Forex News

BNY's Head of Markets Macro Strategy Bob Savage notes Eurozone producer prices fell on energy weakness while ex‑energy pressures stayed positive, and retail sales showed modest annual growth despite monthly softness. German manufacturing orders and services turnover improved, while French trade and current account balances deteriorated. He links these data to a Euro rebound and lower core bond yields after the ceasefire.

Mixed data as Euro firms post ceasefire

"Eurozone’s February industrial producer prices fell 0.7% m/m and 3.0% y/y, while EU prices declined 0.5% m/m and 2.7% y/y, driven primarily by a sharp drop in energy prices."

"On an annual basis, energy prices declined 11.7%, while other categories recorded moderate increases, indicating underlying price pressures remain positive outside energy."

"Across member states, the largest monthly declines were seen in Spain, Ireland and Portugal, while Bulgaria, Finland and Sweden recorded the strongest annual increases, highlighting continued divergence in producer price dynamics across the region."

"Eurozone’s February retail sales volumes declined 0.2% m/m, with the EU down 0.3%, reflecting weaker food sales and broadly flat or slightly negative non-food performance, partly offset by gains in fuel sales."

"Germany’s February manufacturing orders rose 0.9% m/m, with stronger underlying momentum as orders excluding large contracts increased 3.5%, driven primarily by gains in the automotive sector (+3.8%) alongside sharp growth in textiles (+45.2%) and metals (+3.7%), partially offset by a steep decline in other transport equipment (-25.9%)."

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

United States (US) President Donald Trump said on Truth Social on Wednesday that the US will work closely with Iran through a "very productive regime change."

"There will be no enrichment of Uranium, and the United States will, working with Iran, dig up and remove all of the deeply buried (B-2 Bombers) Nuclear “Dust.” It is now, and has been, under very exacting Satellite Surveillance (Space Force!)," Trump added and continued:

"Nothing has been touched from the date of attack. We are, and will be, talking tariff and sanctions relief with Iran. Many of the 15 points have already been been agreed to."

Market reaction

Risk flows continue to dominate the action in financial markets midweek. At the time of press, the S&P 500 Futures were up 2.8% on the day, while Nasdaq Futures were gaining 3.5%.

Commerzbank’s Carsten Fritsch reports that Gold jumped up to 3% to USD 4,855 per ounce after the 14‑day Middle East ceasefire, behaving unlike a classic safe haven. The move is linked to lower Oil prices, reduced inflation risks and softer rate expectations, which have pushed bond yields down. The outlook hinges on whether a lasting peace deal emerges.

Yield-driven surge after Middle East truce

"The gold price reacted to the news of a 14-day ceasefire in the Middle East with a jump of up to 3% to USD 4,855 per troy ounce. This means that gold is not behaving like a typical safe-haven asset, also in times of de-escalation."

"Instead, the sharp fall in oil prices is leading to a easing of inflation risks and, consequently, a downward adjustment in interest rate expectations. In Europe, this is likely to mean fewer interest rate hikes, whilst in the US it could mean earlier rate cuts."

"This prospect has led to a fall in bond yields, from which gold, as a non-interest-bearing investment, benefits. Whether this remains the case depends on whether a lasting peace settlement is found in the coming two weeks or whether there is a renewed escalation thereafter."

"The Chinese central bank, PBoC, increased its gold reserves in March for the 17th consecutive month. According to the PBoC’s release, gold holdings stood at 74.38 million ounces at the end of March, an increase of 160,000 ounces compared with the previous month."

"However, compared with the decline in the Turkish central bank’s gold reserves of around 120 tons in the second half of March – 69 tons alone in the last week of March – these amounts are almost negligible."

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

TD Securities analysts review the latest Reserve Bank of New Zealand (RBNZ) decision, noting the cash rate was held at 2.25% while inflation forecasts were revised sharply higher for Q1 and Q2. The Bank’s communication reaffirmed a tightening bias, with discussion of a pre-emptive hike and risks that the hiking cycle could start earlier than TD’s current February next-year call.

Higher inflation and pre-emptive hike discussion

"The RBNZ kept the cash rate on hold at 2.25% as expected."

"Today's release revealed the Bank now expects headline inflation to print at 3% y/y for Q1 and 4.2% y/y in Q2 (assuming crude <$100), the print for Q2 well off the 2.7% Feb MPS forecast."

"Our read of today's release if anything reaffirms the Bank's bias to tighten."

"The Board did discuss a pre-emptive hike but held off given "…this could cause unnecessary volatility in output and employment if the conflict was resolved in the near term or if the economic outlook weakens by more than currently expected"."

