Forex News

• EUR/USD holds gains above 1.1750, but remains trapped within recent ranges.
• News that the US and Iran exchanged fire in the Strait of Hormuz is keeping risk appetite subdued.
• Markets are bracing for a significant slowdown in job creation in the US in April.

The Euro (EUR) posts moderate gains against the US Dollar (USD) on Friday, trading near session highs at the 1.1770 level at the time of writing, although it remains capped below the top of the last three weeks' trading range, in the 1.1800 area. The Euro has shrugged off weak German industrial and trade data and is drawing support from a weaker US Dollar, ahead of the US Nonfarm Payrolls release.

The US economy is forecasted to have created 62K new jobs in April, well below the 178K jobs reported in March, although the Unemployment Rate is seen remaining steady at 4.3%. The risk is on a weaker-than-expected report, which would undermine last week's hawkish tweak at the Federal Reserve’s monetary policy meeting, when some committee members called to remove the “easing bias” line from the statement.

On the geopolitical front, reports of fire exchange between the US and Iran in the Strait of Hormuz clouded hopes of an upcoming peace deal. US President Donald Trump, however, affirmed that the ceasefire remains standing and urged Tehran to sign a deal. Iranian authorities, meanwhile, are studying a 14-point US proposal to end the conflict.

Data from Germany released on Friday was not particularly supportive. Industrial Production contracted for the second consecutive month in March against market expectations of a rebound, and the Trade Balance shrank beyond forecast, also in March, as an unexpected increase in exports was offset by a sharp rise in imports.  

Technical Analysis: The key resistance level remains at 1.1800

EUR/USD has rallied about 0.35% on the day so far, with momentum indicators showing a neutral-to-bullish bias. The 4-hour Relative Strength Index (RSI) is nearing the 60 level, hinting at a moderate upside momentum, although the Moving Average Convergence Divergence (MACD) line keeps wavering around the signal line.

Bulls, however, need a fresh catalyst to break the resistance area between 1.1790 and 1.1800 (April 20, May 6 highs) and set the focus on April's high, in the 1.1850 area. Further appreciation seems off the point at the moment.

On the downside, session lows, just above 1.1720, are likely to provide support for a potential bearish reversal, although the key area for bears lies between 1.1645 and 1.1675, which halted sellers several times in April.

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

• The Pound Sterling gains across the board amid a risk-on market mood.
• US President Trump confirms that the ceasefire with Iran is intact.
• Investors await the US NFP data for fresh cues on the Fed’s monetary policy outlook.

The Pound Sterling (GBP) trades higher against its major currency peers, is up 0.43% around 1.3610 against the US Dollar (USD), during the European trading session on Friday. The British currency outperforms as demand for risk-sensitive assets remains upbeat amid hopes of a diplomatic solution between the United States (US) and Iran.

As of writing, S&P 500 futures are 0.55% higher to near 7,375, reflecting a strong demand for riskier assets ahead of the United States (US) Nonfarm Payrolls (NFP) data for April release at 12:30 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.3% lower to near 97.95.

The expectation that the month-long ceasefire between the US and Iran is intact remains stable after President Donald Trump confirmed, in an interview with ABC News, that strikes exchanged near the Strait of Hormuz were not meant to restart the war.

Going forward, investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. The Fed is expected to hold interest rates at their current levels by the year-end, according to the CME FedWatch tool.

The US NFP report is expected to show that the economy created 62K fresh jobs, significantly lower than 178K in March. The Unemployment Rate is seen as steady at 4.3%. Average Hourly Earnings, a key measure of wage growth, is estimated to have grown at a stronger pace of 3.8% Year-on-Year (YoY) against the previous reading of 3.5%.

Brown Brothers Harriman’s (BBH) Elias Haddad notes that efforts by the Trump administration to narrow the US trade deficit are structurally negative for the Dollar via balance of payments dynamics. However, Haddad argues near-term USD downside is limited as the US labor market stabilizes, with April non-farm payrolls and University of Michigan sentiment data seen as key for Fed expectations.

Structural headwinds but data support

"In our view, the Trump administration’s effort to narrow the US trade deficit means fewer dollars will flow overseas, reducing the need for those funds to be recycled back into US securities. That’s pure balance of payments mechanics and is a structural drag on USD."

"In the near-term, USD downside is limited largely because the US labor market is stabilizing, keeping odds of Fed funds rate hike in play. Today’s April non-farm payrolls report is expected to validate earlier data pointing to steadier labor demand (1:30pm London, 8:30am New York). Consensus is looking for +65k job gains vs. +178k in March and the unemployment rate is seen unchanged at 4.3% in April, a tick below the FOMC 2026 projection (4.4%)."

"It’s worth noting that in the three months to March, employers added an average of 68k jobs to payrolls each month. That pace of growth is well within the breakeven range that is necessary to keep the unemployment rate steady given the slowdown in overall labor force growth. A recent Fed research note estimates the breakeven pace of employment growth to average 18k in 2026, substantially lower than at any point in the past 65 years."

"May University of Michigan sentiment survey is due later today (3:00pm London, 10:00am New York). Long-term inflation expectations are critical to watch as any drift higher would push the FOMC towards a more hawkish bias. Encouragingly, the New York Fed consumer expectations survey released yesterday showed long-term inflation expectations (3 and 5 years out) remain anchored around their 12-month moving average in April."

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

Commerzbank strategists note Copper has outperformed other base metals, helped by improved macro sentiment around Hormuz and ongoing mine issues. Chilean ore output fell 9% year‑on‑year in March despite a monthly rebound, while Indonesia’s Grasberg mine is running at only 40–50% capacity. They warn that mine‑supply risks could challenge ICSG’s 1.6% growth forecast.

