Forex News

• The Australian Dollar trades higher against its peers as market sentiment remains positive.
• Pakistan denies having any information on the location and time of the US-Iran second round of talks.
• The Australian Unemployment Rate remained steady at 4.3% in March, as expected.

The Australian Dollar (AUD) outperforms its major currency peers, except the Canadian Dollar (CAD), during the European trading session on Thursday. The antipodean gives back its early gains against the US Dollar (USD) after posting a fresh multi-year high around 0.7200 and is marginally higher near 0.7170.

The Australian currency remains firm as the market sentiment remains favorable for riskier assets amid hopes that the United States (US) and Iran will call a permanent ceasefire soon.

S&P 500 futures extend session gains in the European trade, reflecting an improvement in investors’ risk appetite. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 98.15 after recovering early losses.

On Wednesday, White House press secretary Karoline Leavitt said that Washington is very much engaged in negotiations with Iran, and another round of talks is very likely to be scheduled in Pakistan, according to The Guardian.

However, Pakistan’s foreign ministry has clarified that it has no information on the venue of the second round of US-Iran talks.

On the domestic front, Australian labor market data for March have come almost in line with estimates. According to the report, the Australian economy created 17.9K new jobs, slightly lower than estimates of 20K and the previous reading of 49.7K. The Unemployment Rate remained steady at 4.3%, as expected.

Commerzbank analysts highlight that India’s March trade deficit narrowed more than expected as imports slumped, but warn this may reverse as Oil prices rise and exports face Middle East-related disruptions. Export declines are broad-based, with sharp falls to key Middle Eastern partners and the US, while lower petroleum import volumes hint at emerging energy supply constraints.

Exports slump as oil and conflict bite

"March trade deficit narrowed more than expected to USD20.7bn (Bloomberg consensus: USD28.5bn) vs USD27.1bn in February. This was driven by a steep fall in imports amid the global economic uncertainty. The trade deficit could widen in the coming months as global oil prices rise, leading to a higher import bill. Exports may also face headwinds from supply chain disruptions due to the conflict in the Middle East."

"Exports fell for the second consecutive month, contracting 7.8% yoy vs -0.8% in February, the sharpest decline since October 2025. Chemical exports fell 2.0% vs +6.9%, while pharmaceutical shipments dropped 23.2% vs +3.4%. This was likely driven by disruptions to the supply of petrochemical feedstock due to the conflict in the Middle East. Electronic exports also declined 3.3% vs +10.4% previously."

"By destination, shipments to the Middle East faced significant headwinds as the military conflict disrupted supply chains. Exports to Saudi Arabia fell 45.7% yoy vs -10.5% in February while shipments to the United Arab Emirates sank 61.9% vs -0.3% previously. On the other hand, exports to China helped to cushion the overall decline. They rose 28.1% vs 32.4% previously. Shipments to the US fell 21.0% vs -12.9% in February due to high base effects, as it rose 35.1% in the same period last year."

"Imports fell 6.5% yoy vs +24.1% in February, the sharpest decline since October 2025. This was largely due to petroleum imports declining 35.9% vs +9.1%. Given the elevated global oil prices, the decline suggests a sharp drop in petroleum import volume, pointing to potential energy supply bottlenecks."

"Despite some easing in oil prices in recent days, INR remains under pressure due to USD demand from importers as commodity prices remain above pre-conflict levels. The structural issues persist for INR, including elevated oil prices, a widening trade deficit, and a cautious risk backdrop for emerging markets."

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

• Gold trades broadly unchanged above $4,800, with upside attempts limited below $4,850.
• Hopes of a new round of US-Iran negotiations keep precious metals buoyed.
• Frictions around the blockade in the Strait of Hormuz are weighing on risk appetite.

Gold’s (XAU/USD) nurses minor gains in an “inside day” on Thursday, trading at around $4,820, with price action constrained within Wednesday’s ranges. Hopes of new peace talks between the US and Iran keep precious metals buoyed, but the XAU/USD pair is failing to break resistance at the $4,850 area.

US President Donald Trump boosted market sentiment on Wednesday by confirming that negotiations with Tehran are underway and expressing confidence that the peace talks might resume in the coming days.

