Forex News
- Silver price edges down to near $67.90 in the countdown to the US inflation data for May.
- The US headline inflation is expected to have risen further to 4.2% YoY.
- Surprisingly strong US NFP has prompted hawkish Fed bets.
Silver price (XAG/USD) trades marginally lower at around $67.90 during the European trading session on Tuesday. The white metal faces slight selling pressure as investors turn cautious ahead of the United States (US) Consumer Price Index (CPI) data for May, which will be published on Wednesday.
The US CPI report is expected to show that the headline inflation accelerated to 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – is expected to have grown at an annualized pace of 2.9%, faster than the previous reading of 2.8%.
Month-on-month (MoM) headline and core CPI are estimated to have risen at a moderate pace of 0.5% and 0.3%, respectively.
Investors will pay close attention to the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
Though precious metals outperform in a high inflation environment, an increment in hawkish Fed bets bodes poorly for non-yielding assets, such as Silver.
Hawkish Fed prospects have intensified in the last two trading days, following the release of the surprisingly stronger Nonfarm Payrolls (NFP) data for May.
According to the CME FedWatch tool, there is an almost 71% chance that the Fed will deliver at least one interest rate hike this year.
Silver technical analysis
XAG/USD trades marginally lower to near $67.90, extending its corrective decline and holding well below the 20-day Exponential Moving Average (EMA) at $73.97, which reinforces a bearish near-term bias. The Moving Average Exponential (20, close) now acts as the primary dynamic cap, while the Relative Strength Index (RSI) at 35.83 hovers near oversold territory, hinting that downside momentum remains in place but could slow as selling pressure matures.
On the topside, immediate resistance is seen at the 20-day EMA around $73.97, and a daily close back above this barrier would be needed to ease the current bearish tone and signal room for a deeper recovery towards $80. On the downside, the spot could slide towards the March 23 low at $61.61.
(The technical analysis of this story was written with the help of an AI tool.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The Bank of Japan (BoJ) is widely expected to raise its short-term policy interest rate from 0.75% to 1.0% at its upcoming monetary policy meeting on June 15–16, Nikkei reported on Tuesday.
The source also said that the Japanese central bank considers halting bond tapering from April 2027.
Market reaction
At the time of writing, the USD/JPY pair is down 0.01% on the day at 160.15.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- EUR/USD gains ground to around 1.1545 in Tuesday’s early European session.
- The ECB is widely expected to raise its key interest rates at its June policy meeting on Thursday.
- Trump said he might have a proposal for the Iran agreement within days.
The EUR/USD pair gathers strength near 1.1545 during the early European trading hours on Tuesday, bolstered by the hawkish stance of the European Central Bank (ECB). Traders brace for the US Consumer Price Index (CPI) data on Wednesday. On Thursday, all eyes will be on the ECB interest rate decision.
The ECB is set to raise its key interest rate for the first time in almost three years at the upcoming June policy meeting on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East.
“At its 11 June meeting, the ECB is very likely to raise its key interest rates by 25 basis points, in line with its recent hawkish communication,” said Martin Wolburg, senior economist at Generali Investments.
ECB President Christine Lagarde will hold the press conference to deliver the monetary policy statement and take questions from journalists. Any hawkish comments from ECB policymakers could provide some support to the Euro (EUR) against the Greenback in the near term.
US President Donald Trump said on Tuesday that he might have a proposal for the Iran agreement within days, per Reuters. However, the uncertainty surrounding the Middle East remains high. Earlier Monday, Israeli Prime Minister Benjamin Netanyahu said that the war against Iran and its Lebanon-based proxy Hezbollah “has not yet ended,” though he insisted both are weaker than ever. Signs of rising tensions in the Middle East could boost the US Dollar (USD) as a safe-haven currency and act as a headwind for the major pair.
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.
- USD/JPY attracts some buyers on Tuesday, though the uptick lacks bullish conviction.
- Intervention fears and BoJ rate hike bets support the JPY, capping gains for the major.
- The Israel-Iran truce weighs on the USD and further acts as a headwind for spot prices.
The USD/JPY pair struggles to build on a modest Asian session uptick on Tuesday and remains below its highest level since April 30, set the previous day. Spot prices, however, hold above the 160.00 psychological mark and seem unaffected by a broadly weaker US Dollar (USD).
Iran and Israel said that they had halted attacks on each other after an appeal from US President Donald Trump. This drags the USD Index (DXY), which tracks the safe-haven Greenback against a basket of currencies, away from a two-month high, touched on Monday, and acts as a headwind for the USD/JPY pair. Furthermore, speculations that authorities will step in again to prop up the Japanese Yen (JPY) contribute to capping spot prices.
In fact, Japan’s Finance Minister Satsuki Katayama reiterated earlier today that the stance is unchanged and authorities are prepared for decisive measures. The JPY bulls, however, seem hesitant amid worries that Japan's economy will remain under strain due to the Middle East conflict and the continued energy supply disruptions through the Strait of Hormuz. This offsets Bank of Japan (BoJ) rate hike bets and further supports the USD/JPY pair.
Meanwhile, firming expectations that the US Federal Reserve (Fed) will raise borrowing costs by the end of this year, along with the uncertainty over the US-Iran peace deal, should limit USD losses. Investors might also opt to wait for the US inflation figures – Consumer Price Index (CPI) and Producer Price Index (PPI) on Wednesday and Thursday, respectively. This warrants some caution before confirming that the USD/JPY pair has formed a near-term top.
Japanese Yen Price Last 30 days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 30 days. Japanese Yen was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.59% | 1.53% | 2.08% | 2.04% | 2.24% | 1.90% | 2.13% | |
| EUR | -1.59% | -0.09% | 0.52% | 0.48% | 0.57% | 0.28% | 0.53% | |
| GBP | -1.53% | 0.09% | 0.62% | 0.58% | 0.75% | 0.39% | 0.62% | |
| JPY | -2.08% | -0.52% | -0.62% | -0.05% | 0.00% | -0.23% | 0.07% | |
| CAD | -2.04% | -0.48% | -0.58% | 0.05% | 0.02% | -0.18% | 0.09% | |
| AUD | -2.24% | -0.57% | -0.75% | -0.00% | -0.02% | -0.23% | -0.03% | |
| NZD | -1.90% | -0.28% | -0.39% | 0.23% | 0.18% | 0.23% | 0.14% | |
| CHF | -2.13% | -0.53% | -0.62% | -0.07% | -0.09% | 0.03% | -0.14% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
US President Donald Trump said that he might have a proposal for an Iran agreement within days, Reuters reported on Tuesday.
Key quotes
Two or three days. We have a very good chance of doing it.
US will issue a report on Hormuz incident later today.
Pilots involved the incident are fine.
We will not allow Iran to acquire a nuclear weapon.
Iran's economy is struggling, they will have to come to an agreement.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 1.13% on the day at $88.75.
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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