Forex News
- WTI regains positive traction as fading hopes for a US-Iran ceasefire keep supply concerns in play.
- Traders also remain worried about a new phase of US military action following Tuesday’s deadline.
- The technical setup also favors bullish traders and backs the case for a further appreciating move.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – catches fresh bids during the Asian session on Tuesday and climbs back closer to a nearly four-week high set the previous day. The commodity currently trades just below mid-$105.00s, up over 1.5% for the day, ahead of US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz.
In the meantime, Trump heightened a harsh rhetoric against Iran and threatened to target civilian infrastructure if the deadline of Tuesday, 8 PM Eastern Time (00:00 GMT Wednesday) passes without a deal. Iran, on the other hand, pushed back against pressure to reopen the strategic waterway and rejected a ceasefire proposal, instead insisting on a permanent end to the conflict. This raises the risk of a further escalation of conflict in the Middle East and acts as a tailwind for Crude Oil prices.
From a technical perspective, the near-term bias is bullish as Crude Oil prices extend above the rising 100-period Exponential Moving Average (EMA), confirming an established uptrend after last week’s rebound from the mid-$90s. Adding to this, the Moving Average Convergence Divergence (MACD) indicator holds in positive territory with the line above its signal, while the histogram stays slightly expanded, suggesting steady upside momentum rather than a blow-off move. Furthermore, the Relative Strength Index (RSI) near 64 remains below overbought conditions, indicating buyers retain control with no immediate sign of exhaustion.
Meanwhile, immediate resistance is located at $105.70, the recent peak, and a clear move above would reinforce the current bullish structure, opening the way toward $107.00. On the downside, initial support emerges at $103.50, the latest pullback low, ahead of a stronger floor at $101.50, where recent consolidation aligns closer to the rising 100-period EMA near $95.10 on a broader horizon. A break below $103.50 would expose $101.50, and then the $99.50 area as deeper downside levels within the trend.
(The technical analysis of this story was written with the help of an AI tool.)
WTI 4-hour chart
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.
Gold prices rose in India on Tuesday, according to data compiled by FXStreet.
The price for Gold stood at 14,075.78 Indian Rupees (INR) per gram, up compared with the INR 14,053.40 it cost on Monday.
The price for Gold increased to INR 164,176.80 per tola from INR 163,916.10 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 14,075.78 |
10 Grams | 140,757.50 |
Tola | 164,176.80 |
Troy Ounce | 437,806.10 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
- EUR/JPY trades on a flat note around 184.35 in Tuesday’s early European session.
- The cross keeps the positive vibe above the 100-day EMA, with bullish RSI momentum.
- The initial support level is seen at 183.70; the first upside barrier emerges at 185.80.
The EUR/JPY cross holds steady near 184.35 during the early European session on Tuesday. However, the potential upside for the cross might be limited as ongoing tensions between the United States (US) and Iran could boost a safe-haven currency such as the Japanese Yen (JPY).
On the other hand, the hawkish tone of the European Central Bank (ECB) could underpin the Euro (EUR) against the JPY. Markets are now pricing in 2–3 interest rate hikes for 2026 due to surging energy-driven inflation, a significant shift from previous expectations of holding rates.
Technical Analysis:
In the daily chart, the near-term bias of EUR/JPY is mildly bullish as price holds above the rising 100-day exponential moving average near 182.10 and continues to respect a sequence of higher closes over recent sessions. The pair also trades comfortably above the Bollinger middle band around 183.70, indicating that dips are being absorbed within an ongoing uptrend rather than signalling a reversal. RSI at 55.22 stays above its midline and trends higher, confirming positive momentum but without overbought conditions.
Initial support emerges at the Bollinger middle band around 183.70, followed by the psychological 183.00 area, while the 100-day EMA near 182.10 forms a deeper support level that underpins the broader bullish structure. On the topside, immediate resistance sits near the recent upper-Bollinger proximity around 185.80, with a sustained break opening room toward the 186.30 region. As long as EUR/JPY holds above 183.00 on a daily closing basis, the path of least resistance points to further tests of the 185.80–186.30 resistance band.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- USD/CNH gains ground as the US Dollar advances on increased safe-haven demand linked to Middle East uncertainty.
- Trump said Iran’s ceasefire proposal was “not good enough” ahead of his Hormuz Strait deadline.
- The PBOC set the USD/CNY midpoint at 6.8854, higher than the 6.8773 estimate.
USD/CNH gains ground after registering modest losses in the previous session, trading around 6.8800 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) holds gains on increased safe-haven demand ahead of further developments on the Iran deadline by US President Donald Trump to open the Strait of Hormuz.
President Trump warned that he could target Iranian power plants and bridges unless his demands are met by 8:00 PM Eastern Time. Trump said on Monday that the latest proposal for a US ceasefire with Iran is “not good enough" ahead of his deadline for Iran to either reopen the Strait of Hormuz. “It’s not good enough, but it’s a very significant step,” Trump said, adding, “They’re negotiating now, and they’ve made a very significant step. We’ll see what happens.”
