Forex News

• WTI falls as traders weigh the potential impact of an upcoming US-Iran peace deal on global oil supplies.
• Three Iranian tankers safely passed the US naval blockade this week, while an empty vessel sails toward the Gulf.
• Benchmark Dubai fell into contango for the first time since January, as Oman and Murban differentials flipped to discounts.

West Texas Intermediate (WTI) oil price remains subdued for the fifth successive day, trading around $75.60 per barrel during the European hours on Wednesday. Crude oil prices declined as investors weighed the impact of an upcoming United States (US)-Iran peace deal. However, the market’s downward momentum was partially cushioned by ongoing uncertainty surrounding the full resumption of shipping through the critical Strait of Hormuz.

The US and Iran are scheduled to sign an interim accord in Switzerland this Friday, which will grant Tehran broad economic incentives and pave the way for an immediate resumption of Iranian oil exports. In anticipation of the formal signing, shipping data shows that at least three tankers carrying Iranian oil have already successfully breached the US naval blockade this week, while a fourth, empty vessel is currently en route to the Gulf of Oman.

Despite this diplomatic progress, experts warn that a physical recovery will take time. Markets are broadly stripping out the embedded geopolitical risk premium in oil prices, but the path toward normalization remains far from straightforward. While political agreements are progressing smoothly, actual physical tanker traffic through the Strait has yet to fully recover to its baseline levels.

This shifting supply outlook caused the broader Middle Eastern crude market to weaken sharply this week, with key benchmarks slipping into deep discounts. Reuters data revealed that the benchmark Dubai's premium to swaps fell into a discount of 46 cents on Tuesday, marking its first contango structure since January. Similarly, spot Oman and Murban differentials flipped into discounts of 67 and 49 cents, respectively. This widespread shift into contango, a market structure where prompt cargoes trade at a discount to later-dated ones, is a clear signal to investors that near-term global supplies are becoming ample.

• Half of the world’s production of Silver comes from Mexico, Peru and China.
• The American continent dominates Silver mining production and is expected to continue to do so.
• The Silver market posted its fifth consecutive deficit in 2025 and the gap is expected to widen to 46.3 million ounces in 2026.

Half of the world’s mined Silver comes from only three countries: Mexico, Peru and China. In a market facing running structural deficits, the concentration in only a few countries leaves it subject to vulnerability in case there is any disruption in any of the core producers.

Data from The Silver Institute shows that Mexico produced around 173 million ounces of Silver in 2025, which is about one-fifth of the world’s total output. Peru and China followed, with 130 million ounces and 113 million ounces, respectively.

Mexico’s output fell 5% for a third consecutive year. Peru moved closer to Mexico after production rose 7%. China remained third, and Russia’s production jumped 23% to fourth place, data from the report shows.

Regionally, North American output fell 3% to its lowest level in 10 years, while Central and South America rose 5%. This shows the supply center of gravity is still heavily tied to the Americas, especially Mexico and Peru.

Silver market faces structural deficit 

This dependence occurs as the Silver market posted a deficit for a fifth consecutive year. The gap stood at 40.3 million ounces in 2025 and it is expected to widen to 46.3 million ounces in 2026 despite rising supply and a contraction in demand.

The Silver price surged to an all-time high above $120 at the end of January. The rally was followed by a sharp correction, with prices currently hovering at around $70. 

“What made the January 2026 rally truly exceptional was the outsized impact that physical investment had on prices,” the Silver Institute said in its World Silver Survey 2026 report. The institute’s research confirmed strong coin and bar demand across most key markets, common product shortages and an explosion of funds into Exchange-Traded Products (ETPs).

Despite the sharp correction seen at the beginning of the year, the analysts said that their outlook over the metal remains constructive as a slight decline in demand will be accompanied by a mild decline in production. More importantly, the market is still projected to post a sixth consecutive deficit, leaving inventories under pressure.

“Taken together, these trends point to another silver-market deficit of 46.3 million ounces. This would be the sixth in a row and, combined with elevated ETP holdings and the possibility of metal flowing back to the CME if positioning recovers, the cumulative drawdown of stocks over these years makes the market vulnerable to liquidity squeezes,” the report said. 

“Though these will not be constant, lower liquidity than the market has been used to in previous years means that volatility in prices and lease rates will continue,” it added.

The Australian Dollar (AUD) has entered a corrective phase, surrendering part of its recent gains against the US Dollar, after the Reserve Bank of Australia (RBA) opted to break its tightening cycle and hold its benchmark cash rate at 4.35%. 

Having delivered three consecutive 25-basis-point interest rate increases earlier in the year, policymakers are now pivoting to a data-dependent pause to evaluate the lagged impact of their restrictive policies. 

While the central bank refuses to completely shut the door on further hikes due to sticky consumer price inflation, cooling domestic growth and a de-escalation of geopolitical risks in the Middle East have prompted prominent analysts to adopt a more bearish near-term outlook for the currency.

