Forex News

• EUR/GBP extends losses for the third consecutive day and hits three-week lows near 0.8650.
• UK preliminary PMI shows a strong business activity in April but warns about soaring costs.
• In the Eurozone, the improvement in the manufacturing sector has been offset by a sharp contraction in the services sector

The Euro (EUR) depreciates for the third consecutive day against the British Pound (GBP) on Thursday. The pair has reached fresh three-week lows right above 0.8650 following bright preliminary business activity data in the UK, while the Eurozone’s April HCOB Purchasing Managers’ Index (PMI), released earlier on the day, failed to inspire.

UK Manufacturing activity improved to 53.6 in April from 51 in March, according to preliminary S&P Global PMI figures, against expectations of a mild contraction, at 49.9. The Services PMI rose to 52.0 from 50.5 in March, instead of stagnating at 50.0 as the market consensus had anticipated.

UK business activity remains strong, but costs soar

The UK Composite PMI has improved to 52.0 from 50.3. The survey, however, warned about the highest input costs since records started in 1984, and supply chain disruptions, in both cases due to the war in Iran, which is clouding the near-term economic outlook.

In the Eurozone, the HCOB Manufacturing PMI improved to its best reading in almost four years, at 52.2, from 51.6 in March. These figures, however, have been offset by a sharp contraction of the services sector, which dropped to 47.4 from 50.2 in the previous month, bringing the composite index down to 48.6 in April, from 50.7 in March.

April's PMI data gives further margin for the Bank of England (BoE) to keep its monetary policy unchanged in the near term, which is positive for the Pound. Data from the Eurozone, on the contrary, feeds concerns of stagflation and poses a significant challenge to the European Central Bank (ECB), which will have to fight the growing inflationary pressures without damaging fragile economic growth.

ING’s Francesco Pesole notes that resilient United States (US) equities and higher Oil prices have driven flows away from low-yielding, energy-importer currencies toward the Dollar and commodity FX. However, with US equity futures turning lower, ING warns that US Dollar (USD) could become the sole winner. US S&P Global PMIs (Purchasing Managers' Index) are in focus, with expectations for an improvement in both manufacturing and services.

Risk sentiment and PMIs drive USD

"Strong earnings helped US equities remain resilient yesterday despite signs of re‑escalation in the Gulf. In FX, this translated into a more pronounced rotation away from low‑yielding, energy‑importer currencies and toward high‑beta commodity FX and the dollar. However, US equity futures point to souring risk sentiment overnight, raising the chance that the USD will emerge as the sole winner."

"The reassuring element is that at least one party – the US – is signalling a strong desire to resume negotiations swiftly. What is less reassuring is the lack of clarity around plans for reopening the Strait of Hormuz. The current environment still points to strength in USD and commodity currencies, although the latter depends heavily on a continuation of recent equity market resilience."

"Today, the main macro events in developed markets are the release of S&P Global PMIs. Whilst not as impactful as the ISM for USD, it has better comparability with Europe. The US manufacturing and services gauge is expected to improve from March."

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

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann see EUR/USD biased lower in the near term after breaking below 1.1720, but doubts a move to major support at 1.1665 today. For the coming weeks, they expect range trading between 1.1665 and 1.1795. Longer term, they still see scope for further Euro upside, though 1.1800 remains a key barrier.

Short term pressure but still rangebound

"24-HOUR VIEW: Two days ago, EUR dropped to a low of 1.1718 before recovering. When EUR was at 1.1745 in the early Asian session yesterday, we indicated that “there has been a tentative increase in downward momentum, and EUR could retest the 1.1720 level.” We also highlighted that “a break below this level is not ruled out, but we do not expect the major support at 1.1665 to come into view.” EUR subsequently broke below 1.1720 and dropped to a low of 1.1702. While the risk for today remains on the downside, the increase in downward momentum is not enough to indicate a move to 1.1665. Note that there is another support level at 1.1685. Resistance is at 1.1730; a breach of 1.1745 would indicate that the decline in EUR is stabilising."

"1-3 WEEKS VIEW: We highlighted on Monday (20 Apr, spot at 1.1750) that EUR “is likely to trade in a range for the time being, probably between 1.1665 and 1.1840.” Although there has been an increase in short-term downward momentum, it is not sufficient to indicate a continued decline. We continue to expect EUR to trade in a range, but a narrower 1.1665/1.1795 range is likely enough contain the price movements for now."