"The Bank's Feb MPS OCR forecast implied a cash rate hike by the end of this year but given the points highlighted above there is a risk the RBNZ acts earlier, and hence to our call for the hike cycle to begin in Feb next year."

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

• AUD/USD pulls back to 0.7040 from session highs at 0.7085.
• The Aussie has rallied more than 2% so far this week.
• Recent Australian data has increased concerns about the inflationary impact of energy prices.

The Australian Dollar (AUD) is trading higher against the US Dollar (USD) for the third consecutive day on Wednesday, boosted by investors’ optimism about the ceasefire in Iran. The pair, however, has retreated from session highs at 0.7084 during the European trading session, returning to levels around 0.7040 at the time of writing as the dust from the US-Iran deal settled.

News that Washington and Tehran had reached a deal to stop the hostilities for two weeks, less than two hours before US President Trump’s deadline, was welcomed by the market during Wednesday’s Asian session. Risk-sensitive assets like the Aussie rallied sharply while the US Dollar and Oil prices retreated sharply.

Direct US-Iran negotiations

The deal is still fragile, and Iran said it keeps its finger on the trigger, but the market remains hopeful that Tuesday’s agreement might lead to a durable peace and lower energy prices. Iranian authorities also affirmed that direct talks with US negotiators will start on Friday in Islamabad, Pakistan, feeding hopes of de-escalation of the tensions in a highly volatile area.

Data from Australia released earlier this week showed that the TM-MI Inflation Gauge posted its sharpest monthly advance in history, with a 1.3% increase in March, following a 0.2% decline in February. Year-on-year, inflation accelerated to 4.3%, its highest level in more than two years. These figures increase concerns of stagflation and pose a significant challenge for the Reserve Bank of Australia’s (RBA) policymakers.

In the US, the focus on Wednesday will be on the minutes of the March Federal Open Market Committee (FOMC), which might give some further insight into the bank's next monetary policy steps. These comments, however, will be contrasted by Friday’s Consumer Prices Index (CPI) figures, the first hard data reflecting the inflationary impact of Iran’s war.

• The Indian Rupee nears a three-week high against the US Dollar on the US-Iran temporary ceasefire.
• Iran delivers a 10-point proposal plan to the US, which includes recognition of Tehran’s authority at Hormuz.
• The RBI leaves its Repo Rate steady at 5.25%, as expected.

The Indian Rupee (INR) jumps to a fresh over three-week high against the US Dollar (USD) on Wednesday. The USD/INR pair slides to near 92.30 as the US Dollar weakens and global oil prices nosedive, following a temporary ceasefire 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, is down 0.55% to near 99.00. WTI Oil price plummets almost 11% to near $90.00.

Trump suspends planned Iranian attacks

Earlier in the day, US President Donald Trump announced, through a post on Truth Social, that he has suspended planned attacks on Iranian power plants and bridges for two weeks, as he has agreed to a “complete, immediate, and safe opening of the Strait of Hormuz”, a critical gateway to almost 20% of global oil supply. Trump added, “We received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate.”

Meanwhile, Iran has also acknowledged the Hormuz reopening and the delivery of the 10-point proposal, which includes controlled transit through the Hormuz coordinated with Iranian armed forces, ending war against Iran and allied groups, the withdrawal of US combat forces from all regional bases, lifting all primary and secondary sanctions, payment of full compensation to Iran and the release of all frozen Iranian assets.

The Hormuz reopening has battered the Oil prices badly, a scenario that is favorable for currencies of economies like India, which rely heavily on Oil imports to meet their energy needs.

However, the continuation of the Foreign Institutional Investors (FIIs) selling in the Indian stock market is expected to cap the upside in the Indian Rupee. So far in April, FIIs have offloaded their stake worth Rs. 35,121.56 crore.

RBI keeps Repo Rate steady at 5.25%

The Reserve Bank of India (RBI) has kept key interest rates unchanged at its monetary policy meeting on Wednesday, keeping the Repo Rate steady at 5.25%. The Indian central bank was expected to maintain the status quo, as the war in the Middle East has increased inflation globally.

RBI Governor Sanjay Malhotra has stated in the monetary policy statement that higher Oil prices due to disruptions in the Strait of Hormuz are likely to impact growth this year. “Elevated crude oil prices could increase imported inflation and widen the current account deficit,” Malhotra said.

Technical Analysis: USD/INR faces selling pressure near 20-day EMA

USD/INR declines to near 92.30 on Wednesday. The pair trades below the 20-day Exponential Moving Average (EMA), shifting the near-term bias to mildly bearish.