Chilean and Indonesian output risks persist

"The price of copper on the LME has risen nearly 5% this week, outperforming other industrial metals by a wide margin. On the one hand, this is likely due to improved sentiment surrounding the Strait of Hormuz."

"Hopes for a swift reopening reduce the risk of a significant slowdown in the global economy and, consequently, in copper demand. However, this would also reduce the shortage of sulfuric acid, which could have a positive impact on copper production."

"Copper ore production in Chile rose to 434,300 tons in March, following a 9-year low of 378,300 tons recorded in February. Compared to the same month last year, however, the decline in production accelerated to 9% from 4.9% in February."

"This news demonstrates once again that the weak link in global copper production remains mining and the production of copper ore. While the International Copper Study Group forecasts a 1.6% increase in mine production for this year, the risks surrounding this forecast should not be overlooked and could have a direct impact on copper production."

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

DBS Group Research’s Philip Wee says the Federal Reserve is working to cool hawkish expectations ahead of Kevin Warsh’s appointment as Chair on May 15. Officials are stressing an extended pause despite higher near-term inflation expectations from energy shocks, pointing to stable long-term inflation and wages and softer labour data, with April nonfarm payrolls seen at just 50k–100k.

Policy patience despite energy shocks

"This cooling of geopolitical heat coincides with the Fed’s strategic effort to temper hawkish expectations."

"Ahead of Kevin Warsh assuming the Fed Chairmanship on May 15, officials have sought to correct market pricing of late-2026 rate hikes by emphasizing an extended pause."

"Despite a rise in one-year inflation expectations driven by energy shocks from the Iran conflict, Fed officials maintain that current rates are sufficiently restrictive."

"With long-term inflation expectations and wage growth remaining stable, the Fed is resisting aggressive tightening, a stance supported by today’s cooling labour market data."

"Nonfarm payrolls are expected to drop to the 50k–100k range for April, a far cry from the robust readings that fuelled the USD’s surge in 2022."

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

Federal Reserve (Fed) Governor Stephen Miran said in an interview with Fox Business, released on Friday, that the central bank should cut interest rates, clarifying that the current policy is holding back the job market.

Remarks

I think it's appropriate to cut interest rates.

Fed policy is holding back job market.

Fed should provide less forward guidance.

Less forward guidance will make policy more flexible.

Fed should look through energy shocks.

Neither jobs market nor inflation expectations point to higher inflation.

Hopes Powell staying on is transitional and nothing more.

Very good reasons to reduce fed balance sheet.

Market Reaction

No impact on the US Dollar (USD) is observed after Fed Miran's dovish comments. While the US Dollar Index (DXY) is already trading 0.3% lower to near 97.95 ahead of the United States (US) Nonfarm Payrolls (NFP) data release.

• NZD/USD hits session highs at 0.5970 after bouncing from 0.5930 lows earlier on Friday.
• The US Dollar loses ground ahead of the US Nonfarm Payrolls release.
• New Zealand's employment data feeds hopes that the RBNZ will hike rates this year.

The New Zealand Dollar (NZD) extends gains against the US Dollar (USD) on Friday, reaching session highs at 0.5970, after bouncing from 0.5930 earlier on the day. The Greenback loses ground despite a cautious market mood, as investors shift their focus from Iran to April’s US Nonfarm Payrolls (NFP) report.

According to the market consensus, the US economy is expected to have created 62K new jobs in April, less than half the 178K fresh payrolls reported in March. The risk is on a weak reading that would offset the Federal Reserve’s (Fed) hawkish tweak of last week’s meeting, with some policymakers calling to remove the “easing bias” line from the central bank’s statement.

On the geopolitical front, an exchange of fire between the US and Iran cast doubt about the fate of the peace process on Thursday. US President Donald Trump played down these skirmishes and reiterated that the ceasefire remains in place, urging Tehran, once again, to sign a deal and put an end to the war.

Oil prices bounced up from Thursday's lows amid news from Iran, but remain well below last week's highs. The US benchmark West Texas Intermediate (WTI) trades at $91, and the Brent Oil barrel is below the key $100 level, which provides some support to the Kiwi, as New Zealand is an oil-importing country.

Data from New Zealand released earlier this week showed an unexpected decline in the Unemployment Rate to 5.3% in Q1 from 5.4% in Q4, despite a lower-than-expected increase in net employment. Apart from that, Labour Costs grew beyond expectations, adding to inflationary pressures, and keeping hopes of a Reserve Bank of New Zealand (RBNZ) near-term rate hike alive.

ING strategists Ewa Manthey and Warren Patterson report that Gold is edging higher, supported by ongoing central bank demand and geopolitical risks. They emphasize sustained buying from China’s central bank, which continues to diversify reserves away from US Treasuries, although elevated real yields and a firm Dollar are seen limiting near‑term upside.

PBoC accumulation offsets macro headwinds

"Gold edged higher as signs of renewed buying interest emerged, supported by ongoing central bank demand and persistent geopolitical risks in the Middle East. China’s central bank remains a key structural support, with April marking another month of official reserve accumulation."

"The People's Bank of China reported its largest monthly gold purchase in over a year in April, extending its accumulation for an 18th consecutive month. Official reserves increased by 260,000 troy ounces (around 8 tonnes), the biggest monthly addition since December 2024. The continued buying underscores China’s strategic push to diversify reserves and reduce reliance on US Treasuries. Ongoing central bank demand has helped underpin market sentiment, even as some buyers – including Turkey’s central bank – have recently turned to gold sales to support domestic currencies."

"While recent US-Iran military escalation has lifted safe‑haven demand, gains have been tempered by a still‑restrictive macro backdrop, with elevated real yields, a firm US dollar, and reduced expectations for near‑term Federal Reserve easing continuing to cap the upside."

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