The Greenback receives support as Iran war surges energy prices, increasing fears of inflation revival and forcing the US Federal Reserve (Fed), to adopt a more hawkish stance. Traders are pricing in a delay of Fed rate cuts and could even raise borrowing costs later this year if inflationary pressures persist. Market participants are now looking ahead to the latest Federal Open Market Committee (FOMC) Meeting Minutes for clearer guidance on the central bank’s policy trajectory.
The People's Bank of China (PBOC) set Tuesday’s USD/CNY reference rate at 6.8854, above the 6.8773 estimate, allowing the Yuan to trade within a +/-2% band around the midpoint.
Meanwhile, traders' focus is shifting to Friday’s inflation data, with consumer prices expected to ease slightly, while producer prices are projected to post their first annual increase since 2022.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- Asian stock markets open mixed as investors remain nervous ahead of Trump's Tuesday deadline.
- Concerns about Iran's reciprocal attacks on targets in Gulf states also weigh on investors' sentiment.
- Rallying Oil prices fuel inflation fears and Fed rate hike bets, further undermining riskier assets.
Asian equity markets opened mixed on Tuesday, tracking US stock index futures, as investors remain cautious ahead of US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz. At the time of writing, Japan’s Nikkei 225, Thailand's SET Index, Indonesia's IDX Composite, and Malaysia's KLCI index are experiencing some downward pressure, while South Korea’s Kospi and Australia's S&P/ASX 200 are trading with modest gains.
Trump heightened a harsh rhetoric against Iran and threatened to decimate civilian infrastructure if the deadline of Tuesday, 8 PM Eastern Time (00:00 GMT Wednesday) passes without a deal. Iran, on the other hand, pushed back against pressure to reopen the strategic waterway and rejected a ceasefire proposal, instead insisting on a permanent end to the conflict. This raises the risk of a further escalation of conflict in the Middle East and keep nervy investors on the sidelines.
Meanwhile, geopolitical uncertainties push Crude Oil prices to a fresh four-week top and back the case for a further move up, fueling inflationary concerns and bolstering bets for more hawkish central banks globally. Furthermore, traders are pricing in the possibility of a rate hike by the US Federal Reserve (Fed) by the end of this year. This turns out to be another factor weighing on investors' sentiment and might keep a lid on any optimism in the markets, warranting caution for bulls.
The market attention now shifts to the release of the latest US consumer inflation figures, due on Friday, which will include the Middle East conflict period and allow investors to assess the effects of surging Oil prices. The focus, however, will remain glued to geopolitical developments amid fading hopes for a last-minute agreement between the US and Iran. The failure to reach a deal would likely trigger a new phase of US military action and trigger a fresh wave of the risk-aversion trade.
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
- EUR/USD edges lower to near 1.1530 while investors remain uncertain over Iran’s final decision to the US proposal.
- Iran calls on US President Trump to surrender or his allies will return to the Paleolithic Age.
- The US FOMC minutes of the March policy meeting will be released on Wednesday.
The EUR/USD pair ticks marginally lower around 1.1530 during the Asian trading session on Tuesday, but is broadly sideways, wobbling inside Monday’s trading range. The major currency pair consolidates while investors await Iran’s final decision on the ceasefire proposal by the United States (US), which has a deadline of Tuesday, 08:00 PM ET.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades slightly higher to near 100.10.
Ahead of US President Donald Trump’s deadline, an advisor to Iran's Parliament Speaker Mohammad Bagher Ghalibaf has stated that Trump has about 20 hours to either surrender to Iran or his allies will return to the Paleolithic Age, emphasizing that Tehran will not back down. He called Trump’s threats “delusional” and added that they won’t make up for the “disgrace and humiliation” of the US in the region.
On the domestic front, investors await the release of the Federal Open Market Committee (FOMC) minutes of the March policy meeting, which will be released on Wednesday. In the meeting, the Fed left interest rates unchanged in the range of 3.50%-3.75%.
EUR/USD technical analysis
EUR/USD edges down to near 1.1530 in the opening trade on Tuesday. Price sits marginally below the 20-day Exponential Moving Average (EMA) near 1.1560, keeping the short-term tone mildly bearish as the pair struggles to reclaim that dynamic cap.
The 14-day Relative Strength Index (RSI) hovers in the mid-40s, showing negative but not extreme momentum, consistent with a market leaning lower inside a broader consolidation. A downward-sloping resistance trend line from around 1.1660 continues to limit rebounds, while the recent sequence of lower closes under that line confirms sellers retain the near-term advantage.
