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  • EUR/USD snaps back above 1.1300 as Trump’s tariff salvo roils markets

    EUR/USD snaps back above 1.1300 as Trump’s tariff salvo roils markets


    • EUR/USD dips to 1.1296 after Trump announces steep tariffs on EU imports starting June 1.
    • The pair rebounds to 1.1350 as US Dollar stays pressured by rising fiscal deficit concerns.
    • Euro shrugs off ECB rate cut talk, supported by improving German GDP figures.

    EUR/USD recovered during the mid-North American session on Friday after diving below 1.1300 after US President Donald Trump rattled the markets by threatening to impose 50% tariffs on the European Union (EU). At the time of writing, the pair recovered and climbed to around 1.1350

    US President Donald Trump posted on his social network early Friday that discussions with the European Union “are going nowhere! Therefore, I am recommending a straight 50% tariff on the European Union, starting on June 1, 2025,” he wrote. The EUR/USD fell to 1.1296 on the remarks before the uptrend resumed.

    Following those remarks, US Treasury Secretary Scott Bessent said that “EU proposals have not been of good quality,” adding that “Most countries are negotiating in good faith, except the EU.”

    The Greenback remains on the back foot, weighed down by the approval of Trump’s tax bill in the House of Representatives, which is on its way to the Senate. If passed, the proposal would add close to $4 trillion to the US debt ceiling over a decade, according to the Congressional Budget Office (CBO).

    It is worth noting that the US Dollar remains unreactive to Federal Reserve (Fed) speakers, who so far have said the US Treasury market is working orderly, adding that uncertainty about supply chains, inventory and inflation keeps business executives unaware of the future.

    The US economic docket featured US housing data in May, which was mixed as Building Permits fell, but New Home Sales improved in April.

    In the Eurozone, Germany’s Gross Domestic Product (GDP) improved yearly, though it remained in contractionary territory.

    In the meantime, the Euro shrugged off speculation that the European Central Bank (ECB) is expected to lower interest rates at the upcoming meeting. ECB’s Rehn and Stournaras favor a rate cut in June, with the latter supporting a pause after that meeting.

    EUR/USD daily market movers: the Euro favored by “sell America” trend

    • The Euro remains favored by overall US Dollar weakness. The US Dollar Index (DXY), which tracks the performance of six currencies against the American Dollar, tumbled 0.79% at 99.10, its lowest level since April 29.
    • The “sell America” trend continues with investors selling off bonds, US equities and the US Dollar. It was ignited by US President Donald Trump’s “trade war” and Moody’s downgrade of US government debt from AAA to AA1.
    • The US schedule featured Building Permits, which fell by 4% MoM in April, declining from 1.481 million to 1.422 million, signaling a slowdown in future construction activity.
    • New Home Sales surged 10.9% MoM, rising from 0.67 million to 0.743 million, according to the US Census Bureau. This reflects strong demand in the housing market despite tighter supply conditions.
    • Germany’s economy grew in Q1 2025, exceeding estimates due to exports and industry frontloading ahead of US tariffs. The Gross Domestic Product (GDP) improved from 0.2% to 0.4% QoQ.

    EUR/USD technical outlook: Set to challenge 1.1400 in the near term

    The EUR/USD uptrend resumed on Friday, with the pair reaching a two-week high of 1.1375 as traders brace for challenging 1.1400. Buyers are gathering steam as the pair registered the highest high and low during the last five days, and further confirmed by the Relative Strength Index (RSI), which trends up ahead of turning overbought.

    If EUR/USD clears 1.1400, it would pave the way for testing key resistance levels, like 1.1450, followed by the 1.1500 mark and the year-to-date (YTD) high at 1.1573.

    Conversely, if EUR/USD falls below 1.1300, the pair could test the May 22 low of 1.1255, ahead of 1.1200.

    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.



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  • US Dollar Index slides after Trump lashes out to EU and Apple with tariffs

    US Dollar Index slides after Trump lashes out to EU and Apple with tariffs


    • The US Dollar Index sees the previous day’s relief rally pared back in full on Friday.  
    • Trump hints to tariffs for EU and starts to target domestic companies as well, with Apple’s Iphone facing 25% tariff.
    • The US Dollar Index extends losses and is on its way to test a fresh two-week low near 99.14.

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, dips further on Friday and erases the previous day’s recovery, trading near 99.20 at the time of writing. The fresh leg lower comes after the House of Representatives passed United States (US) President Donald Trump’s spending bill, now on its way to the Senate. The nonpartisan Congressional Budget Office revealed that this “big, beautiful bill” comes with a hefty price tag: $3.8 trillion in additional debt to the federal government’s $36.2 trillion over the next decade, according to Reuters.

    Markets, and indeed the bond market, have been very concerned about these numbers. The best example was the longer-term 30-year Bond, where yields rallied to 5.15% on Thursday from 4.64% at the start of May, a more than one-year high since the 5.18% seen at the end of December 2023. More concerns could devalue the US Dollar even further. 

    Meanwhile President Trump came out on his social media platform Truth Social by saying that he is considering putting a 50% tariff on EU goods as of June 1st. Apple might face a 25% tariff on its Iphone if the model is not made in the US. Both Apple and EU equities are diving lower on the back of this news.

    Daily digest market movers: The approach raises more questions

    • United States Secretary of the Treasury Scott Bessent gave further details on President Trump’s comments. Bessent said that the EU was not making enough progress on its talks with the US. The proposals itself from Europea re not that good as from other countries, Bessent said, Bloomberg reports.
    • President Trump threatens with a 50% tariff on all EU goods from June 1st and a 25% tariff on Iphones if they are not made in the US, Bloomberg reports.
    • At 12:35 GMT, St. Louis Fed President Alberto Musalem participates in a fireside chat with Kansas City Fed President Jeff Schmid at the Heartland Health Institute, Benthoville.
    • At 14:00 GMT, April’s New Home Sales data will be released. 
    • At 16:00 GMT, Federal Reserve Bank Governor Lisa Cook speaks on financial stability at the Seventh Annual Women in Macro Conference.
    • Equities are diving lower, with losses over 2% across Europe and over 1% in the three main US indices.
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 5.3%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 28.2%. Recent hawkish comments from Fed officials have reduced the chances of a rate cut in the short term.
    • The US 10-year yields trade around 4.47%, cooling down from their peak performance earlier this week at 4.62%.  

    US Dollar Index Technical Analysis: Another bad week

    The US Dollar Index is back to square one, flirting with a fresh two-week low at the time of writing near 99.40. With the spending bill now having cleared that first hurdle, the risk of a substantial shock effect in the US debt could further materialise. Even another cut in its credit rating might be under consideration, denting the US image and the US Dollar even further. 

    On the upside, the broken ascending trend line and the 100.22 level, which held the DXY back in September-October, are the first resistance zone. Further up, the 55-day Simple Moving Average (SMA) at 101.49 is the next level to watch out for, followed by 101.90, a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 103.18 pivotal level comes into play.

    If the downward pressure continues, a nosedive move could materialize towards the year-to-date low of 97.91 and the pivotal level of 97.73. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    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.



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  • Japanese Yen stands firm near two-week top against USD on BoJ rate hike bets, safe-haven demand

    Japanese Yen stands firm near two-week top against USD on BoJ rate hike bets, safe-haven demand


    • The Japanese Yen attracted some dip-buyers following upbeat domestic data.
    • BoJ rate hike bets and reviving safe-haven demand also lend support to the JPY.
    • The prevalent USD selling bias further exerts downward pressure on USD/JPY.

