Forex News
- EUR/GBP flatlines near 0.8645 in Tuesday’s early European session.
- The Eurozone HICP inflation report will be closely watched on Tuesday.
- Traders have dialed back aggressive BoE tightening bets.
The EUR/GBP cross trades on a flat note around 0.8645 during the early European trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of the preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone, which will be published later on Tuesday.
The Eurozone HICP inflation report could offer some clues about the European Central Bank’s (ECB) interest rate outlook. Headline inflation is projected to rise to 3.2% YoY in May from 3.0% in April. If the report shows hotter-than-expected outcomes, this could boost the Euro (EUR) against the British Pound (GBP) in the near term.
Markets are now pricing in a high probability, nearly 92%, of a 25 basis point (bps) interest rate hike at the ECB’s next meeting on June 11, which would take the bank’s key deposit facility rate to 2.25%, and a 50% chance of another rate rise later this year in September, according to the ECB Watch Tool.
On the UK’s front, BoE governor Andrew Bailey said on Friday that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak. Money market futures now imply 32 basis points (bps) of tightening this year, one quarter-point hike, and roughly a 30% chance of a second, according to Reuters.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
Commerzbank’s Michael Pfister argues that Eurozone inflation data have limited surprise potential for the foreign exchange market because many national figures are released beforehand and recent outcomes have largely matched expectations. He notes that, compared with the 2022–2023 inflation shock, current surprise magnitudes are much smaller, so the impact on interest-rate expectations and EUR/USD should be modest, leaving negotiations over the Strait of Hormuz as the key driver.
Eurozone data surprises seen as contained
"On a day otherwise light on economic data, the focus in the foreign exchange market today is likely to be on the preliminary inflation figures for the euro area in May."
"The problem is that many national economies usually release their figures ahead of the eurozone, so we have generally maintained that there is little potential for surprises in the foreign exchange market."
"If we compare the surprises from that period with those from recent months, we can safely say that we are still far from those levels."
"However, this is likely due in equal part to the fact that, despite the energy price shock, inflation has recently delivered few major surprises and has generally been in line with expectations."
"As long as we do not see more pronounced surprises, the effect on interest rate expectations is likely to remain limited."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/JPY edges up to near 159.73 on the Japanese Yen’s continued underperformance.
- Former BoJ’s Wakatabe expresses doubts over whether the economy could withstand tight monetary conditions.
- Several Japanese officials have warned of intervention in the forex markets.
The USD/JPY pair trades marginally higher to near 159.73 during the early European trading session on Tuesday. The pair edges up as the Japanese Yen (JPY) underperforms due to growing concerns regarding whether the Bank of Japan (BoJ) will raise interest rates in the near term.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.06% | 0.05% | 0.03% | -0.07% | -0.05% | 0.00% | |
| EUR | 0.05% | -0.01% | 0.09% | 0.07% | -0.01% | 0.01% | 0.05% | |
| GBP | 0.06% | 0.00% | 0.11% | 0.08% | 0.03% | 0.03% | 0.03% | |
| JPY | -0.05% | -0.09% | -0.11% | -0.01% | -0.09% | -0.09% | -0.07% | |
| CAD | -0.03% | -0.07% | -0.08% | 0.01% | -0.09% | -0.07% | -0.06% | |
| AUD | 0.07% | 0.01% | -0.03% | 0.09% | 0.09% | -0.00% | 0.00% | |
| NZD | 0.05% | -0.01% | -0.03% | 0.09% | 0.07% | 0.00% | 0.00% | |
| CHF | -0.01% | -0.05% | -0.03% | 0.07% | 0.06% | -0.00% | -0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Concerns over hawkish BoJ bets have been deepened due to growing economic worries in the wake of the Middle East crisis.
Last week, Former BoJ Deputy Governor and current member of Japan’s Council on Economic and Fiscal Policy, Masazumi Wakatabe, said that it is important to understand whether the economy can withstand tighter monetary conditions, Reuters reported.
Meanwhile, fears of Japan’s intervention into forex markets remain intact, with the USD/JPY pair approaching prior intervention levels at around 160.70. However, Japanese officials have been consistently avoiding mentioning any key forex levels.
As of writing, the US Dollar (USD) trades subduedly amid uncertainty surrounding the United States (US)-Iran permanent peace deal, with the US Dollar Index (DXY) wobbling around 99.15.
USD/JPY technical analysis
USD/JPY trades slightly higher at around 159.73, holding a bullish near-term bias as price remains above the 20-day Exponential Moving Average (EMA) at 158.94. The pair continues to consolidate near recent highs while staying underpinned by this dynamic support, and the 14-day Relative Strength Index (RSI) at roughly 60 suggests constructive but not yet overbought momentum, allowing room for further upside as long as the pair defends its underlying floor.
On the downside, immediate support is located at the 20-day EMA around 158.94, where a sustained break would hint at a deeper corrective phase toward 158.00. Looking up, the pair aims to revisit its almost two-year high at 160.74.
(The technical analysis of this story was written with the help of an AI tool.)
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
- EUR/USD gains ground around 1.1635 in Tuesday’s early European session.
- ECB's policymaker said Iran war inflation too broad to look through, flags rate hikes.
- Iran suspended talks with the US over Israeli attacks in Lebanon.
The EUR/USD pair holds positive ground near 1.1635 during the early European trading hours on Tuesday. Hawkish stance of the European Central Bank (ECB) provides some support to the Euro (EUR) against the US Dollar (USD). Traders brace for the preliminary reading of Harmonized Index of Consumer Prices (HICP) from the Eurozone, which is due later on Tuesday.
