Forex News

Rabobank revises its TTF Natural Gas and JKM forecasts higher for Q3 and Q4 2026, citing a structurally tight LNG market and deeper Qatari export losses following renewed Hormuz disruption. The bank still expects a winter premium, warning Europe may enter winter with storage only just above 70% capacity, leaving buyers more exposed to spot LNG pricing and supply shocks.

Qatar shortfall tightens global balances

"The renewed fighting reinforces our view that the LNG market remains structurally tight and that any expectation of a rapid normalization in global balances is becoming unattainable."

"Even under the optimistic assumption that flows gradually resumed through the Strait of Hormuz by August, Qatar was still on track to lose around 37 million tonnes of LNG production and exports by year-end."

"With the latest breakdown in the US-Iran understanding and the resumption of military action, that shortfall is now likely to increase further as it hampers the recovery of Hormuz flows."

"If Qatar can only export a fraction of normal volumes, the global LNG deficit could expand materially, driving stronger competition for available cargoes and leaving Europe and Asia increasingly exposed to supply shocks."

"Taken together, the larger expected LNG shortfall, slower European storage injections and renewed risk premium around Hormuz justify a modest upward revision to our TTF and JKM forecasts for Q3 and Q4 (to €48/MWh and $16.85/MMBtu and Q4 prices to €52/MWh and $18/MMBtu, respectively)."

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

MUFG’s Lee Hardman reports the New Zealand Dollar is the top G10 performer overnight, helped by a hawkish shift in RBNZ rate expectations. After last week’s hike, RBNZ's Chief Economist Paul Conway flagged upside risks to the September inflation forecast from Middle East developments and warned of a response if pressures persist. Markets now anticipate a back-to-back rate increase in September.

Kiwi benefits from rate hike risks

"The top performing G10 currency overnight has been the New Zealand dollar which has also been boosted by the hawkish repricing of RBNZ rate hike expectations."

"After hiking rates for the first tie last week, the RBNZ’s Chief Economist Paul Conway stated that “I think developments in the Middle East over the last week suggest upside risks to our September quarter forecast”."

"He warned that “if inflation pressures stemming from the Middle East conflict prove to be more persistent than expected, we will respond”."

"The comments have reinforced market expectations that the RBNZ will deliver a back-to-back rate hike at the next policy meeting in September.

"The latest unfavourable developments in the Middle East have refocused market attention on upside inflation risks for the global economy."

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

Annual inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), declined to 3.5% in June from the three-year high it set at 4.2% in May, the US Bureau of Labor Statistics (BLS) reported on Tuesday. This print came in well below the market expectation of 3.8%.

On a monthly basis, the CPI declined by 0.4% after rising 0.5% in May. The core CPI, which excludes volatile food and energy prices, was unchanged on a monthly basis and it was up 2.6% on a yearly basis, compared to the 2.9% increase recorded in May and the market expectation of 2.8%.

Market reaction to US CPI data

The US Dollar (USD) came under heavy selling pressure with the immediate reaction. At the time of press, the USD Index was down 0.6% on the day at 100.70.

This section below was published as a preview of the US Consumer Price Index (CPI) data at 08:30 GMT.

• The US Consumer Price Index is expected to rise by 3.8% YoY in June, down from the 4.2% advance seen in May.
• Annual core CPI inflation is expected to hold steady at 2.9%.
• EUR/USD finds support but is yet to offer a convincing sign of a bullish reversal.

The US Bureau of Labor Statistics (BLS) will publish the June Consumer Price Index (CPI) data on Tuesday. The report is expected to show a decline in consumer inflation, driven by the easing of crude Oil prices following the ceasefire announcement between the United States (USD) and Iran. 

The monthly CPI is forecast to decline by 0.1%, following the 0.5% increase recorded in May, while the annual reading is seen retreating to 3.8% from 4.2% reported in the previous month, which marked the highest level since May 2023. Core CPI figures, which exclude volatile food and energy prices, are expected to post an increase of 0.2% and 2.9%, on a monthly and yearly basis, respectively, steadying compared with May. 

Following a nearly 17% drop in May, Crude Oil prices declined by more than 20% in June and came back to pre-war levels, as investors cheered news of the US and Iran reaching a ceasefire on June 17 to start negotiations to bring an end to the conflict. As a result, a retreat in the monthly CPI print should not come as a surprise. 

Previewing the inflation data, “June CPI likely showed inflation remained contained, with core up 0.20% m/m. Soft goods prices and further shelter normalization should keep underlying inflation steady, though this year’s Oil shock may continue to lift airfares. Risks to our forecast look more balanced than in recent reports. We expect headline CPI fell 0.22% m/m, led by a 10% drop in gasoline prices,” said TD Securities analysts.

What to expect in the next CPI data report?

Although CPI figures for June could confirm that falling Oil prices helped inflation ease, investors could overlook this development. Since the beginning of July, Oil prices have edged higher again as the US and Iran started exchanging strikes, risking the sustainability of the fragile ceasefire and reviving concerns over progress in inflation slowing down. 

In addition, market participants are increasingly worried about the potential inflationary effect of the artificial intelligence (AI) boom. The massive capital wave flowing into AI infrastructure, rising industrial electricity costs and notable price premiums on tech hardware and LLM software subscriptions, could keep core services and goods inflation elevated and put pressure on consumers.

In a recently published study, the Fed pointed out that the “Computer Software and Accessories" category of the Personal Consumption Expenditures (PCE) Price Index, which is not publicly accessible, “had been falling over the past 25 years at an average annualized rate of 5.3%,” but rose at a record pace of “73% annualized increase from November 2025 through March 2026.”

Hence, even if there is a monthly decline in the CPI, as expected, investors might not see it as a convincing sign that could derail the Fed from potentially tightening the policy later in the year. 

According to the CME FedWatch Tool, markets currently see about a 30% probability of a 25 basis points (bps) interest rate hike in July and price in around a 77% chance that the US central bank will raise rates at least once by the end of the year. 

How could the US Consumer Price Index report affect EUR/USD?

If the monthly CPI surprises to the upside and posts a positive reading, investors could reassess the odds of a July rate hike with the immediate reaction and boost the US Dollar. In this scenario, EUR/USD could come under renewed bearish pressure.

Conversely, a bigger decline in the monthly CPI, with a reading of at least -0.2%, could hurt the USD initially and help EUR/USD gain traction. However, investors are unlikely to overreact to a single soft CPI print given that Oil prices are rising again and growing doubts surrounding the impact of AI on inflation.

Eren Sengezer, European Session Lead Analyst, shares a brief technical outlook for EUR/USD:

“EUR/USD has managed to find a foothold after touching a fresh 12-month low below 1.1330 in Late June and has stabilized slightly above 1.1400 since. However, the Relative Strength Index (RSI) indicator on the daily chart is yet to climb above 50, and the pair is yet to flip the 20-day Simple Moving Average (SMA) into support, reflecting buyers’ hesitancy.”

“On the upside, 1.1500 (round level, static level) aligns as an interim resistance level for the pair ahead of 1.1550-1.1555 (Upper arm of the Bollinger Band, 50-day SMA), 1.1600 (100-day SMA, descending trend line) and 1.1645 (200-day SMA). Looking south, the first support level could be spotted at 1.1350 (static level), followed by 1.1220 (static level, round level) and 1.1160 (static level).”