    The Japanese Yen (JPY) retains its positive bias through the Asian session and trades near a two-week high touched against a broadly weaker US Dollar (USD) earlier this Thursday. Japan’s upbeat Machinery Orders data countered recession fears and boosted hopes for an economic recovery. This, along with the growing acceptance that the Bank of Japan (BoJ) will hike interest rates again in 2025, turns out to be a key factor that continues to act as a tailwind for the JPY.

    Meanwhile, US President Donald Trump’s proposed sweeping tax bill fueled concerns about the US government’s fiscal health. Adding to this, renewed US-China tensions weigh on investors’ sentiment and further underpin the traditional safe-haven JPY. The USD, on the other hand, remains depressed amid worries about the deteriorating US fiscal outlook and bets for further rate cuts by the Federal Reserve (Fed). This further contributes to the USD/JPY pair’s decline.

    Japanese Yen bulls retain control amid BoJ rate hike bets, weaker risk sentiment

    • Data released earlier this Thursday showed that Japan’s Core Machinery Orders – a key leading indicator of capital spending over the next six to nine months – rose 13.0% in March, defying forecasts for a 1.6% decline. This marks the highest level in nearly two decades and assists the Japanese Yen to attract dip-buyers.
    • The Bank of Japan recently showed a willingness to hike interest rates further this year amid signs of broadening inflation in Japan. Moreover, investors expect that rising wages could lead to a significant increase in consumption, which, in turn, should allow the central bank to continue on its path of policy normalization.
    • Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said early Thursday the US did not discuss FX levels at the finance ministers’ meeting. Mimura does not believe that there is any gap in understanding with the US and reaffirmed that forex should be determined by the market.
    • Investors remain hopeful about progress in trade negotiations between the US and Japan and the possibility of an eventual deal. Japan’s Trade Minister Ryosei Akazawa is expected to attend the upcoming third round of ministerial-level talks with US Trade Representative Jamieson Greer. Moreover, US Treasury Secretary Scott Bessent is also likely to take part in the trade negotiations.
    • US President Donald Trump’s dubbed “One Big, Beautiful Bill” is expected to come to the House floor for a vote sometime on Thursday, and if passed, will add $3 trillion to $5 trillion to the federal deficit over the next ten years. This adds to worries about a deteriorating US fiscal outlook and weighs on investors’ sentiment.
    • China accused the US of abusing export control measures and violating Geneva trade agreements after the US issued guidance warning companies not to use Huawei’s Ascend AI chips. China’s Commerce Ministry said on Wednesday that US measures on advanced chips are ‘typical of unilateral bullying and protectionism.’
    • Federal Reserve officials expressed concerns over economic and business sentiment in the wake of the uncertainty tied to the Trump administration’s trade policies. Adding to this, a weak 20-year Treasury bond sale reinforced the view that investors are shying away from US assets and kept the US Dollar depressed.
    • Trump reportedly told European leaders that Russian President Vladimir Putin isn’t ready to end the war with Ukraine, as he thinks he is winning. Meanwhile, Israel’s military continued to pound the Gaza Strip and block desperately needed food aid. This keeps geopolitical risks in play and further benefits the safe-haven JPY.
    • Thursday’s release of flash PMIs could provide a fresh insight into the global economic health. Moreover, trade developments should influence the broader risk sentiment. Adding to this, the US macro data – the usual Weekly Initial Jobless Claims and Existing Home Sales – might provide some impetus to the USD/JPY pair.

    USD/JPY consolidates near 61.8% Fibo. retracement level before the next leg down

    From a technical perspective, the USD/JPY pair’s intraday move up on Thursday falters near the 144.40 region. The said area nears a confluence support breakpoint – comprising the 50% retracement level of the April-May rally and the 200-period Simple Moving Average (SMA) on the 4-hour chart – and should act as a key pivotal point. A sustained strength beyond could trigger a short-covering move, though it is likely to attract fresh sellers near the 145.00 psychological mark. This should cap spot prices near the 145.35-145.40 region, or the 38.2% Fibo. retracement level, which, if cleared decisively, might shift the near-term bias in favor of bullish traders.

    Meanwhile, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the USD/JPY pair remains to the downside. However, the Relative Strength Index (RSI) on the 4-hour chart has moved on the verge of breaking into oversold territory, making it prudent to wait for some near-term consolidation before positioning for the next leg of a downfall. That said, acceptance below the 143.20 area, or the 61.8% Fibo. retracement level, might prompt some technical selling and drag spot prices below the 143.00 round figure, to the next relevant support near the 142.40-142.35 area en route to the 142.00 mark.

    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.



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  • Australian Dollar depreciates as RBA reduces Official Cash Rate by 25 basis points

    Australian Dollar depreciates as RBA reduces Official Cash Rate by 25 basis points


    • The Australian Dollar falls as the Reserve Bank of Australia implements 25 basis point rate cut.
    • The People’s Bank of China cut its one-year Loan Prime Rate to 3.00% from 3.10% on Tuesday.
    • The US Dollar weakened following Moody’s downgrade of the US credit rating from Aaa to Aa1.

    The Australian Dollar (AUD) dips against the US Dollar (USD) on Tuesday, following a gain of over 0.50% in the previous session. The AUD/USD pair remains under pressure after the interest rate decisions from the Reserve Bank of Australia (RBA) and the People’s Bank of China (PBoC).

    The RBA board voted to cut the Official Cash Rate (OCR) by 25 basis points, reducing it from 4.1% to 3.85% at the conclusion of its May monetary policy meeting. The move was largely expected by markets.

    The PBoC announced a reduction in its Loan Prime Rates (LPRs) on Tuesday. The one-year LPR was lowered from 3.10% to 3.00%, while the five-year LPR was reduced from 3.60% to 3.50%. Given the close trade relationship between Australia and China, any change in the Chinese markets can significantly impact the Aussie Dollar.

    The Australian Dollar continues to weaken due to escalating political turmoil in Australia. The opposition coalition fractured after the National Party withdrew from its alliance with the Liberal Party. Meanwhile, the ruling Labor Party returned to power with a stronger and broader mandate, capitalizing on the disarray within the Opposition.

    Market attention now turns to the Reserve Bank of Australia’s (RBA) upcoming rate decision scheduled for later in the day. The central bank is expected to cut interest rates by 25 basis points, following last week’s stronger-than-anticipated employment data.

    The AUD/USD pair strengthened on Monday as the US Dollar weakened in the wake of Moody’s Ratings downgrading the US credit rating from Aaa to Aa1. This move aligns with similar downgrades by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now projects US federal debt to climb to around 134% of GDP by 2035, up from 98% in 2023, with the budget deficit expected to widen to nearly 9% of GDP. This deterioration is attributed to rising debt-servicing costs, expanding entitlement programs, and falling tax revenues.

