BoJ signal that it is prepared to tolerate higher rates. Until then, intervention can stabilize the yen, but it cannot cheaply reverse the trend."

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

• USD/INR edges lower as the US Dollar softens, but downside remains limited near record highs.
• Geopolitical tensions and elevated Oil prices continue to pressure the Rupee.
• Strong US Dollar demand and sustained foreign outflows keep the pair supported.

USD/INR trades slightly lower on Tuesday, pressured by a modest pullback in the US Dollar (USD), though the downside remains limited as ongoing geopolitical tensions continue to weigh on the Indian Rupee (INR). The pair retreats after testing a fresh record high of 95.40 set on Monday and is trading around 95.12 at the time of writing, down about 0.12% on the day.

The Middle East war remains a key drag on emerging market currencies like the INR. Traders are seeking safety in the USD amid heightened global uncertainty.

At the same time, India’s heavy reliance on energy imports is adding to downside pressure on the Rupee. The country imports over 80% of its crude Oil needs, with a significant share of shipments passing through the Strait of Hormuz.

With Brent crude hovering near $110 per barrel amid ongoing supply disruptions, the rising import bill is driving strong demand for US Dollars from domestic buyers.

The macro backdrop adds another layer of pressure, as higher crude prices are pushing up inflation and slowing growth. This has reduced expectations of near-term interest rate cuts globally, keeping bond yields elevated and making emerging market assets less attractive to foreign investors.

Foreign investors have continued to cut exposure to Indian equities amid weaker risk appetite. Foreign Portfolio Investors (FPIs) have pulled out over $20 billion from Indian equities in the first four months of 2026, with nearly $19 billion of these outflows recorded since the start of the Iran war.

Looking ahead, USD/INR is likely to remain supported as long as Oil prices stay elevated, foreign outflows continue, and the US Dollar holds firm.

Societe Generale’s commodity team notes that Brent prices rose nearly 4% on the day the UAE announced its exit from OPEC and OPEC+, as Hormuz-related tensions overshadowed what would normally be a bearish supply shock. The bank argues Saudi Arabia now bears a heavier balancing burden and sees the market focused on whether other producers might follow the UAE.

UAE exit shifts burden to Saudi Arabia

"On Tuesday 28 April 2026, the UAE announced its decision to exit OPEC and OPEC+, effective May 1."

"Under normal circumstances this would have been a major market‑moving event, likely pushing prices lower, yet Brent rose nearly 4% on the day as the Hormuz crisis dominated."

"The signal is unambiguous: geopolitics and uncertainty are overwhelming fundamentals."

"OPEC and its allies have agreed to lift output by around 188,000 barrels per day in June, signalling to markets that the group’s policy framework remains intact despite the United Arab Emirates’ exit."

"We view the increase as symbolic rather than a catalyst for prices, given the operational and geopolitical constraints facing exporters—most notably the effective closure of the Strait of Hormuz."

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