Initial resistance is now located at the 20-day EMA around 1.1560, with a break above exposing the descending trend-line barrier near 1.1600 and then the March 10 high at 1.1666. On the downside, the rising support trend line coming from the 1.1410 region underpins the market around 1.1470, with a daily close below that level opening the way toward 1.1410 as the next support. As long as the pair trades below 1.1600, rallies are likely to meet selling interest, keeping focus on whether the 1.1470–1.1410 support band can contain the current bearish pressure.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- GBP/USD depreciates as the US Dollar strengthens on increased risk aversion linked to geopolitical tensions.
- President Trump said Iran’s ceasefire proposal was “not good enough” ahead of his Hormuz Strait deadline.
- BoE policymakers shifted to holding policy rates amid rising energy costs from the Middle East conflict.
GBP/USD pares its recent gains from the previous day, trading around 1.3220 during the Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) gains ground amid increased risk aversion, which could be attributed to the Middle East peace truce uncertainty.
US President Donald Trump said on Monday that the latest proposal for a US ceasefire with Iran is “not good enough" ahead of his deadline for Iran to either reopen the Strait of Hormuz. “It’s not good enough, but it’s a very significant step,” Trump said, adding, “They’re negotiating now, and they’ve made a very significant step. We’ll see what happens.”
Traders keep a close watch on US President Donald Trump's deadline concerning the Strait of Hormuz. Trump warned that he could target Iranian power plants and bridges unless his demands are met by 8 p.m. Eastern Time.
The Institute for Supply Management (ISM) showed on Monday that the US Services PMI eased to 54.0 in March from 56.1 in February. The figure came in below expectations of 55.0, signaling a slight loss of momentum in the sector.
The Bank of England (BoE) policymakers, including Sarah Breeden and Swati Dhingra, shifted from supporting cuts to holding rates amid rising energy costs linked to the Middle East conflict, while warning CPI inflation could rise to 3%–3.5% in the coming quarters.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
- US Dollar Index strengthens to around 100.10 in Tuesday’s Asian session.
- Trump escalated threats to attack key Iranian infrastructure if his terms aren’t met before a Tuesday deadline.
- US service sector cooled in March, with the ISM Services PMI declining to 54.0.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 100.10 during the Asian trading hours on Tuesday. The DXY gains ground as escalating geopolitical tensions in the Middle East boost the safe-haven demand. The US Durable Goods Orders and ADP Employment reports will be published later on Tuesday.
US President Donald Trump said on Monday that the latest proposal for a US ceasefire with Iran is “not good enough.” He threatened to target Iran's power plants and bridges if the strategic waterway is not reopened, setting a precise deadline of Tuesday, 8 p.m. Eastern Time (00:00 GMT Wednesday).
The spokesperson for Iran’s top joint military command said that Trump’s threats will not make up for the “disgrace and humiliation” of the US in the region. Heightened uncertainty in the Middle East continues to boost the US Dollar against its rivals in the near term.
Surging oil prices due to the Iran war have complicated the US Federal Reserve (Fed) interest rate path. Cleveland Fed President Beth Hammack stated that a rate hike could be appropriate if inflation remains stubbornly high.
Data released by the Institute for Supply Management (ISM) on Monday showed that the Services PMI declined to 54.0 in March, versus 56.1 prior. This figure came in worse than the expectations at 55.0, signaling some loss of momentum in the sector.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- NZD/USD softens to near 0.5700 in Tuesday’s Asian session.
- Trump insisted on Hormuz opening as he escalated Iran threats.
- The RBNZ rate decision will be in the spotlight later on Wednesday, with no change in rate expected.
The NZD/USD pair attracts some sellers to around 0.5700 during the Asian trading hours on Tuesday. The US Dollar (USD) strengthens against the New Zealand Dollar (NZD) as heightened uncertainty in the Middle East boosts demand for a safe-haven currency.
US President Donald Trump said on Monday that freedom of navigation through the Strait of Hormuz would be part of any deal to end the Middle East war and escalated threats to attack key Iranian infrastructures if his terms aren’t met before a Tuesday deadline at 8 p.m. Eastern Time (00:00 GMT Wednesday), per Bloomberg.
Iran has also retaliated by saying that it will respond to Trump's threats by ramping up its own attacks on energy infrastructure in the Gulf. Rising tensions in the Middle East could provide some support to the Greenback and act as a headwind for the pair in the near term.
However, the downbeat US economic data might cap the upside for the USD. The US Services Purchasing Managers Index (PMI) declined to 54.0 in March from 56.1 in February, the Institute for Supply Management (ISM) showed on Monday. This reading came in below the market consensus of 55.0.
The Reserve Bank of New Zealand (RBNZ) is expected to keep interest rates unchanged at its April meeting on Wednesday and restate its willingness to look through the initial inflationary impact of surging fuel prices that threaten a stuttering recovery. Governor Anna Breman will hold a press conference after the policy meeting. Markets and analysts anticipate a potential rate hike to 2.50% by the end of 2026.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
