Forex News

The Japanese Yen (JPY) continues to face strong headwinds, trading back above the critical 160.00 threshold against the US Dollar despite improving domestic fundamentals. While Japan's current account surplus has surged to historic highs and the Bank of Japan (BoJ) prepares for an upcoming policy meeting with an interest rate hike almost fully priced in, these positive drivers are being completely overshadowed by broader macroeconomic pressures. 

Elevated global energy prices and geopolitical friction continue to dominate market sentiment, leaving major financial institutions aligned on a soft near-term path for the Japanese currency.

Improving trade fundamentals clash with external geopolitical shocks

Analysts at Commerzbank note that Japan's structural economic backdrop is showing clear signs of independent strength, highlighted by a high current account surplus. However, they argue that these domestic improvements are currently taking a backseat in the currency markets. Instead, global commodity fluctuations and international conflicts remain the primary forces suppressing the Yen's value.

In the short term, however, the exchange rate will continue to be determined primarily by the Iran conflict and the price of Oil.

Anticipated policy normalisation fails to shift bearish Yen sentiment

Looking closely at monetary policy dynamics, strategy experts at MUFG point out that upcoming tightening steps from the Bank of Japan are already heavily anticipated by investors. Because the market has already factored in aggressive policy updates (including potential interest rate hikes and future shifts in government bond purchasing programs), such moves are unlikely to spark an independent recovery for the struggling currency until international commodity pressures cool.

Overall, the latest developments have not changed our view that the Yen is likely to remain weak in the near-term until the worst of the energy price shock begins to fade.

Banks point toward persistent near-term weakness for the Japanese Yen

Both institutions maintain a bearish near-term outlook for the Japanese Yen, predicting it will remain weak in the months ahead. Commerzbank explicitly states that external forces like Oil prices and geopolitics will continue to dominate the exchange rate over short-term domestic improvements. Echoing this soft sentiment, MUFG projects that the currency will struggle to find meaningful upward traction, noting that even expected interest rate hikes from the BoJ will fail to trigger a structural reversal until global energy market shocks begin to subside.

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

• GBP/USD rises toward 1.3390 on Tuesday, supported by a weaker US Dollar after easing tensions between Israel and Iran.
• Markets have shifted their expectations for the Bank of England and now price in a rate hike before the end of the year.
• UK political uncertainty and concerns about economic growth continue to limit the British Pound’s upside potential.

GBP/USD trades around 1.3390 on Tuesday at the time of writing, up 0.42% on the day, mainly benefiting from a weaker US Dollar (USD) following confirmation that direct attacks between Israel and Iran have ceased. The easing geopolitical backdrop reduces demand for safe-haven assets and weighs on the Greenback, providing support for the pair.

However, the British Pound’s (GBP) gains remain limited despite a shift in monetary policy expectations in the United Kingdom (UK). While markets had previously expected the Bank of England (BoE) to deliver two rate cuts this year, the outlook has been completely reversed. Investors are now pricing in a 25-basis-point rate hike before the end of the year, according to estimates cited by CNBC.

At first glance, this development may appear supportive for the British currency, but several factors explain why the market reaction remains restrained. First, expectations for tighter monetary policy reflect concerns about persistent inflation, particularly driven by higher energy prices, rather than an improvement in the economic outlook. Investors fear that higher interest rates could be implemented in an environment of weak growth or even economic stagnation.

BBH argues that the current backdrop leaves the British Pound vulnerable to a correction against the US Dollar. The bank believes that higher rates in an economy facing stagflationary pressures are not necessarily bullish for the currency, although they may help cushion the downside.

Meanwhile, political developments continue to weigh on market sentiment. UK Prime Minister Keir Starmer’s authority has been weakened by several government resignations, increasing uncertainty about the country’s political stability. This situation encourages investors to remain cautious despite expectations of a more restrictive monetary policy stance.

On the Bank of England (BoE) side, some Monetary Policy Committee (MPC) members are advocating for a near-term rate increase. However, Société Générale believes these policymakers are likely to remain in the minority and expects the central bank to adopt a more cautious approach at upcoming meetings.

Investors are now focused on the upcoming UK Gross Domestic Product (GDP) data release and US inflation figures. These reports could shape expectations for both the Bank of England and the Federal Reserve (Fed), and ultimately determine the next direction for GBP/USD.

ING’s Frantisek Taborsky says Hungary’s May inflation at 1.8% year-on-year confirms an idiosyncratic disinflation story and makes a June NBH easing cycle “a done deal”, with an initial 25 bp cut to 6.00% and 75 bp total this year. EUR/HUF remains around 355, with a mid-year target of 350 as conviction on rate cuts grows.

Low inflation anchors forint outlook

"Inflation in Hungary in May remained unchanged at 1.8% YoY, below market expectations (2.2%) and below the 3% forecast in the National Bank of Hungary's March inflation report. This confirms that Hungary remains in its idiosyncratic story since the April elections and the combination of sharp FX appreciation and price shields is keeping inflation low despite the pro-inflationary global story."