    Australian Dollar depreciates despite a weaker US Dollar amid a dovish Fed

    • The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, is remaining subdued and trading lower at around 100.40 at the time of writing.
    • Economic data released last week pointed to easing inflation, as both the Consumer Price Index (CPI) and Producer Price Index (PPI) signaled a deceleration in price pressures. This has heightened expectations that the Federal Reserve may implement additional rate cuts in 2025, contributing to further weakness in the US Dollar. Additionally, disappointing US Retail Sales figures have deepened concerns over an extended period of sluggish economic growth.
    • US President Donald Trump told Fox News that he is working to gain greater access to China, describing the relationship as excellent and expressing willingness to negotiate directly with President Xi on a potential deal.
    • Trump administration plans to add several Chinese chipmakers to its export blacklist, known as the “entity list.” According to the Financial Times, Trump administration officials expressed concern late Thursday that imposing export controls on key Chinese firms at this stage could undermine the recently reached trade agreement between China and the US during talks in Geneva over the weekend.
    • The National Bureau of Statistics (NBS) reported on Monday that China’s Retail Sales rose by 5.1% year-over-year (YoY) in April, falling short of the 5.5% forecast and down from 5.9% in March. Industrial Production grew by 6.1% YoY during the same period, beating the expected 5.5% but slowing from the previous 7.7% growth.
    • The risk-sensitive Australian Dollar gained support from renewed optimism surrounding a 90-day US-China trade truce and hopes for further trade deals with other countries. Meanwhile, US Treasury Secretary Scott Bessent told CNN on Sunday that President Donald Trump intends to implement tariffs at previously threatened levels on trading partners that do not engage in negotiations “in good faith.”
    • According to the Australian Bureau of Statistics (ABS), employment surged by 89,000 in April, significantly higher than the 36,400 increase in March and far above the forecasted 20,000. Meanwhile, the Unemployment Rate remained unchanged at 4.1%.
    • Australia’s seasonally adjusted Wage Price Index rose by 3.4% year-over-year in Q1 2025, up from a 3.2% increase in Q1 2024 and surpassing market forecasts of a 3.2% gain. This marks a recovery from the prior quarter, which recorded the slowest wage growth since Q3 2022. On a quarterly basis, the index climbed 0.9% in Q1, surpassing the projected 0.8% rise.

    Australian Dollar hovers around 0.6450, support appears at nine-day EMA

    AUD/USD is trading near 0.6450 on Tuesday, with technical indicators on the daily chart pointing to a bullish bias. The pair remains above the nine-day Exponential Moving Average (EMA), while the 14-day Relative Strength Index (RSI) holds above the 50 mark, suggesting continued upward momentum.

    On the upside, immediate resistance is located at the six-month high of 0.6515, posted on December 2, 2024. A sustained break above this level could open the door to the seven-month high of 0.6687 from November 2024.

    Support is initially seen at the nine-day EMA of 0.6429, followed by the 50-day EMA around 0.6363. A clear drop below these levels would likely weaken the short- to medium-term outlook, potentially triggering a deeper decline toward the March 2020 low of 0.5914.

    AUD/USD: Daily Chart

    Australian Dollar PRICE Today

    The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.03% -0.03% -0.07% 0.09% 0.43% 0.22% -0.09%
    EUR 0.03% 0.00% -0.02% 0.13% 0.47% 0.27% -0.06%
    GBP 0.03% -0.00% -0.06% 0.12% 0.44% 0.28% -0.02%
    JPY 0.07% 0.02% 0.06% 0.16% 0.50% 0.29% 0.03%
    CAD -0.09% -0.13% -0.12% -0.16% 0.35% 0.13% -0.15%
    AUD -0.43% -0.47% -0.44% -0.50% -0.35% -0.20% -0.49%
    NZD -0.22% -0.27% -0.28% -0.29% -0.13% 0.20% -0.28%
    CHF 0.09% 0.06% 0.02% -0.03% 0.15% 0.49% 0.28%

    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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

    Economic Indicator

    RBA Interest Rate Decision

    The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.


    Read more.

    Last release:
    Tue May 20, 2025 04:30

    Frequency:
    Irregular

    Actual:
    3.85%

    Consensus:
    3.85%

    Previous:
    4.1%

    Source:

    Reserve Bank of Australia



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  • Mexican Peso firms as US Dollar softens and Treasury yields climb

    Mexican Peso firms as US Dollar softens and Treasury yields climb


    • The Mexican Peso gains ground against the US Dollar as Moody’s downgrade of US sovereign debt weighs on the Greenback.
    • The Federal Reserve is set to review the discount rate on Monday, potentially influencing short-term funding conditions.
    • USD/MXN trades cautiously below the key psychological resistance at 19.50, reflecting broader Dollar weakness.

    The Mexican Peso (MXN) remains firm against the US Dollar (USD) as markets react to renewed uncertainty following Moody’s downgrade of the US credit rating. The decision to lower the sovereign rating to AA1 from AAA has prompted a reassessment of the US Dollar’s status. While the MXN slightly benefits from the USD’s weakness, the broader risk-off tone in the market causes the Mexican currency to fall against other peers such as the Euro (EUR), the Pound Sterling (GBP), or the Australian Dollar (AUD).

    While the Greenback has retained its global reserve status and safe-haven appeal, mounting concerns over trade tensions, tariff instability, and a deteriorating fiscal outlook are weighing on sentiment. Structural headwinds, including ballooning US debt and subdued growth prospects, have tempered interest rate expectations and contributed to the Greenback’s broad weakness.

    At the time of writing, USD/MXN is trading near 19.43, down 0.12% on the day. The former psychological support at 19.50 has now turned into a resistance barrier, with market participants watching to see whether the Peso can sustain its upward momentum.

    Mexican Peso daily digest: USD/MXN slides as cautious Fed tone and Moody’s downgrade weigh on the Dollar

    • Federal Reserve officials offered a cautious outlook, with Vice Chair for Supervision Philip N. Jefferson, New York Fed President John C. Williams, and Atlanta Fed President Raphael W. Bostic signaling policy vigilance amid fiscal concerns.
    • Dallas Fed President Lorie K. Logan and Minneapolis Fed President Neel Kashkari focused on market structure and broader economic risks, factors that continue to influence USD performance against emerging market peers like the Mexican Peso.
    • Moody’s became the latest major credit agency to downgrade the US sovereign rating, triggering a rise in Treasury yields and a slump in the DXY US Dollar Index.
    • As perceived credit risk rises, the US must offer higher interest rates to attract investors who might otherwise shift capital to alternative safe-haven assets. While rising yields tend to be supportive for the USD, the broader context of fiscal instability has the potential to weigh on the Greenback.
    • Comments from Fed speakers throughout the day may provide insights into the trajectory of US monetary policy, influencing the performance of the US Dollar against global counterparts, including USD/MXN. 
    • Persistent trade tensions between Mexico and the United States continue to create downside risks for the Peso. With roughly 80% of Mexican exports directed toward the US, any disruption or tariff-related uncertainty could magnify market volatility in the pair.

    Mexican Peso Technical Analysis: Peso holds gains as USD/MXN consolidates between key levels

    USD/MXN remains under pressure, extending its bearish trajectory beneath the descending trendline and the 20-day Simple Moving Average (SMA), currently at 19.55. The pair has failed to clear resistance near the 78.6% Fibonacci retracement level of the October–February rally at 19.578, reinforcing a weak technical outlook. 

    Price action continues to oscillate within a narrow range, with repeated failures to break higher indicating ongoing downside pressure.

    USD/MXN daily chart

    The consolidation zone between 19.30 (May low) and 19.72 (23.6% Fib) has acted as a containment range for several weeks. A breakdown below 19.30 could open the door toward the October 2024 low at 19.11, while a daily close above 19.72 would be needed to suggest a shift in sentiment and challenge the next key level at 19.98 (38.2% Fib).

    The Relative Strength Index (RSI) at 40.06 remains subdued, supporting the bearish bias while signaling a lack of upward momentum.

    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.



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  • USD/INR remains stronger as Indian Rupee struggles on strong importer demand

    USD/INR remains stronger as Indian Rupee struggles on strong importer demand


    • The Indian Rupee continues to weaken amid renewed USD demand from importers and persistent foreign fund outflows.
    • USD/INR may face headwinds as the US Dollar comes under pressure following Moody’s downgrade of the US credit rating.
    • The INR finds some support from falling crude oil prices, driven by reports of progress in US-Iran nuclear talks.