Investors’ optimism, however, has been curbed as the standoff over the Strait of Hormuz blockade continues. The US Central Command (Centcom) announced on Wednesday that it has closed traffic in and out of Iran’s ports, in an attempt to force Tehran to close a deal. In response, Iran’s military threatened to shut sea traffic in the Red Sea, the Persian Gulf, and the Sea of Oman, casting doubts about the ongoing ceasefire.

Technical Analysis: Above $4,850, the target is the $5,000 area

XAU/USD maintains a near-term bullish bias, but price action remains capped below the top of the last two weeks' horizontal channel at around $4,850.

Momentum indicators are showing mixed trends. The 4-hour Relative Strength Index is hovering around 59, in positive territory, but the Moving Average Convergence Divergence (MACD) hints at consolidation rather than a clear reversal.

Bulls need to break resistance at the $4,850 area (April 8, 14 and 15 highs), which would expose a previous support-turned-resistance right above $5,000. Further up, the next upside target would be the March 10 high at $5,235.

On the downside, Wednesday's lows right below $4,800 are holding bears for now. The key support level, however, is the bottom of the recent range around $4,600. A confirmation below here would negate the bullish view and add pressure toward the March 26 lows at the $4,350 area.

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

Lee Hardman at MUFG observes that both Euro (EUR) and Pound (GBP) have fully reversed their initial Middle East conflict losses versus the US Dollar (USD), helped by falling European energy prices and stronger United Kingdom (UK) Gross Domestic Product (GDP) data. He adds that hawkish Bank of England (BoE) and European Central Bank (ECB) rhetoric has supported EUR and GBP, although a likely delay of ECB tightening to June or July could temper further Euro upside.

Euro and Pound regain conflict losses

"The euro and pound have now fully recovered all of their initial losses against the US dollar since the Middle East conflict."

"The easing of safe haven demand triggered by the outbreak of the conflict has triggered a reversal of US dollar strength which has occurred much more quickly than we had been expecting."

"The euro and pound have been supported as well by falling energy prices reflecting optimism that risks from energy supply disruption will ease if a lasting peace deal can be reached soon."

"There was also some good news this morning from the UK where the latest monthly GDP report for February revealed that economy was growing much more strongly than expected heading into the energy price shock. Monthly GDP can be volatile but expanded strongly by 0.5%M/M in February which was the strongest monthly reading since last April."

"At the same time, the euro and pound have derived support recently from hawkish comments from BoE and ECB officials indicating that they are preparing the ground for rate hikes in response to the energy price shock. In contrast, Fed officials have indicated they are more prepared to look through higher inflation in the near-term."

"However, there has been some back tracking from the both the BoE and ECB suggesting that they want to take more time to assess the fallout from the energy price shock before hiking rates."

"We still expect the ECB to deliver 50bps of tightening but the timing of the first hike is likely delayed until June or July which could help dampen the euro’s upward momentum."

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

BNY reports that European Central Bank (ECB) officials are signaling a preference to hold rates at the April meeting, despite Eurozone inflation rising to 2.6% year-on-year in March. Policymakers stress the need for more data given Iran-related growth and oil risks. Markets still price two hikes later in 2026, leaving EUR/USD supported but sensitive to evolving ECB guidance.

Two hikes priced despite April caution

"Interest rate policy is a key area of difference for EU vs. U.S. outlooks, with two rate hikes priced for the ECB and just under one rate cut for the U.S. The shift today is that expectations of a quick April hike from the ECB are unwinding as central bankers speak at the IMF meetings and push back against acting in haste. Nevertheless, March CPI of 2.6% y/y is higher than expected and above target."

"ECB officials are leaning toward holding interest rates steady at their April 29-30 meeting, delaying decisions amid uncertainty over the impact of the Iran war on economic growth and inflation. Despite a March rise in headline inflation to 2.6% y/y in the euro area, underlying price pressures remain limited."

"ECB President Christine Lagarde has emphasized agility without a bias toward hikes, while Governing Council member François Villeroy de Galhau has called for more data before acting, citing risks from volatile oil prices and potential negative effects on demand and growth."

"The ECB’s Isabel Schnabel has said the ECB can afford to take time to analyze the Iran shock and does not want to impose unnecessary costs on the economy. Investors still anticipate two quarter-point hikes later this year."

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

ING’s Chris Turner argues that while global risk assets are rallying and weighing on the US Dollar (USD), conditions for a sustained Dollar decline are not yet in place. Stable United States (US) interest rates, resilient foreign demand for US assets and lingering global growth headwinds suggest caution. Turner expects only mild Dollar softness near term, with US Dollar Index (DXY) unlikely to revisit year-to-date lows immediately.