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

TD Securities strategists Prashant Newnaha and Alex Loo note that Australian activity has stabilised in April, with services rebounding into expansion while manufacturing remains in contraction. However, they stress that input and output prices across both sectors have surged to multi‑year highs. Against this backdrop, they expect the Reserve Bank of Australia to deliver another 25 bps rate hike in May.

Australian data support May RBA hike

"The Flash Composite PMI Output index rebounded from contraction to expansion in April, but this was entirely due to services activity picking up while manufacturing activity contracted."

"With activity on balance stabilising but price pressures accelerating to multi-year highs across both sectors, the case for further RBA tightening remains intact."

"The Composite measure of input and output prices accelerated, with input prices the highest in 4 years with output prices the highest in 3.5 years, to be well above averages."

"The Composite Employment Index rose from 51.8 to 53.1, pointing to a strong start for employment to begin the 2nd quarter."

"We anticipate the RBA delivers a 25bps hike at its May meeting while markets are pricing about a 70% chance to this outcome."

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

• UK economic activity rebounds in April, driven by both the services and manufacturing.
• Pound Sterling finds support after PMI data beats market expectations.
• The US Dollar remains supported by geopolitical tensions and the monetary policy outlook.

GBP/USD trades around 1.3500 on Thursday, virtually unchanged on the day, after recovering earlier losses following the release of stronger-than-expected UK activity data.

The Pound Sterling (GBP) draws support after S&P Global data showed a stronger-than-expected rebound in business activity. The flash Composite Purchasing Managers Index (PMI) rises to 52 in April, well above market expectations of 49.8 and the previous reading of 50.3. A simultaneous acceleration in both manufacturing and services sectors drives the improvement. The Manufacturing PMI climbs to 53.6, while the Services PMI reaches 52, pointing to broad-based expansion.

According to Chris Williamson of S&P Global Market Intelligence, the rebound partly reflects a temporary boost driven by companies bringing forward purchases amid concerns over rising prices and supply disruptions linked to geopolitical tensions. Still, the data suggests renewed economic momentum after the slowdown seen in March.

On the monetary policy front, the Bank of England (BoE) is expected to keep interest rates unchanged at 3.75% at its April 30 meeting. While easing inflation, particularly in core and services components, argues against further tightening, elevated inflation expectations due to higher energy prices are likely to limit the scope for near-term rate cuts.

Meanwhile, the US Dollar (USD) maintains a modest firm tone amid a risk-averse environment. Ongoing tensions between the United States (US) and Iran, particularly around the Strait of Hormuz, continue to support demand for the safe-haven currency. Recent military developments and the lack of progress in peace negotiations are keeping uncertainty elevated, reinforcing the Greenback’s appeal.

Monetary policy expectations also underpin the USD. Despite projections for limited rate cuts by the Federal Reserve (Fed), resilient US economic data and persistent inflation pressures linked to energy prices are encouraging a cautious stance from the central bank. This backdrop continues to cap GBP/USD upside despite supportive UK data.

Investors now turn their attention to upcoming US macroeconomic releases, including weekly jobless claims and PMI data, which could further influence near-term direction in GBP/USD.

BNY’s Geoff Yu argues that recent European inflation data do not yet justify pre-emptive tightening by the European Central Bank (ECB) or Bank of England (BoE). He notes core inflation has been contained across core Europe and warns that higher rates could further damage already weak growth and consumer confidence. Markets still price some tightening, but Yu stresses policymakers have time to assess corporate pricing and wage dynamics.

ECB and BoE seen delaying hikes

"After yesterday’s CPI release, all March inflation data are now available to central bankers ahead of their policy decisions. In our view, the case for a pre-emptive move is not compelling, and on balance we do not expect the European Central Bank (ECB) or Bank of England (BoE) to move next week."

"First, there hasn’t been any surge in core inflation figures beyond expectations, and in all cases for core Europe (U.K., Eurozone, Switzerland and Scandinavia), annualized core inflation either held steady or fell. There was no sign of a demand boost, from which we can infer that either wage expectations are well anchored or any earnings growth is not translating into changes in household behavior."

"We have long held the view that the conflict started at an acutely weak point in Europe’s growth cycle. Consumer confidence surveys point to considerable near-term restraint, reflecting a generally poor economic outlook. Tightening through the interest rate channel now risks doing more harm than good."