Yield differentials, geopolitical de-escalation cap the Aussie 

Analysts at Brown Brothers Harriman (BBH) note that the Australian Dollar is losing momentum as the initial market euphoria from a US-Iran peace agreement begins to fade. They emphasize that while the RBA has preserved its hawkish optionality, the underlying financial fundamentals, specifically unfavorable interest rate gaps between Australia and the United States, strongly favor a deeper near-term pullback for the asset.

Australia-US 2-year bond yield spreads suggests AUD/USD can undershoot 0.7000 in the near-term.

Slowing economy, lower energy costs damp rate hike bets

Analysts at MUFG point out that the RBA's decision to hold rates unanimously reflects growing signs that previous monetary tightening is successfully cooling the domestic economy. With consumer spending slowing, housing markets softening, and falling global energy prices easing baseline inflationary pressures, the aggressive interest-rate expectations that previously supported the Aussie Dollar are unwinding.

The recent paring of RBA rate hike expectations and correction lower for commodity prices are currently contributing to the Australian dollar giving back some of the strong gains recorded earlier this year.

Banks anticipate downward-biased trajectory for the Australian Dollar

Analysts project a corrective near-term trend for the Australian Dollar, indicating that its earlier bullish momentum has stalled. Brown Brothers Harriman explicitly warns that the AUD/USD currency pair is vulnerable to breaking beneath the critical 0.7000 threshold. MUFG projects a period of underperformance and near-term consolidation, concluding that as the central bank remains comfortable on hold to assess cooling growth and softer global commodity markets, the Aussie will continue to give back its prior year-to-date gains.

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

• Dow Jones futures flatten as traders brace for the Federal Reserve's upcoming policy decision.
• Traders are pricing in odds of the Fed holding its benchmark interest rate steady in the 3.50% to 3.75% range.
• Broader market sentiment improved on optimism following a preliminary US-Iran peace deal signed digitally by Trump and Iranian officials.

Dow Jones futures move little, hovering near 52,040 during the European hours on Wednesday, ahead of the US regular opening. However, S&P 500 futures rise 0.26% to near 7,540, and Nasdaq 100 futures advance 0.8%, trading near 30,240 at the time of writing.

US stock futures posted mixed results as investors anxiously awaited the Federal Reserve's (Fed) upcoming policy decision. The central bank is widely expected to maintain a cautious "wait-and-see" approach, holding its benchmark interest rate steady within the 3.50% to 3.75% range. However, market participants are on high alert for potential volatility, as traders broadly expect Fed Chair Kevin Warsh to strike a more hawkish tone during his first official policy meeting.

While monetary policy cast a shadow, broader market sentiment found strong support in a potential diplomatic breakthrough between the United States (US) and Iran. Optimism surged after Vice President JD Vance stated that President Donald Trump might release a preliminary peace agreement ahead of schedule, following the president's earlier comments that a framework had already been signed.

Confirming the momentum, Iranian Foreign Minister Seyed Abbas Araghchi announced that a new round of negotiations aimed at securing a final, comprehensive peace deal is set to begin in Switzerland.

This mixed backdrop follows a highly divided regular US trading session on Tuesday, where the Dow Jones managed a 0.64% gain, while the S&P 500 and Nasdaq 100 slid by 0.57% and 1.15%, respectively. Technology shares bore the brunt of the selling pressure as investors aggressively locked in profits, snapping a powerful rally in semiconductor stocks. This sector-wide pullback dragged down industry heavyweights, with Micron tumbling 6.2%, Broadcom sliding 4.4%, and Nvidia declining 2.4%.

In contrast to the broader tech rout, SpaceX provided a massive bright spot for the market. The company’s stock advanced 4.8%, extending its impressive gains since its initial public trading debut the previous Friday. Investor enthusiasm was heavily fueled by emerging reports that the aerospace giant is moving to acquire the AI assistant startup Cursor in a blockbuster deal valued at $60 billion.

• Gold oscillates in a narrow band as traders seem hesitant ahead of the crucial FOMC rate decision.
• Investors keenly await more cues about the Fed’s policy path before placing fresh directional bets.
• The US-Iran peace deal keeps the USD on the defensive, lending some support to the commodity.

Gold (XAU/USD) continues with its struggle to gain any meaningful traction and remains on the defensive through the first half of the European session on Wednesday as traders seem hesitant ahead of the crucial FOMC policy decision.

In the meantime, the optimism over an interim US-Iran peace deal undermines the safe-haven US Dollar (USD), which continues to act as a tailwind for the bullion. The commodity, however, remains below the weekly high, touched on Monday, and the technically significant 200-day Simple Moving Average (SMA), warranting caution for bullish traders.

The US and Iran agreed to a framework peace deal intended to end the war that began earlier in 2026. The initial memorandum of understanding (MOU) establishes a 60-day ceasefire, the reopening of the Strait of Hormuz, and sets the stage for technical negotiations over Iran's nuclear program. Other details about the agreement remain scarce amid some contradictory claims about what’s in it. US President Donald Trump said that the MoU will state that Tehran will never have a nuclear weapon, while Iran’s state media reported that the country had not yet entered into detailed negotiations on the nuclear issues.