    The Indian Rupee (INR) remains subdued against the US Dollar (USD) on Monday, continuing its losing streak for the sixth successive day. Moreover, fresh USD demand from importers and ongoing foreign fund outflows continue to weigh on the INR. 

    However, the upside of the USD/INR pair could be limited as the US Dollar (USD) came under renewed pressure following Moody’s Investors Service downgrade of the US credit rating by one notch, citing rising debt levels and mounting interest payment obligations.

    However, the INR receives support from a decline in crude oil prices, amid reports of progress in US-Iran nuclear negotiations, which could help cushion the Rupee’s downside. Iran’s president reaffirmed his country’s commitment to continue talks with the US while standing firm on its nuclear rights. Given that India is the world’s third-largest oil consumer, lower oil prices generally support the Rupee by easing the country’s import bill.

    Indian Rupee depreciates despite a weaker US Dollar 

    • The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading lower at around 100.80 at the time of writing. The US Dollar faces challenges as Moody’s Ratings has downgraded the US credit rating from Aaa to Aa1, aligning with previous downgrades by Fitch Ratings in 2023 and Standard & Poor’s in 2011.
    • Moody’s now forecasts US federal debt to rise to approximately 134% of GDP by 2035, up from 98% in 2023. The federal deficit is projected to widen to nearly 9% of GDP, fueled by mounting debt-servicing costs, increased entitlement spending, and declining tax revenues.
    • A series of weak US economic indicators has reinforced expectations of rate cuts by the Federal Reserve later this year. Notably, the University of Michigan’s Consumer Sentiment Index fell sharply to 50.8 in May from 52.2 in April, the lowest level since June 2022 and the fifth consecutive monthly decline. Analysts had forecast a rise to 53.4.
    • The US Dollar may find some support from easing global trade tensions. A preliminary trade deal between the US and China proposes significant tariff reductions—Washington is set to lower duties on Chinese goods from 145% to 30%, while Beijing will cut tariffs on US imports from 125% to 10%.
    • Market sentiment is also lifted by renewed optimism over a potential US-Iran nuclear deal and upcoming talks between US President Donald Trump and Russian President Vladimir Putin aimed at de-escalating the Ukraine conflict.
    • India’s BSE Sensex rose 3.6% last week, rebounding from the previous week’s decline. The rally was fueled by easing geopolitical tensions between India and Pakistan, growing optimism around India–US trade ties, and expectations of domestic interest rate cuts.
    • Meanwhile, a high-level Indian delegation led by Minister of Commerce and Industry Piyush Goyal is set to meet with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick during his visit, which continues through May 20. Goyal is expected to push forward discussions on a proposed India–US bilateral trade agreement.

    USD/INR rises above 85.50 amid a mixed-to-bullish bias 

    The Indian Rupee continues its losing streak for the sixth consecutive day, with the USD/INR pair trading near 85.60 on Monday. Technical indicators on the daily chart maintain a bullish bias, as the pair moves upwards within an ascending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 level, suggesting a persistent bullish sentiment.

    The USD/INR pair could target its monthly high of 85.90, reached on May 9. A break above this level could allow the pair to explore the region around the upper boundary of the ascending channel at 86.40.

    Immediate support lies at the nine-day Exponential Moving Average (EMA) around 85.30, followed by the ascending channel’s lower boundary at 85.10. A decisive break below this zone could undermine short-term bullish attempts and open the door for a decline toward its eight-month low of 83.76.

    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.



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  • Dow Jones finds fresh weekly highs as investor sentiment holds firm

    Dow Jones finds fresh weekly highs as investor sentiment holds firm


    • The Dow Jones rose slightly on Friday, clipping into fresh weekly highs.
    • Equity markets shrugged off a worse-than-expected print from the UoM Consumer Sentiment Index.
    • Investors are hoping that more clarity will come from the Trump administration on trade.

    The Dow Jones Industrial Average (DJIA) stepped into fresh weekly highs on Friday after investors shrugged off the second-worst print from the University of Michigan’s (UoM) Consumer Sentiment Index on record. Market sentiment remains on the high side as traders hope for further clarity on trade from the Trump administration and a continued easing of President Donald Trump’s tariff policies.

    The UoM’s Consumer Sentiment Index sank to 50.8 from 52.2 as consumers’ outlook for economic activity, income, and employment continues to decline. Investors were hoping for an uptick in consumer sentiment, but the average consumer apparently disagrees with Wall Street. Consumer 1-year and 5-year inflation expectations also rose, climbing to 7.3% and 4.6% respectively.

    Market sentiment holds on the high end, but dark trade clouds remain

    While consumers tend to be terrible at forecasting their economic futures, tariff concerns have been playing havoc on consumers’ feelings about the economy. With inflation expectations continuing to climb, it could pave the way for “profit-led inflation”, or businesses taking the opportunity to raise prices in the face of consumers expecting rising prices. US inflation data came in far better than expected this week, helping to assuage market fears that lopsided US trade policies could shatter the US economy’s still-strong position. However, investors habitually understate the amount of time it takes for government policies to show up in headline data, and tariffs are likely no exception.

    According to estimates from the Fitch Ratings agency, the US’s headline Effective Tariff Rate has reached 13% following the Trump administration’s fun new toy of using tariffs to try and control global trade. Prior to widespread tariffs, the US’s ETR was 2.5%. The US’s ETR specifically on China remains above 30% even after the walkback of President Trump’s unhinged 145% import taxes.

    The Trump administration has developed a pattern of threatening deeply damaging policy changes before walking them back, temporarily suspending them, or outright canceling them at the eleventh hour. Market perception broadly anticipates a continued clawback of Donald Trump’s policy strategies; however, bullish animal spirits are likely to remain tepid until the Trump administration delivers some solid results and provides some clarity from the many trade agreements that White House staff have been insisting are due to be announced any day now for the last two months.

    The latest US government budget bill failed in Congress on Friday. Hardline Conservatives rejected the spending bill, which would add trillions to the national debt and includes steep tax breaks for high net worth individuals and drastic cuts to Medicaid spending. Several key Republicans rejected the bill for introducing excessive deficit spending, something the Republican party has spent years accusing their Democratic opponents of doing. In contrast, select Republicans rejected the bill because they felt it didn’t include enough cuts to national healthcare provisions. The budget rejection deals a blow to the Trump administration’s plans of muscling the spending bill through the US legislature. President Trump will likely have choice words to share on the matter over the weekend on his Truth Social account, especially as this is one key aspect of his administration’s strategy that he cannot circumvent using a flood of executive orders.

    Dow Jones price forecast

    The Dow Jones Industrial Average has finally clawed its way back the 42,500 level for the first time since March. Trade headlines sent US equity markets into a freefall in the first quarter, sending the Dow Jones into the 36,600 region. After weeks of paring back losses, the DJIA is finally back into positive territory for 2025.

    Bullish momentum has bolstered the Dow Jones back above the 200-day Exponential Moving Average (EMA) near 41,500, and the DJIA has rebounded 16.25% bottom-to-top. Price action is heading for a technical resistance zone priced in from March’s swing high into 42,800, while the 42,000 handle is set to begin providing a technical floor.

    Dow Jones daily chart

    Dow Jones FAQs

    The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

    Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

    Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

    There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.