"The start of an easing cycle in June seems like a done deal, and we expect 25bp to 6.00%. For the rest of the year, our economists see 75bp of easing overall, but today's soft CPI data can probably see the market pricing more than that."

"Yesterday's headlines from Governor Zoltan Kurali suggest that easing is coming, but the central bank does not want to rush. This means we cannot expect any bigger steps than 25bp."

"Meanwhile, EUR/HUF is showing admirable stability at 355 despite the deterioration of global sentiment. As long as EUR/HUF remains stable or grinds down, we believe that conviction regarding NBH rate cuts is growing. At the same time, we maintain 350 EUR/HUF as the target in our mid-year forecast."

"The June NBH meeting is only two weeks away and the global situation could still change in the meantime. However, the risk is rather on the positive side for Hungary given the escalation of the Middle East conflict over the weekend and the stronger US dollar at the moment."

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

• EUR/GBP hesitates above 0.8630, two-week lows, awaiting the ECB's decision.
• Mixed German macroeconomic data have failed to support the Euro.
• The pair has broken the base of a triangle pattern, hinting at a downside continuation.

The Euro (EUR) trades lower against the British Pound (GBP) on Tuesday, with bears testing support at two-week lows in the area of 0.8630, and bearish momentum building up. Mixed data from Germany has failed to provide support to the pair, although hopes that the European Central Bank (ECB) will hike rates on Thursday are keeping the Euro from depreciating further.

Data released earlier in the day revealed that German Industrial Production bounced back in April, following two consecutive contractions, while the trade surplus narrowed moderately, contrary to expectations. The data had minimal impact on Euro crosses.

Later on the day, ECB President Christine Lagarde is likely to confirm that the bank will hike rates on Thursday, pressured by the soaring inflationary levels. In the UK, the focus will be on the monthly Gross Domestic Product (GDP) and Manufacturing Production figures, due on Friday.

Technical Analysis: Bears pierce the base of the triangle

EUR/GBP trades at 0.8634, sitting just above two-week lows at 0.8630, after breaching the base of a symmetrical triangle pattern, which is holding bulls right now. Momentum indicators in the 4-hour chart endorse the bearish view, with the Relative Strength Index (RSI) hovering in the low 40s and the Moving Average Convergence Divergence (MACD) at treading within negative territory.

A break of the support level around 0.8630, which has held bears several times in June, brings the 2026 lows in the area of 0.8610-0.8620 into focus. On the upside, the reverse trendline, now at 0.8637, is capping upside attempts. If price action returns above that level, the June 4 and 5 highs, at 0.8655 and the triangle top, now at 0.8665, would be the next targets.

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

• The National Bank of Poland continued to add to its Gold reserves in April, becoming the top buyer among central banks so far this year.
• Globally, central banks resumed net purchases in April after recording net sales seen a month earlier.
• Gold prices remain subdued despite continued demand from central banks due to elevated global bond yields.

Poland’s central bank was the top Gold buyer in April among its peers, consolidating its position as one of the world’s most active sovereigns that accumulate the precious metal.

The bank bought 14 tonnes of Gold in the month, bringing the country’s year-to-date purchases to 45 tonnes, according to the most recent data published by the World Gold Council (WGC). 

Poland’s central bank Gold purchases so far this year have exceeded those of Uzbekistan and China, the second and third in the ranking, respectively.

The National Bank of Poland’s Gold holdings are at 595 tonnes, about 30% of its total reserves. The bank has doubled down its bet on the precious metal as a geopolitical hedge due to increased uncertainty.  

Data from the WGC shows that global central banks resumed net Gold purchases in April, rebounding from the net sales reported in March. Back then, the immediate economic fallout from the Iran war forced some sovereigns in emerging markets to offload Gold to protect their currencies.

Central bank buying has been a key driver of Gold’s rally, which saw the metal almost double in price in 2025. The pace of purchases jumped significantly in 2022, after Russia’s foreign reserves were immobilized following its invasion of Ukraine.

Gold touched an all-time high of around $5,600 per troy ounce in January but has fallen about 23% since then, trading at around $4,300. 

Gold’s most recent correction, which has driven its price below its 200-day Simple Moving Average since October 2023, has been triggered by a surprisingly strong US jobs report for May, which prompted markets to price in upcoming interest-rate hikes by the Federal Reserve. As Gold doesn’t yield interest, investors have fled to other interest-bearing assets such as bonds.

• The Indian Rupee bounces back against the US Dollar as Israel-Iran ceasefire pushes oil prices lower.
• US President Trump expresses confidence that a total victory over Iran could be announced in two weeks.
• Investors shift focus to the US-India CPI data for May.

The Indian Rupee (INR) recovers against the US Dollar (USD) at open on Tuesday after a sharp decline the previous day. The USD/INR pair drops to near 95.35 as oil prices extend their decline, following comments from United States (US) President Donald Trump that a deal with Iran could be finalized in two or three days.

As of writing, the MCX Crude Oil contract expiring on June 18 is down 2.35% to near 8,500. Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

Oil prices fall further as Trump sees Iran deal soon

Oil prices started retreating after a strong start on Monday, following confirmation from Iran that it will stop attacking Israeli territory. However, Iran’s armed forces warned of harsher attacks if Israel resumes attacks on Lebanon.