Risk rally but limited Dollar downside

"Risk assets are recovering well as investors continue to position for de-escalation in the Middle East. The return to equity markets and to pro-growth and higher-yielding EM currencies has led to a broadly softer dollar. However, we question whether conditions are right for a sustained dollar decline just yet, when assessing factors like Fed policy, global growth and any evidence that foreign investors are quietly leaving US asset markets or increasing dollar hedge ratios."

"In all, it points to a Fed comfortable with the policy rate at 3.75%, where neither the labour market is deteriorating nor are second-round inflation effects growing. The case for renewed Fed easing has yet to be made, although the whole world will be glued to Kevin Warsh's confirmation hearing next Tuesday for any dovish plans."

"On the subject of global growth, it is tough to see markets overlooking the headwinds which have been created over the last month. Energy prices look higher on a sustained basis (though this is not as large a shock as 2022), while interest rates, unlike currencies, have notably failed to retrace any of their moves in March. These tighter financial conditions have to prove a brake on global growth, which will likely emerge in hard data over the coming months."

"Barring some negative headlines out of the Middle East, risk assets should stay mildly bid and the dollar mildly offered today, but we don't see conditions in place for DXY to make an immediate return to the lows of the year at 96. We have a couple of Fed speakers today and the weekly initial claims data, though these look unlikely to move markets."

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

• EUR/JPY declines slightly on Thursday, consolidating above 187.00.
• Eurozone inflation is revised higher in March, reaching its highest level since July 2024.
• Markets now await the European Central Bank’s latest monetary policy meeting accounts.

EUR/JPY loses 0.15% on Thursday, trading near 187.30 at the time of writing and extending its consolidation above the 187.00 level seen since the beginning of the week.

The latest inflation data from the Eurozone is providing some fundamental support for the single currency. According to revised figures, the Eurozone Harmonized Index of Consumer Prices (HICP) increased by 1.3% MoM in March, accelerating from 0.6% in February and slightly above the preliminary estimate of 1.2%. On an annual basis, inflation was revised higher to 2.6%, up from 1.9% previously and marking its highest level since July 2024. Meanwhile, core inflation eased to 2.3% YoY from 2.4% the previous month.

The increase in headline inflation, largely driven by energy prices, could encourage the European Central Bank (ECB) to adopt a more hawkish tone at its next monetary policy meeting scheduled for April 29-30. However, ECB President Christine Lagarde recently stressed that the institution must remain “completely agile” regarding interest rates, while indicating that policymakers do not have a bias toward tightening.

Nevertheless, financial markets continue to anticipate two 25-basis-point rate hikes this year, although the probability of a move at the April meeting remains limited. According to Reuters, investors now almost fully price in a first hike by June.

Attention now turns to the release of the accounts of the European Central Bank’s March monetary policy meeting, which could provide further insight into how policymakers assess the persistence of inflationary pressures. Speeches from several ECB officials later in the day are also expected to gather market focus.

In Japan, Japan’s Finance Minister Satsuki Takayama stated that Tokyo and Washington have agreed to strengthen communication on exchange rates following a meeting with US Treasury Secretary Scott Bessent. These comments underline the Japanese authorities’ commitment to limiting excessive weakness in the Japanese Yen (JPY), although the immediate market impact has remained limited.

(This story was corrected at 12:25 GMT to say that core inflation eased to 2.3%, not revised to 2.3%)

• GBP/USD falls to near 1.3545 as the US Dollar recovers despite market sentiment remaining risk-on.
• There has been no announcement of the second round of US-Iran talks.
• UK monthly GDP grew strongly by 0.5% in February.

The GBP/USD pair trades 0.1% lower to near 1.3545 during the European trading session on Thursday, struggling to extend the rally above the 1.3600 hurdle. The Cable faces slight selling pressure as the US Dollar (USD) turns positive after recovering early losses, despite market sentiment remaining risk-on.

At press time, S&P 500 futures trade 0.2% higher around 7,070, reflecting an upbeat market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 98.20.

Market sentiment remains favorable for riskier assets amid firm hopes that the United States (US) and Iran would announce a permanent ceasefire soon. However, there is no announcement of a date for another round of talks between the two nations.