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  • Australian Dollar struggles as Trump administration plans to blacklist Chinese chipmakers

    Australian Dollar struggles as Trump administration plans to blacklist Chinese chipmakers


    • The Australian Dollar faces headwinds as the Trump administration moves to add several Chinese chipmakers to its export blacklist.
    • The AUD remains under pressure despite a strong Australian labor market report showing solid job gains in April.
    • The US Dollar continues to trade within a narrow range, as recent US economic data has sent mixed signals to the market.

    The Australian Dollar (AUD) extends its decline against the US Dollar (USD) for a third consecutive session on Friday. The AUD remains under pressure, possibly due to reports that the Trump administration is planning to add several Chinese chipmakers to its export blacklist, known as the “entity list.” Given the close trade relationship between Australia and China, any disruption in the Chinese market can significantly impact the Aussie Dollar.

    According to the Financial Times, Trump administration officials expressed concern late Thursday that imposing export controls on key Chinese firms at this stage could undermine the recently reached trade agreement between China and the US during talks in Geneva over the weekend.

    The AUD struggles despite a strong Australian labor market report, which reported robust job growth in April. The AUD/USD pair struggled even as the Greenback weakened following economic data that fueled speculation the Federal Reserve (Fed) could resume interest rate cuts in the coming months.

    The risk-sensitive AUD/USD pair also failed to benefit from easing global trade tensions. A senior adviser to Iran’s supreme leader, Ali Shamkhani, stated on Wednesday that Iran is ready to sign a nuclear deal with US President Donald Trump. Additionally, the US and China reached a preliminary agreement, under which the US will reduce tariffs on Chinese goods from 145% to 30%, while China will lower its tariffs on US imports from 125% to 10%.

    Australian Dollar struggles despite a weaker US Dollar amid improved risk sentiment

    • The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading lower at around 100.60 at the time of writing. US economic data this week has delivered mixed signals—highlighting the economy’s resilience while also indicating a slowdown in growth momentum, which has kept the dollar confined to a narrow trading range.
    • The US Producer Price Index (PPI) rose 2.4% year-over-year in April, easing from the 2.7% increase in March and falling short of the market expectation of 2.5%. Core PPI, which excludes food and energy, climbed 3.1% annually, down from the previous 4%. On a monthly basis, headline PPI dropped 0.5%, while core PPI fell 0.4%.
    • US Initial Jobless Claims for the week ending May 10 stood at 229,000, unchanged from the revised figure for the previous week, and in line with expectations, according to the US Department of Labor (DOL). Continuing Jobless Claims rose by 9,000 to reach 1.881 million for the week ending May 3.
    • US Consumer Price Index (CPI) rose by 2.3% year-over-year in April, slightly below the 2.4% increase recorded in March and market expectations of 2.4%. Core CPI—which excludes food and energy—also climbed 2.8% annually, matching both the previous figure and forecasts. On a monthly basis, both headline CPI and core CPI rose by 0.2% in April.
    • US President Donald Trump told Fox News that he is working to gain greater access to China, describing the relationship as excellent and expressing willingness to negotiate directly with President Xi on a potential deal.
    • According to the Australian Bureau of Statistics (ABS), employment surged by 89,000 in April, significantly higher than the 36,400 increase in March and far above the forecasted 20,000. Meanwhile, the Unemployment Rate remained unchanged at 4.1%.
    • Australia’s seasonally adjusted Wage Price Index rose by 3.4% year-over-year in Q1 2025, up from a 3.2% increase in Q1 2024 and surpassing market forecasts of a 3.2% gain. This marks a recovery from the prior quarter, which recorded the slowest wage growth since Q3 2022. On a quarterly basis, the index climbed 0.9% in Q1, surpassing the projected 0.8% rise.
    • Australian Prime Minister Anthony Albanese was sworn in for a second term on Tuesday after a decisive election victory. Key cabinet positions—including treasurer, foreign affairs, defense, and trade—remain unchanged. Albanese is scheduled to attend the inauguration Mass of Pope Leo XIV in Rome on Sunday, where he will also meet with leaders such as European Commission President Ursula von der Leyen to discuss trade relations.
    • Easing global trade tensions have prompted investors to dial back expectations for aggressive interest rate cuts in Australia. Markets now project the Reserve Bank of Australia (RBA) to reduce the cash rate to approximately 3.1% by year-end, a revision from earlier forecasts of 2.85%. Nevertheless, the RBA is still widely expected to proceed with a 25 basis point cut at its upcoming policy meeting.

    Australian Dollar finds support around 0.6400 after breaking below nine-day EMA

    AUD/USD is hovering around 0.6410 on Friday. Technical analysis on the daily chart indicates a bearish bias, as the pair is trading below the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) remains above the 50 level, signaling that some bullish momentum persists despite the downside pressure.

    Immediate support lies at the psychological level of 0.6400, followed by the 50-day EMA around 0.6355. A decisive break below these levels could deteriorate the short- to medium-term outlook and pave the way for a deeper slide toward 0.5914 — a low last seen in March 2020.

    On the upside, resistance is seen at the nine-day EMA near 0.6417. A break above this could lead the pair to retest the six-month high of 0.6515, recorded on December 2, 2024. A sustained rally beyond that point may target the seven-month high of 0.6687 from November 2024.

    AUD/USD: Daily Chart

    Australian Dollar PRICE Today

    The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.20% -0.09% -0.38% -0.06% -0.04% 0.07% -0.34%
    EUR 0.20% 0.11% -0.20% 0.13% 0.16% 0.26% -0.14%
    GBP 0.09% -0.11% -0.29% 0.03% 0.06% 0.16% -0.24%
    JPY 0.38% 0.20% 0.29% 0.33% 0.33% 0.42% 0.04%
    CAD 0.06% -0.13% -0.03% -0.33% 0.00% 0.13% -0.27%
    AUD 0.04% -0.16% -0.06% -0.33% -0.00% 0.11% -0.30%
    NZD -0.07% -0.26% -0.16% -0.42% -0.13% -0.11% -0.41%
    CHF 0.34% 0.14% 0.24% -0.04% 0.27% 0.30% 0.41%

    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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.



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  • US Dollar goes nowhere with talks not even starting and Zelenskyy set to leave Istanbul

    US Dollar goes nowhere with talks not even starting and Zelenskyy set to leave Istanbul


    • The US Dollar trades steady lower on Thursday despite a slew of key US economic data released. 
    • Markets see talks in Turkey between Russia and Ukraine fall apart before even starting.
    • The US Dollar Index holds just below 101.00 and could move either way after a volatile Wednesday. 

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is catching its breath and trades slightly lower just below the 101.00 level at the time of writing on Thursday, ahead of a chunky United States (US) economic calendar. The Greenback is not really moving on the back of the geopolitical defusing by US President Donald Trump, who commented during his Middle Eastern trip that nuclear talks with Iran have good hopes, while both Yemen and Syria deserve a second chance. 

    After Wednesday’s sharp volatility affecting the Korean Won (KRW), traders are looking to Asia for possible more currency hiccups and evidence that the Trump administration is seeking a currency deal with countries in the region to devalue the Greenback. 

    Meanwhile in Turkey it appears talks between Russia and Ukraine are not going well. Even before the two negotiating teams have joined, talks seem to already have been broken down. US President Trump meanwhile said on Air Force One that peace will not come if Trump and Russian President Vladimir Putin do not meet, Bloomberg reports.