ECB executive board member Isabel Schnabel on Monday signalled rate hikes, saying that the central bank can no longer overlook the inflationary impact of the Iran conflict as price pressures have spread beyond the energy sector and the risk of unanchored inflation expectations has risen.
The Eurozone HICP inflation report could offer some clues about the ECB interest rate outlook. Headline inflation is expected to tick up to 3.2% YoY in May from 3.0% in April. Any signs of hotter inflation in the Eurozone could lift the shared currency in the near term.
On the other hand, broader geopolitical uncertainties might keep traders on edge and underpin a safe-haven currency such as the Greenback. Iran’s state media said Tehran on Monday had suspended talks over Israel’s actions in Lebanon. Separately, US President Donald Trump stated that he believes an agreement to reopen the Strait of Hormuz and extend the ceasefire with Iran is reachable “over the next week.”
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- GBP/USD regains positive traction as a partial Israel-Hezbollah ceasefire undermines the USD.
- The US-Iran peace uncertainty acts as a tailwind for the Greenback and might cap spot prices.
- The technical setup, too, warrants some caution for bulls before positioning for further upside.
The GBP/USD pair attracts some buyers following the previous day's good two-way price swings and holds steady above the 1.3450 level through the Asian session on Tuesday. Spot prices, however, lack bullish conviction and remain confined within a three-day-old range amid the uncertainty over US-Iran peace talks.
Iran warned that it would suspend negotiations with the US following fresh strikes and an Israeli military operation in Lebanon. However, Trump asserted that peace talks were ongoing with Iran, adding that he will have an agreement to extend the ceasefire and reopen the Strait of Hormuz over the next week. That said, a partial ceasefire between Hezbollah and Israel eases fears of a broader regional conflict, keeping a lid on the overnight gains for the US Dollar (USD) and offering some support to the GBP/USD pair.
From a technical perspective, spot prices hold a capped tone beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and under the 50.0% Fibonacci retracement of the downfall from the May swing high. That said, the Moving Average Convergence Divergence (MACD) histogram is marginally positive, and the Relative Strength Index (RSI) around 56 suggests mild bullish momentum.
That said, momentum indicators have not been sufficient to reclaim the overhead retracement and trend barrier, keeping upside attempts vulnerable for now. Meanwhile, initial resistance is located at the 50.0% retracement at 1.3476, followed closely by the 200-period SMA at 1.3498, with additional hurdles at the 61.8% level at 1.3517 and then 1.3576 and 1.3650.
On the downside, first support emerges at the 38.2% retracement at 1.3435, ahead of the 23.6% level at 1.3384, while a deeper slide would expose the recent swing low area around 1.3302.
(The technical analysis of this story was written with the help of an AI tool.)
GBP/USD 4-hour chart
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.
- USD/IDR drops as the Indonesian Rupiah strengthens following the release of domestic inflation data.
- Indonesia's May headline inflation hit 3.08%, beating market expectations but remaining well within the central bank's target zone.
- The US Dollar remains firm amid rising safe-haven demand driven by ongoing geopolitical uncertainty in the Middle East.
USD/IDR pulls back after reaching a fresh record high of 18,021 on Tuesday, trading around 17,900 at the time of writing. The pair depreciates as the Indonesian Rupiah (IDR) gains support following the release of domestic inflation data.
Indonesia’s annual headline inflation accelerated sharply to 3.08% in May, rebounding from an eight-month low of 2.42% in April and surpassing market expectations of 2.97%, remaining within the central bank’s target comfort zone of 1.5% to 3.5%. Core inflation hit a three-month high of 2.59% compared to the previous month's 2.44%. Consumer prices climbed 0.28% month-over-month, accelerating from a 0.13% rise in April and finishing well ahead of the 0.14% gain projected by analysts.
Moreover, Indonesia’s S&P Global Manufacturing Purchasing Managers Index (PMI) rebounded to 50.0 in May from April’s ten-month low of 49.1, signaling a return to broadly stable factory conditions. This recovery was underpinned by domestic demand, though the export market remained a significant drag amid ongoing shipping disruptions from the Middle East conflict, which continue to weigh on global trade.
Meanwhile, the Indonesian Rupiah (IDR) is finding fresh fundamental support following repeated currency lows earlier this year. The government recently pledged strict transparency regarding a newly formed, state-owned exporter dedicated to key commodities. This strategic initiative is expected to bolster national tax collection, legally mandate that more export earnings are retained onshore, and ultimately improve domestic US dollar (USD) liquidity to help stabilize the IDR.
However, the USD/INR pair received support as the US Dollar (USD) remains firm on increased safe-haven demand amid Middle East uncertainty. Iran’s Tasnim news agency indicated that Tehran has halted indirect negotiations with the United States.
The report also indicated that Iran and its "Resistance Front" allies, spanning Yemen, Lebanon, and Iraq, have established an agenda to completely block the critical Strait of Hormuz and activate additional fronts, including the Bab el-Mandeb Strait, as a means to punish Israel and its supporters.
Economic Indicator
Inflation (YoY)
The Inflation index released by the Statistics Indonesia is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of Indonesian Rupiah is dragged down by inflation. The CPI is used as a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the Rupiah, while a low reading is seen as negative (or Bearish).
Read more.Last release: Tue Jun 02, 2026 04:06
Frequency: Monthly
Actual: 3.08%
Consensus: 2.97%
Previous: 2.42%
Source: Statistics Indonesia
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