Adding to this, reports suggest that the agreement includes plans for a $300 billion private fund to trigger investment in Iran, but Trump called it "fake news." This keeps investors on edge and holds back the USD bears from placing aggressive bets ahead of the key central bank event risk. The US Federal Reserve (Fed) is scheduled to announce its rate decision later today and is widely expected to leave policy rates unchanged. Furthermore, the central bank is seen removing the easing bias as inflation is proving stickier than anticipated. Hence, the focus will be on updated economic projections, including the so-called dot plot.

Moreover, investors will closely scrutinize the new Fed Chair Kevin Warsh's post-meeting press conference for cues about the future policy path. In the meantime, markets have been unwinding the worst-case inflationary scenarios and hawkish Fed expectations built up during the US-Iran conflict. However, traders are still assigning around a 60% chance that the US central bank will raise interest rates by 25 basis points (bps) in December. Hence, a dovish shift in the Fed's stance is needed before placing fresh bearish bets on the USD and positioning for an extension of the Gold's recovery from the year-to-date low, touched last week.

XAU/USD daily chart

Gold traders seem hesitant below 38.2% Fibo.; $4,445-$4,450 confluence holds the key

From a technical perspective, the XAU/USD pair remains capped near the the 38.2% Fibonacci retracement level of the April-June downfall and beneath the declining 200-day SMA, keeping the broader tone bearish. Moreover, the Relative Strength Index (RSI) around 44 and a slightly positive Moving Average Convergence Divergence (MACD) reading hint at stabilizing but not yet convincing upside momentum.

Hence, any subsequent move up might confront an immediate hurdle near the $4,400 mark ahead of the $4,445-$4,450 confluence – comprising the 50% Fibo. level and the 200-day SMA. A daily close above the said resistance would be needed to ease bearish pressure and open the way toward the 61.8% level near $4,560, and the $4,707 and $4,893 Fibo. barriers higher up. On the flip side, immediate support emerges at the 23.6% retracement around $4,227, ahead of the structural floor at the recent swing low near $4,022, where a break would reinforce the prevailing bearish bias and expose deeper losses.

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

Societe Generale analysts observe EUR/USD has rebounded after defending the April low at 1.1500 but see no clear signs yet of a broader uptrend. They stress the importance of the 200‑day moving average near 1.1675/1.1690 as a key resistance area, with 1.1500 remaining crucial support as the Euro consolidates around 1.16 in rangebound trading.

Key moving averages frame euro range

"EUR/USD has staged a brief rebound after defending the April low of 1.1500."

"However, signals of a broader up move are not yet evident."

"It will be important to observe whether EUR/USD can overcome the 200‑DMA near 1.1675/1.1690, which also represents the descending trend line drawn since January."

"A break above this hurdle may trigger a larger rebound."

"The recent pivot low at 1.1500 remains a crucial support."

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

Societe Generale’s Kenneth Broux and colleagues note Brent has broken below its 200‑day moving average around $78.4, leaving prices roughly 38% off their peak but still about 10% above pre‑war levels. They highlight nearby support at $75/$73 and resistance at $86, while Iran’s expected return to Oil exports and a gradual restoration of supply shape their outlook.

Oil correction defines key technical zones

"The decline in Brent below the 200dma of $78.4/b means prices have crumbled by a whopping 38% from the peak but still trade around 10% above pre-war level in February."

"Technically, we identify support at $75/$73 and resistance at $86."

"Newswires report that Iran will be permitted to immediately begin with the sale of oil following the signing of the MoU on Friday."

"The price action has been nothing short of spectacular if we consider that it will take until Jan-27 for oil supplies to be restored to pre-war levels (SG view)."

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

• USD Index struggles to attract any meaningful buyers and remains close to a one-week trough.
• The US-Iran peace deal optimism undermines the safe-haven USD ahead of the Fed rate decision.
• The constructive technical setup warrants caution before positioning for any meaningful downfall.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, consolidates in a narrow band around mid-99.00s through the first half of the European session on Wednesday as traders opt to wait for the outcome of a two-day FOMC meeting. In the meantime, the optimism led by an interim US-Iran peace deal acts as a headwind for the safe-haven buck and keeps it close to a one-week low, touched on Monday.

From a technical perspective, the overnight close below the 23.6% Fibonacci retracement level of the May-June upswing favors bearish traders and backs the case for an extension of the USD's retracement slide from the highest level since late March. Apart from this, a slightly negative Moving Average Convergence Divergence (MACD) reading validates the outlook. However, the Relative Strength Index (RSI) around 53 suggests neutral-to-constructive momentum, hinting that dips may attract buyers.

Moreover, the DXY holds above the 200-day Exponential Moving Average (EMA), which coincides with the 50% retracement level, keeping a mild bullish bias while the broader structure remains supported. Hence, any further decline is more likely to find initial support at the 38.2% Fibonacci retracement at 99.27, ahead of the 200-day EMA near 99.09, with deeper Fibonacci floors lining up at 98.96 and 98.64 if corrective pressure extends.

On the topside, immediate resistance emerges at the 23.6% retracement around 99.67, with a break above this level exposing the recent swing high region near the 0.0% Fibonacci anchor at 100.30.

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

DXY daily chart