    Daily digest market movers: Going Nowhere

    • The US economic calendar kicked off at 12:30 GMT with a string of data:
      • Weekly Initial Jobless Claims came in at 229,000, as expected and from 228,00 in the previous week. The Continuing Claims came in softer at 1.881 million, beating the 1.89 million estimate and from 1.879 million previously. 
      • The NY Empire State Manufacturing Index for May only fell to -9.2, beating the expected -10, from -8.1 the previous month. The Philadelphia Fed Manufacturing Survey for May was a surprise -4, far better than the expected -11 and from -26.4 in April. 
      • The monthly April headline Producer Price Index contracted by -0.5%, where an increase by 0.2% was expected and from the 0.4% decline in March. The core PPI contracted by -0.4%, missing the 0.3% estimate and compared to -0.1% previously.
      • April Retail Sales fell to just 0.1%, a small beat on the 0% estimate and compared to the 1.5% previous release. Retail Sales excluding Cars and Transportation only increased by 0.1%, missing the 0.3% estimate and compared to the 0.5% rise in March. That same 0.5% for March got revised up to 0.8%.
    • Federal Reserve Chairman Jerome Powell delivered a speech about the Fed’s framework review at the Thomas Laubach Research Conference in Washington DC. Though the Fed Chairman did not comment on any near-term economic outlook or rate path.
    • The monthly Industrial Production data for April fell to 0.0%, a miss on the estimated 0.2%, though up from the -0.3% in March. 
    • At 18:05 GMT, Federal Reserve Bank Vice Chair for Supervision Michael Barr will deliver opening remarks (via pre-recorded video) at the 2025 Northeast/Mid-Atlantic Small Business Credit Symposium.
    • Equities are slumping across the board on Thursday, though nowhere more than 1% losses to report from Asia, across Europe, and into the US equity futures markets. 
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 8.2%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 38.6%.
    • The US 10-year yields trade around 4.53%, and keep ticking higher, nearing a one-month high.

    US Dollar Index Technical Analysis: Stuck between two forces

    The US Dollar Index saw the pivotal technical level at 100.22 hold firmly, delivering a small bounce for the Greenback on Wednesday. With the slide below 101.00, the DXY looks well-positioned to go either way, driven by the US economic data releases later this Thursday. A return to 101.90 could materialize, while the downside support at 100.22 is not far off. 

    On the upside, 101.90 is the first big resistance again. It already acted as a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 55-day Simple Moving Average (SMA) at 102.06 comes into play. 

    On the other hand, the previous resistance at 100.22 is now acting as firm support, followed by the year-to-date low of 97.91 and the pivotal level of 97.73. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    Banking crisis FAQs

    The Banking Crisis of March 2023 occurred when three US-based banks with heavy exposure to the tech-sector and crypto suffered a spike in withdrawals that revealed severe weaknesses in their balance sheets, resulting in their insolvency.
    The most high profile of the banks was California-based Silicon Valley Bank (SVB) which experienced a surge in withdrawal requests due to a combination of customers fearing fallout from the FTX debacle, and substantially higher returns being offered elsewhere.

    In order to fulfill the redemptions, Silicon Valley Bank had to sell its holdings of predominantly US Treasury bonds. Due to the rise in interest rates caused by the Federal Reserve’s rapid tightening measures, however, Treasury bonds had substantially fallen in value. The news that SVB had taken a $1.8B loss from the sale of its bonds triggered a panic and precipitated a full scale run on the bank that ended with the Federal Deposit Insurance Corporation (FDIC) having to take it over.The crisis spread to San-Francisco-based First Republic which ended up being rescued by a coordinated effort from a group of large US banks. On March 19, Credit Suisse in Switzerland fell foul after several years of poor performance and had to be taken over by UBS.

    The Banking Crisis was negative for the US Dollar (USD) because it changed expectations about the future course of interest rates. Prior to the crisis investors had expected the Federal Reserve (Fed) to continue raising interest rates to combat persistently high inflation, however, once it became clear how much stress this was placing on the banking sector by devaluing bank holdings of US Treasury bonds, the expectation was the Fed would pause or even reverse its policy trajectory. Since higher interest rates are positive for the US Dollar, it fell as it discounted the possibility of a policy pivot.

    The Banking Crisis was a bullish event for Gold. Firstly it benefited from demand due to its status as a safe-haven asset. Secondly, it led to investors expecting the Federal Reserve (Fed) to pause its aggressive rate-hiking policy, out of fear of the impact on the financial stability of the banking system – lower interest rate expectations reduced the opportunity cost of holding Gold. Thirdly, Gold, which is priced in US Dollars (XAU/USD), rose in value because the US Dollar weakened.



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  • USD/INR softens ahead of US Retail Sales, PPI releases

    USD/INR softens ahead of US Retail Sales, PPI releases


    • Indian Rupee posts modest gains in Thursday’s Asian session.
    • Optimism from the US-China trade deal underpins the US Dollar and drags the INR lower. 
    • Traders brace for the US April Retail Sales and PPI data, due later on Thursday.

    The Indian Rupee (INR) strengthens on Thursday. The de-escalation of a trade war between the United States (US) and China, along with the fall in Crude oil prices and the weakness of the US Dollar (USD), provides some support to the Indian currency. 

    However, the cooler-than-expected India’s retail inflation, which dropped to its lowest level since July 2019, might exert some selling pressure on the INR, as it could give the Reserve Bank of India (RBI) another chance to cut rates next month in its scheduled meeting. 

    Looking ahead, traders await the release of top-tier US economic data due later on Thursday, including Retail Sales and Producer Price Index (PPI) for April. The Federal Reserve (Fed) Chair Jerome Powell is scheduled to speak later on the same day. 

    Indian Rupee remains firm despite softer retail inflation report

    • India’s Wholesale Price Inflation (WPI) fell to a 13-month low of 0.85% in April from 2.05% in March, according to the Commerce and Industry Ministry on Wednesday. This figure came in below the market consensus of 1.76%. 
    • “Positive rate of inflation in April, 2025 is primarily due to an increase in prices of manufacture of food products, other manufacturing, chemicals and chemical products, manufacture of other transport equipment, and manufacture of machinery and equipment, etc,” noted the Industry Ministry.
    • San Francisco Fed President Mary Daly said late Wednesday that the strength of the US economy allows policymakers to be patient as they wait for more evidence of how Trump’s policies will affect businesses and households. 
    • Markets have dialed back expectations for rate cuts from the Fed this year, pricing in a 74% chance of the first cut of at least 25 basis points (bps) at the September meeting, according to LSEG data, compared with the prior view for a cut in July.

    USD/INR retains a bearish bias in the longer term

    The Indian Rupee trades stronger on the day. The bearish tone of the USD/INR pair remains in place, with the price holding below the key 100-day Exponential Moving Average (EMA) on the daily chart. Nonetheless, further consolidation or temporary recovery cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the midline, indicating neutral momentum in the near term. 

    The first downside target for USD/INR is seen at 84.95, the low of April 28. Any follow-through selling below the mentioned level could see a slide toward 84.61, the low of May 12. The next contention level to watch is 84.12, the low of May 5.

    On the other hand, the immediate resistance level for the pair is located at 85.60, the 100-day EMA. A break above this level might even spark a run toward the 86.00-86.05 zone, which marks both a round figure and the upper boundary of the trend channel. 

    Indian Rupee FAQs

    The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

    The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

    Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

    Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.



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  • Australian Dollar holds gains following Wage Price Index data release

    Australian Dollar holds gains following Wage Price Index data release


    • The Australian Dollar holds ground as the US Dollar weakened following softer-than-expected US inflation data.
    • Australia’s Wage Price Index rose by 0.9% QoQ in Q1, against the expected 0.8% increase.
    • US President Donald Trump described the relationship with China as excellent.