Iran agreed to a truce with Israel after United States (US) President Donald Trump urged both to stop attacking each other immediately.

During the day, oil prices fell further as US President Trump expressed confidence that Washington can reach a deal with Iran in two or three days and that the Strait of Hormuz will open immediately upon signing.

FIIs continue to lower their stake in Indian stock market

Overseas investors continue to lighten their stakes in the Indian stock market amid growing concerns over India Inc.’s earnings projections in the wake of higher energy prices. So far in June, Foreign Institutional Investors (FIIs) have remained net sellers on all trading days, and have offloaded their stake worth Rs. 36,370.14 crore. In May, FIIs also remained net sellers and sold their investments worth Rs. 55,963.33 crore.

US-India CPI data comes into spotlight

This week, major triggers for USD/INR will be the Consumer Price Index (CPI) data for May from both the US and India, which will be released on Wednesday and Friday, respectively. The US headline CPI is expected to arrive higher at 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the US core CPI – which excludes volatile food and energy items – is seen higher at 2.9% from the previous reading of 2.8%.

Signs of US inflationary pressures accelerating further would prompt expectations of interest rate hikes by the Federal Reserve (Fed) this year.

Meanwhile, India’s CPI data for May is also expected to come in higher at 4% YoY from 3.48% in April.

Last week, the Reserve Bank of India (RBI) warned of upside inflation risks in the monetary policy announcement and stated that it would act if it become more persistent. “If inflation becomes generalized, persistent, and starts influencing inflation expectations, policy action may become necessary," the RBI Governor Sanjay Malhotra said.

Technical Analysis: USD/INR sees more downside below 95.00

USD/INR trades slightly lower at around 95.35 at press time. The pair is essentially flat, trading close to the 20-day Exponential Moving Average (EMA) for almost two weeks. The Relative Strength Index (RSI) near 50.0 hovers just above the midline, hinting at balanced momentum with only a slight bullish tilt but no clear directional conviction.

On the downside, the pair could slide towards the May 07 low at 94.03 if it fails to hold the key support level of 95.00. Looking up, the pair could aim to revisit the all-time high above 97.00 if it manages to recover above the June 4 high at 96.30.

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

Societe Generale’s Kenneth Broux and colleagues note that EUR/CHF has formed a higher low near 0.9090 versus March’s 0.8980, signalling reduced downside momentum as the cross approaches its 200‑day moving average and a multi‑year descending trendline around 0.9240/0.9265. They stress that repeated failures at this zone make a sustained break crucial, with 0.9090 identified as key support.

Cross nears multi‑year trend barrier

"EUR/CHF carved out a higher low around 0.9090, than the one achieved in March near 0.8980 highlighting early signals of reduction in downward momentum."

"It is approaching both its 200-DMA and a multi-year descending trendline around 0.9240/0.9265."

"Previous bounce attempts have stalled near this MA, making it important to assess whether EUR/CHF can establish above this zone."

"Failure to cross 0.9240/0.9265 could result in continuation of the decline. The recent pivot low of 0.9090 is a crucial support."

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

• EUR/USD extends gains beyond 1.1550 after bouncing from 1.1500 lows on Monday.
• ECB tightening hopes and a fragile optimism about a lasting peace in the Middle East are supporting the pair.
• US Dollar losses remain limited amid growing Fed tightening bets.

The Euro (EUR) ticks up for the second consecutive day against the US Dollar (USD) on Tuesday to pare some of last week’s losses. The pair is trading at 1.1555, session highs at the time of writing, up from 1.1500 lows on Monday, favoured by hopes that the European Central Bank (ECB) will hike rates this week, while a mild risk appetite is weighing on the safe-haven US Dollar

Data released earlier on Tuesday showed that German Industrial Production bounced to 0.4% growth in April, in line with market consensus, following an upwardly revised 0.1% contraction in March and a 0.5% fall in February. At the same time, German Trade Balance data showed a EUR 14.5 billion surplus in April, down from EUR 14.7 billion in March and undershooting market expectations of EUR 15 billion.

The ECB is expected to hike rates on Thursday

The Euro is drawing support from a generalised view that the ECB will tighten its monetary policy at Thursday’s meeting. The ECB is widely expected to hike its deposit rate by 25 basis points to 2.25% amid high inflation and hint at a pause, as the sluggish Eurozone will deter the bank from adopting an aggressive monetary policy.

On the Geopolitical front, an Israeli attack on the Lebanese city of Tyre has killed eight people, despite US President Donald Trump’s warning to Netanyahu to halt the hostilities. Rarliewr on the day Trump showed optimism about reaching a deal with Tehran, which has triggered a moderate risk-on mood in financial markets.

An improved market sentiment is weighing on demand for the safe-haven US Dollar, although downside attempts remain limited. Solid US macroeconomic data released last week have boosted hopes of Federal Reserve rate hikes later in the year, and investors are now awaiting the release of Wednesday’s US Consumer Price Index (CPI) data for a better assessment of the Fed’s forward path.