"Based on rhetoric alone, only the ECB stands a chance of moving, but the April decision is unlikely to be unanimous. Some Governing Council members have unequivocally opposed tightening, and fears of household scarring are a recurring concern shaping near-term decisions globally."

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

• The Indian Rupee falls further against the US Dollar due to rising oil prices.
• FIIs remain net sellers for three trading days in a row.
• India’s Composite PMI has come in higher at 58.3 in April from 57.0 in March.

The Indian Rupee (INR) extends its losing streak for the fourth trading day against the US Dollar (USD) on Thursday. The USD/INR pair jumps to near 94.15, the highest level seen in over a week, as higher oil prices due to the closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply, continue to keep the Indian Rupee under pressure.

During the press time, the WTI Oil price is up over 1.5% above $93.50. Theoretically, currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, underperform in a high oil price environment.

Hormuz remains closed for indefinite period

While United States (US) President Donald Trump has announced a ceasefire extension with Iran until Washington receives a unified proposal from Tehran, the oil price remains high due to the Hormuz closure.

Iran maintains its vow that it won’t reopen the Strait of Hormuz until the US removes the blockade on Iranian sea ports, a move that was taken to freeze Iranian business activity and cripple the economy. Iranian military groups near the Hormuz continue to attack ships aiming to pass through the Hormuz.

According to a report from The Wall Street Journal (WSJ), Iranian media said the Islamic Revolutionary Guard Corps (IRGC) fired on three ships in the Strait of Hormuz and escorted two of them to Iranian waters, and is bringing those ships to Iran.

FIIs turn net sellers again after brief pause

Foreign investors continue offloading their stake from the Indian stock market after a brief pause in the April 15-17 period, when they bought shares worth Rs. 1,731.71 crore. So far this week, Foreign Institutional Investors (FIIs) have pared their stake worth Rs. 5,057.28 crore.

It seems that fears of lower India Inc. earnings projections by market experts in the wake of higher oil prices are impacting the sentiment of overseas investors towards the Indian stock market.

On the economic data front, India’s preliminary HSBC Composite Purchasing Managers’ Index (PMI) data for April has come in stronger compared to its previous readings. The Composite PMI arrives at 58.3, higher than 57.0 in March. The Manufacturing and the Services PMI expanded at a faster pace to 55.9 and 57.9, respectively.

Higher US Dollar also contributes to USD/INR's upside extension

Rising oil prices due to the Hormuz closure have improved the appeal of the US Dollar, assuming that elevating energy prices would prompt US inflation expectations, a scenario that boosts hawkish Federal Reserve (Fed) bets.

During the day, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, posts a fresh weekly high near 98.70.

Later in the day, investors will focus on the flash US S&P Global PMI data for April, which will be published at 13:45 GMT.

Technical Analysis: USD/INR stabilizes above 20-day EMA

USD/INR trades higher at around 94.15 as of writing. The pair holds a bullish near-term bias as spot remains above the 20-day Exponential Moving Average (EMA) at 93.2609, keeping the recent rebound intact after bouncing off the low-92 area earlier in the month.

The Relative Strength Index (RSI) at 58.45 stays below overbought territory yet leans to the upside, suggesting buyers retain control but without extreme momentum.

On the downside, initial support is seen at the 20-day EMA around 93.26, where a break would signal fading bullish pressure and open the door to a deeper correction toward 93.00, followed by the March 3 high at 92.46. On the topside, the pair seems on track to revisit the all-time high above 95.00.

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

Deutsche Bank strategists report the S&P 500 closed at a fresh record, supported by strong earnings and tech leadership, even as most constituents declined. Futures now point lower as the Iran conflict and higher Oil prices weigh on risk sentiment. Upcoming US PMIs and jobless claims are seen as key tests for the resilience of US equities.

Earnings strength versus Oil shock

"US equities actually performed quite strongly yesterday, with the S&P 500 (+1.05%) closing at a new record high. That got support from corporate earnings, and Boeing (+5.53%) was one of the top performers in the index after their cash outflow was smaller than expected by analysts."

"Otherwise, tech stocks did well, with the NASDAQ (+1.64%) reaching a new record of its own, while the Philadelphia Semiconductor index (+2.72%) posted a record 16th consecutive advance. That said, the breadth of the advance was quite narrow, with most of S&P 500’s constituents falling on the day."