    The Australian Dollar (AUD) extends its gains against the US Dollar (USD) on Wednesday after registering more than 1.50% gains in the previous session. The AUD/USD pair strengthened as the US Dollar weakened following softer-than-expected US inflation data.

    Australia’s seasonally adjusted Wage Price Index rose by 3.4% year-over-year in Q4 2025, up from a 3.2% increase in Q4 2024 and surpassing market forecasts of a 3.2% gain. This marks a recovery from the prior quarter, which recorded the slowest wage growth since Q3 2022. On a quarterly basis, the index climbed 0.9% in Q1, surpassing the projected 0.8% rise.

    Australian Prime Minister Anthony Albanese was sworn in for a second term on Tuesday after a decisive election victory. Key cabinet positions—including treasurer, foreign affairs, defense, and trade—remain unchanged. Albanese is scheduled to attend the inauguration mass of Pope Leo XIV in Rome on Sunday, where he will also meet with leaders such as European Commission President Ursula von der Leyen to discuss trade relations.

    US President Donald Trump told Fox News that he is working to gain greater access to China, describing the relationship as excellent and expressing willingness to negotiate directly with President Xi on a potential deal.

    Easing global trade tensions have prompted investors to dial back expectations for aggressive interest rate cuts in Australia. Markets now project the Reserve Bank of Australia (RBA) to reduce the cash rate to approximately 3.1% by year-end, a revision from earlier forecasts of 2.85%. Nevertheless, the RBA is still widely expected to proceed with a 25 basis point cut at its upcoming policy meeting.

    Australian Dollar receives support as US Dollar struggles following softer inflation data

    • The US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, is trading lower at around 100.90 at the time of writing. Traders await the US Producer Price Index (PPI) and the University of Michigan’s latest Consumer Sentiment Survey, which are set to be released later in the trading week.
    • US Consumer Price Index (CPI) rose by 2.3% year-over-year in April, slightly below the 2.4% increase recorded in March and market expectations of 2.4%. Core CPI—which excludes food and energy—also climbed 2.8% annually, matching both the previous figure and forecasts. On a monthly basis, both headline CPI and core CPI rose by 0.2% in April.
    • The US Dollar strengthened following news that the United States and China reached a preliminary agreement to significantly reduce tariffs after productive trade talks over the weekend in Switzerland. Under the deal, US tariffs on Chinese goods will be reduced from 145% to 30%, while China will lower its tariffs on US imports from 125% to 10%—a move broadly viewed as a major step toward de-escalating trade tensions.
    • After two days of negotiations aimed at easing trade tensions, both the US and China reported “substantial progress.” China’s Vice Premier He Lifeng described the talks as “an important first step” toward stabilizing bilateral relations.
    • Meanwhile, US Treasury Secretary Bessent and Trade Representative Greer called the discussions a constructive move toward narrowing the $400 billion trade imbalance. However, Greer warned later that if the agreement falls through, tariffs on Chinese goods could be reinstated.
    • China’s Consumer Price Index (CPI) declined for the third consecutive month in April, falling 0.1% year-on-year, matching both the market forecast and the drop recorded in March, according to data released Saturday by the National Bureau of Statistics. Meanwhile, the Producer Price Index (PPI) contracted 2.7% YoY in April, steeper than the 2.5% drop in March and below the market expectation of a 2.6% decline.
    • Australia’s Westpac Consumer Confidence Index rose 2.2% month-on-month to 92.1 in May, recovering from a 6.0% drop in the previous month and marking its third increase this year.
    • Australia’s Ai Group Industry Index showed improvement in April, although it marked the 33rd straight month of contraction—particularly driven by weakness in export-reliant manufacturing. These signs of persistent softness have strengthened market expectations that the Reserve Bank of Australia (RBA) may cut its cash rate by 25 basis points to 3.85% later this month.

    Australian Dollar could target 0.6500 barrier near six-month highs

    The AUD/USD pair is trading near 0.6470 on Wednesday. Technical analysis of the daily chart indicates a bullish outlook, with the pair trading above the nine-day Exponential Moving Average (EMA). Furthermore, the 14-day Relative Strength Index (RSI) has also surpassed the 50 mark, reinforcing the bullish sentiment.

    The AUD/USD pair could retest the six-month high of 0.6515, recorded on December 2, 2024. A sustained break above this level may pave the way for a move toward the seven-month high of 0.6687 from November 2024.

    On the downside, the AUD/USD pair is likely to test the nine-day EMA at 0.6433, followed by the 50-day EMA around 0.6353. A decisive break below these levels could weaken the short- and medium-term price momentum and open the door for a decline toward 0.5914, a level not seen since March 2020.

    AUD/USD: Daily Chart

    Australian Dollar PRICE Today

    The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD -0.11% -0.11% -0.26% -0.06% -0.12% -0.13% -0.14%
    EUR 0.11% 0.00% -0.20% 0.05% -0.01% -0.04% -0.03%
    GBP 0.11% -0.00% -0.22% 0.05% -0.02% -0.04% -0.03%
    JPY 0.26% 0.20% 0.22% 0.22% 0.16% 0.14% 0.14%
    CAD 0.06% -0.05% -0.05% -0.22% -0.07% -0.07% -0.07%
    AUD 0.12% 0.01% 0.02% -0.16% 0.07% -0.00% -0.01%
    NZD 0.13% 0.04% 0.04% -0.14% 0.07% 0.00% -0.01%
    CHF 0.14% 0.03% 0.03% -0.14% 0.07% 0.01% 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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

    Economic Indicator

    Wage Price Index (QoQ)

    The Wage Price Index released by the Australian Bureau of Statistics is an indicator of labor cost inflation and of the tightness of labor markets. The Reserve Bank of Australia pays close attention to it when setting interest rates. A high reading is positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).


    Read more.



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  • US Dollar down after soft CPI readings

    US Dollar down after soft CPI readings


    • US CPI inflation cooled to 2.3% in April, below expectations, raising Fed rate cut speculation.
    • Trump touts tax cuts and investment deals, but details on trade pacts remain vague.
    • DXY slips below 101.60 as tariff truce with China lacks forward clarity.
    • Markets expect first Fed rate cut by September 2025 with easing through 2026.

    The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, lost ground on Tuesday, slipping to 101.50 as inflation data for April came in softer than expected. While CPI rose 0.2% monthly and 2.3% annually, missing forecasts, core inflation held steady at 2.8%. 

    Traders remain cautious amid vague trade commitments with China and the UK, and there are new uncertainties after President Trump pushed ambitious investment and tax plans without detailing how they would impact the economy. Despite tariff de-escalation headlines, the Fitch-rated effective tariff rate on Chinese goods remains above 40%, fueling doubt over the recent deal’s durability.