The 14-day Relative Strength Index (RSI) has dropped to 47, moving below the 50 midline and confirming that sellers have gained control after the overbought readings seen above 70 in late March.

Immediate support emerges at 92.00 and then 91.50, where the previous consolidation zone sits. On the topside, initial resistance is now located at 93.00, with stronger resistance at 93.70 ahead of the recent 95.12 peak. As long as price holds below this resistance band while RSI remains under 50, rallies are expected to be capped and vulnerable to renewed selling pressure.

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

• USD/CHF accelerates its reversal below 0.7900 amid a higher risk appetite.
• A two-week ceasefire in Iran has boosted investors' mood.
• The pair has broken the bullish structure from late-February lows.

The US Dollar (USD) accelerated its reversal against the Swiss Franc (CHF) on Wednesday, as investors pared back US Dollar long positions following the announcement of a ceasefire in Iran. The pair’s reversal from weekly highs right above 0.8000 extended to session lows near 0.7870 before picking up to the 0.7890 area at the time of writing.

The Greenback tumbled across the board following news reporting that the US and Iran had reached an agreement to stop the hostilities for two weeks, and allow safe passage for Gas and Oil tankers through the Strait of Hormuz.

Technical Analysis: USD/CHF breaks the bullish trendline support

The USD/CHF has slipped back below the ascending trendline support, confirming the end of the bullish cycle from February 27 lows. and providing bears confidence for a deeper correction.

The Relative Strength Index (RSI) hovers near 30 after dropping from above 60, signaling building downside momentum. The Moving Average Convergence Divergence (MACD) indicator holds below its signal line in negative territory, endorsing the view that rallies toward the recent breakdown area will face selling pressure.

The pair is now featuring a frail recovery attempt, but the support area between the 50% Fibonacci retracement of the March rally at 0.7860 and March 23 lows at 0.7835 is likely to attract selling pressure. On the upside, previous support at 0.7905 (April 1 low) is likely to act now as resistance ahead of the broken trendline, now at 0.7965.

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

Commerzbank notes that the Dollar is selling off as risk sentiment improves, with the Euro rising close to 1.17 against the Dollar following the ceasefire news. The bank highlights that an extended ceasefire would make an April ECB rate hike unlikely and sees the €STR curve’s previously aggressive pricing as a backdrop for bullish steepening in Euro rates.

Dollar weakness lifts single currency

"Brent slides to $95, US Treasuries bull-steepen with 10y yields falling 6bp. Asian equities and e-minis rally with Stoxx future up some 5%. Dollar sells off with EUR rising close to $1.17."

"If the ceasefire gets extended, an ECB rate hike in April, and beyond, becomes unlikely. The €STR curve was pricing some 80bp of rate hikes yesterday, about the most since the war began, which should give rise to strong bullish steepening."

"Just before the Easter break, the ECB published a blog post with insights from their Bank Treasurer Survey on preferred reserve levels and their proprietary Securities Financing Transactions Data."

"While transparency remains patchy, the findings support our view that reserve scarcity is still a long way off. The ECB projects that, by the end of this year, banks accounting for 50% of total assets will reach their preferred reserve level, up from 26% 'now' (which we understand to refer to last October). Unfortunately, the ECB does not disclose the aggregate preferred reserve level, akin to the Preferred Minimum Range of Reserves (PMRR) revealed by the BoE."

"While this is probably towards the lower (or later) end of the scale, we feel affirmed in our view that the point at which reserve scarcity will cause upward pressure on rates and lead to banks returning to ECB operations on a larger scale is unlikely to be reached before next year."

"While repo markets remain calm for now, by the end of the year we believe this will become another argument for cheaper Schatz swap spreads."

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

DBS Group Research’s Eugene Leow notes that Gold surged over 2% to above USD4800 after a two-week ceasefire between the US and Iran reduced immediate escalation risks. He highlights that the sustainability of this truce and the recovery of shipping volumes through the Strait of Hormuz will guide Gold’s next move, while structural demand, including continued PBoC buying, remains supportive.

Ceasefire reprices risk and supports bullion

"Gold rallied following this morning's announcement of a two-week ceasefire between the US and Iran."

"Looking ahead, the sustainability of this temporary truce will likely dictate the next directional move for gold."

"If vessel throughput normalises to a credible rate during this two-week window, it will establish a favorable foundation for a more definitive, long-term ceasefire that should continue to support gold's upward trajectory."

"Beyond these geopolitical swings, gold's structural demand remains robust. The PBoC extended its purchasing streak to a 17th consecutive month in March, adding 160,000 troy ounces to its reserves."

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