"After the US close, Tesla was the first of the Mag 7 to report earnings, with its shares initially rising by almost 5% on a solid earnings beat, but this gain was erased by the end of after-hours trading as executives unveiled that capex will exceed $25bn this year, roughly three times last year’s level. Meanwhile, IBM’s shares slumped by -7% after hours as its software revenues only just met analyst expectations."

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

• The Oil price posts a fresh weekly high near $93.70 due to the Hormuz closure.
• Iran keeps the Hormuz closed due to the US blockade on Iranian sea ports.
• US President Trump orders to hold military attacks on Iran until Washington receives a unified proposal.

West Texas Intermediate (WTI), futures on NYMEX, trades 2% higher to near $93.70 during the European trading session on Thursday. The Oil price gains as the Strait of Hormuz, a vital passage to almost 20% of global energy supply, remains closed despite a ceasefire extension between the United States (US) and Iran.

The Hormuz remains seized by the Iranian military, as part of retaliation against the US blockade of Iranian sea ports.

On Tuesday, US President Donald Trump announced that military attacks on Iran would remain on hold until Washington receives a unified proposal.

Earlier in the day, the Iranian media said the Islamic Revolutionary Guard Corps (IRGC) fired on three ships in the Hormuz and escorted two of them to Iranian waters, and is bringing those ships to Iran, The Wall Street Journal (WSJ) reported.

WTI technical analysis

WTI US Oil trades higher at around $93.70 at the press time. The Oil price remains in a constructive near‑term posture as it holds above the 20‑day Exponential Moving Average (EMA) at $90.96 and within an ongoing uptrend defined by the rising support line drawn from $76.42. This positioning suggests dips are being absorbed, while the Relative Strength Index (RSI) at 54 after recovering from around 40.00 indicates a resumption in the upside trend after a healthy correction.

On the topside, the next notable resistance is the descending trend-line region, with a key reference around the prior break area near $100.39, where earlier rallies stalled. Looking down, the immediate support is the 20‑day EMA at $90.96; a daily close below that level would dampen the near-term bullish tone and might lead to a deeper pullback toward the underlying trend support near $79.61.

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

(This story was corrected at 11:30 GMT to say in the first paragraph under the Technical Analysis section that the Relative Strength Index (RSI) rises to 54 after recovering from around 40.00, and not 60.00)

• EUR/CAD remains subdued as Eurozone Composite PMI falls to 48.6 in April, missing expectations of 50.2.
• Germany’s flash Composite PMI fell to 48.3; Services dropped to 46.9, while Manufacturing declined to 51.2.
• The commodity-linked CAD gains support from higher oil prices amid Strait of Hormuz supply concerns.

EUR/CAD extends its losing streak for the seventh consecutive day, trading around 1.5980 during the European hours on Thursday. The currency cross remains in the negative territory following the release of Purchasing Managers’ Index (PMI) data from Germany and the Eurozone.

The Eurozone’s preliminary HCOB Composite PMI unexpectedly fell to 48.6 in April from 50.7 in March, missing expectations of 50.2. The Services PMI contracted more sharply to 47.4 versus forecasts of 49.8 from a prior 50.2, while the Manufacturing PMI improved to 52.2 from 51.6.

Germany’s flash Composite PMI also surprised to the downside, dropping to 48.3 in April against expectations of 51.1, compared to 51.9 in March. The Services PMI declined to 46.9, below estimates of 50.3 and the previous 50.9 reading. Meanwhile, the Manufacturing PMI expanded again, albeit at a slower pace, printing at 51.2 versus expectations of 51.3 and the prior 52.2.

The EUR/CAD cross lost ground as the commodity-linked Canadian Dollar (CAD) is supported by higher oil prices amid rising supply concerns on ongoing Middle East uncertainty and the blockade of the Strait of Hormuz.

West Texas Intermediate (WTI) oil price gains ground for the fourth consecutive day, trading around $93.40 per barrel at the time of writing. The Wall Street Journal reported that Iran fired on three ships in the Strait of Hormuz and escorted two of them into Iranian waters on Wednesday.

Iranian media reported that the paramilitary Revolutionary Guard was moving the vessels to Iran, marking a further escalation. Iranian parliament speaker and chief negotiator Mohammad Bagher Ghalibaf stated that reopening the strait would be “impossible” while the United States (US) and Israel persist with what he described as “flagrant” ceasefire violations, including the US naval blockade.

(This story was corrected on April 23 at 12:25 GMT to say that Germany’s flash Manufacturing PMI declined to 51.2, not rose.)