Pakistan’s foreign ministry stated earlier in the day on Thursday that dates for another round of talks between the United States (US) and Iran regarding the permanent ceasefire have not been finalized yet.

On the domestic front, the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for February has come in stronger than projected. The Office for National Statistics (ONS) has reported that the economy expanded at a 0.5% pace, while it was expected to remain steady at 0.1%.

GBP/USD technical analysis

GBP/USD trades lower at around 1.3545 as of writing. The pair holds above the 20-day exponential moving average (EMA) at 1.3410 and has reclaimed the 50.0% Fibonacci retracement of the 1.3162–1.3872 swing at 1.3517, which together suggest a constructive near-term bias.

The Relative Strength Index (14) at 61.4 leans bullish without yet flagging overbought conditions, hinting that upside momentum is still in play while the price action consolidates after the recent advance.

On the topside, immediate resistance is seen at the 61.8% Fibonacci retracement at 1.3601, ahead of the 78.6% level at 1.3720 and the cycle high near the 100.0% retracement at 1.3872. Looking down, initial support is provided by the 50.0% retracement at 1.3517, followed by the 38.2% level at 1.3433 and the 20-day EMA at 1.3410; a deeper pullback could expose the 23.6% retracement at 1.3329 before the structural floor around 1.3162.

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

TD Securities strategists note that Australian employment data for March broadly matched the Reserve Bank of Australia’s (RBA) expectations, with steady unemployment and solid full-time job gains. They highlight that labour headwinds from Middle East developments could emerge, but stresses that Q1 CPI on 29 April will be crucial for deciding whether the RBA raises rates, guiding Australian Dollar expectations.

Jobs steady while CPI decision looms

"There was nothing in the data to shake the RBA's labour market outlook. Headline jobs increased 17.9k (RBA and consensus at +20k) in March with strong full-time the key driver, +52.5k, while some of the spike in part time jobs seen in Feb is reversed, -34.6k. The participation rate edged lower a touch from 66.9% to 66.8% which helped keep the unemployment rate steady at 4.3%."

"Even with the drop in part-time jobs, full-time and part-time hours worked increased in Mar, to be +2.5% y/y from 0.9% y/y in Dec'25. Headwinds from the Middle East are likely to impact the labour market over coming months, but it will be Q1 CPI on 29th April that will be a key factor in determining whether the RBA hikes next month."

"Andrew Hauser, the RBA Deputy Governor spoke at the Institute of International Finance Global Outlook Forum, in Washington, D.C."

"The key comments from him were: 1) Australia “went into the Iran shock already running quite hot, and that created some challenges”.2) He said a major communication challenge for the RBA was explaining why the central bank might need to raise interest rates while Australians are hit with higher petrol prices and beyond - “Supply shocks are a hard sell to the public. Inflation is going to be higher, activity is going to be low, we’re going to be poorer. There’s not much upside news in that story"."

"Further he said “That’s harder at a time when we’ve had high inflation already, and people are already a bit resentful about that.”"

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

Brown Brothers Harriman’s (BBH) Elias Haddad notes that the recovery narrative is overshadowing the International Monetary Fund's (IMF) weaker growth outlook, with global equities at record highs and the US Dollar (USD) retracing losses. Haddad does not expect the US Dollar Index (DXY) to break its established 96.00–100.00 range in coming months, as rate differentials and still-strong foreign demand for US long-term securities underpin USD near term.

Range-bound Dollar with structural headwinds

"Markets continue to look beyond the IMF’s gloomier growth forecast and trading the recovery narrative. We agree."

"We don’t expect USD to make new cyclical lows in the next few months. Interest rate differentials between the US and other major economies continues to keep the DXY (USD index) anchored within its nearly one-year 96.00-100.00 range."

"Moreover, foreign demand for US long-term securities (treasury bonds & notes, corporate bonds, equities, gov’t agency bonds) remains strong. The US Treasury International Capital (TIC) data showed that in the twelve months to February, foreign investors accumulated $1615bn of long-term US securities."

"Nevertheless, we expect foreign appetite for US long-term securities to dwindle over time. The Trump administration’s effort to narrow the US trade deficit means fewer dollars will flow overseas, reducing the need for those funds to be recycled back into US securities."

"Fed funds futures imply 45% probability of a 25bps cut by year-end to 3.25-3.50%. Our base case is for the Fed to deliver one cut by year-end, in line with the FOMC’s projection."

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