    Daily digest market movers: CPI figures and trade policies in spotlight

    • CPI inflation in the US slowed to 2.3% annually in April, missing the expected 2.4%, and core CPI held at 2.8% YoY.
    • Trump claims China has lowered tariffs, but Fitch says effective rates remain above 40% after legacy policies.
    • Markets question substance of recent China and UK trade deals as details remain scant.
    • President Trump promotes a $4 trillion tax cut bill focused on high-income earners, while lower-income taxes may rise.
    • Trump says new “investment agreements” with firms like Amazon and Oracle will fuel growth but provides no framework.
    • Fed’s Goolsbee warns tariffs can still fuel inflation, but recent data don’t confirm those fears.
    • US and China have agreed to a 90-day tariff truce with US duties reduced to 30% and China’s to 10%.
    • Fed policymakers maintain cautious tone as CPI remains within acceptable ranges, delaying potential monetary easing.
    • Rate markets show a 91.6% probability of no change at the June 18 Fed meeting and 65.1% in July.
    • September has a 51.6% probability of a 25 bps cut, with long-term projections pointing to 3.25%-3.50% by end of 2026.
    • Risk assets remain mixed; Gold is flat after recent pullbacks, while Oil and equities are cautiously bid.
    • Trump hints at Iran talks and outlines intent to enforce oil export embargo if diplomacy fails.
    • Fed Chair Powell’s comments are awaited later in the week for guidance on policy direction.
    • EUR/USD remains under pressure near 1.1060 with resistance at 1.1322 and support at the 1.1000 mark.

    US Dollar Index technical analysis: Rate gap issues persist

    The US Dollar Index exhibits a bearish signal, currently trading near 101.00 after a minor daily decline. Price action sits near the lower end of the intraday range between 101.19 and 101.76.The Relative Strength Index (RSI) and the Ultimate Oscillator both hover in the 50s, suggesting neutral momentum. 

    The Moving Average Convergence Divergence (MACD) shows a modest buy signal, but this is countered by the Stochastic Relative Strength Index (Stochastic RSI) Fast, which is extended in the 90s — indicating overbought conditions. Additionally, the 10-period Momentum indicator near 2.00 reinforces short-term selling pressure.

    On the moving average front, the 20-day Simple Moving Average (SMA) continues to point upward, hinting at near-term bullishness. However, the 50-day Exponential Moving Average (EMA), 50-day SMA, 100-day SMA, and 200-day SMA — all clustered near the 100 level — indicate a broader bearish trend. Key support levels are identified at 100.94, 100.73 and 100.63, while resistance levels are noted at 101.42, 101.94 and 101.98.

    US-China Trade War FAQs

    Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

    An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

    The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.



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  • US Dollar down after soft CPI readings

    US Dollar Index set for 0.5% loss on steady CPI and rate cut bets rising


    • The Greenback on the backfoot this Tuesday while the US-China trade deal euphoria quickly fades. 
    • Traders see April’s US CPI release not really showing inflationary signals after Liberation Day.
    • The US Dollar Index slips back to 101.50 after failing to reclaim the 102.00 level.

    The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, corrects to near 101.50 ahead of the US trading session on Tuesday. The partial paring back of Monday’s gains comes as traders become wary of the lack of detail on the recent trade deal between China and the United States (US). Besides slashing the tariffs, no forward dates or topics are set, raising questions on what has been discussed, similar to the UK-US trade deal from Thursday. 

    Meanwhile, on the economic data front, the US Consumer Price Index (CPI) release for April came in broadly in line of expectations. For now, that feared inflationary shock has not materialized and sees traders carefully consider the possibility of rate cuts from the Federal Reserve. Overnight, Federal Reserve (Fed) Bank President of Chicago Austan Goolsbee warned that even current tariff levels will still have an inflationary impulse, the New York Times reported. That theory does not seem to be translated into the April CPI numbers for now.

    Daily digest market movers: Not for now

    • On Monday, President Trump lashed out at the European Union (EU), saying that the US has the upper hand in its trade discussions with the EU. “The European Union is in many ways nastier than China. We’ve just started with them. We have all the cards. They treated us very unfairly,” Trump said at the White House.
    • At 10:00 GMT, the National Federation of Independent Business (NFIB) released its Business Optimism Index for April. The actual number came in at 95.8 compared to the previous 97.4. The expectation was for a 94.5. 
    • The April US Consumer Price Index data came in not really shocking:
      • Monthly headline CPI came in at 0.2%, lower than the 0.3% expected and away from the disinflationary -0.1% in March. The yearly figure came in at 2.3% from the previous 2.4%.
      • The Monthly core CPI came in at as well at 0.2%, just missing the 0.3% estimate and a touch higher from 0.1% in March. The yearly figure is set to remain unchanged at 2.8%.
    • Equities in the US are rallying near 1% with a second sigh of relief, this time on US inflation which has not run out of control in April.
    • The CME FedWatch tool shows the chance of an interest rate cut by the Federal Reserve in June’s meeting at just 8.2%. Further ahead, the July 30 decision sees odds for rates being lower than current levels at 38.6%.
    • The US 10-year yields trade around 4.47%, with traders mulling possible rate cut bets for the Fed after these steady CPI numbers.

    US Dollar Index Technical Analysis: Rate gap issues

    Warning lights flashing this Tuesday for the US Dollar Index from a pure technical point of view. The fact that the DXY was unable to break 102.00 and closed below the important 101.90 technical level is opening up the door for a harsh retracement back to 100.00. The US CPI release later this Tuesday could be vital to either broaden the rejection with a weaker Greenback or push it firmly above 102.00.

    On the upside, the DXY is flirting with a technical rejection against 101.90, which acted as a pivotal level throughout December 2023 and as a base for the inverted head-and-shoulders (H&S) formation during the summer of 2024. In case Dollar bulls push the DXY even higher, the 55-day Simple Moving Average (SMA) at 102.29 comes into play. 

    On the other hand, the previous resistance at 100.22 is acting as firm support, followed by 97.73 near the low of 2025. Further below, a relatively thin technical support comes in at 96.94 before looking at the lower levels of this new price range. These would be at 95.25 and 94.56, meaning fresh lows not seen since 2022.

    US Dollar Index: Daily Chart

    (This story was corrected on May 13 at 13:04 GMT to say that Headline yearly inflation is 2.3% instead of 2.4%.)



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  • EUR/USD plummets as US-China trade truce strengthens US Dollar

    EUR/USD plummets as US-China trade truce strengthens US Dollar


    • EUR/USD slides below 1.1100 as the US Dollar rallies after the US and China agreed to lower tariffs by 115% for 90 days.
    • The US-China temporary trade truce is expected to tame elevated consumer inflation expectations.
    • ECB Schnabel sees no need to lower interest rates further.

    EUR/USD is down over 1% near 1.1100 during North American trading hours on Monday. The major currency pair faces an intense selling pressure as the US Dollar (USD) rallies after the United States (US) and China, in a joint statement, announced a higher-than-expected reduction in tariffs for 90 days imposed in April.

    The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, surges to near 101.60.

    In a scheduled briefing during the European trading session on Monday, the US and China have agreed to lower tariffs by 115%. Tariffs on the US and China have dropped to 10% and 30%, respectively. Import duties on China still carry the burden of a 20% fentanyl levy. However, Washington has assured that it could be resolved soon. “Two sides are having constructive conversations on the issue of fentanyl,” US Trade Representative Jamieson Greer said. Additionally, US Treasury Secretary Scott Bessent said, “If China acts, perhaps the fentanyl tariff could come down,” Reuters reported.

    Ahead of the US-China trade talks in Geneva over the weekend, US President Donald Trump stated on Friday that he could lower tariffs on China to 80% through a post on Truth. Social. “80% Tariff on China seems right! It’s up to Scott Bessent,” Trump said.

    The next trigger for the US Dollar will be commentary from Federal Reserve (Fed) officials on the monetary policy outlook in the wake of de-escalation in the Sino-US trade war. Fed officials are expected to revise their outlook on interest rates as the averted tariff war would diminish elevated consumer inflation expectations.

    Last week, Fed Chair Jerome Powell warned in the press conference after the central bank’s decision to keep interest rates unchanged that tariffs announced were “significantly bigger than expected” and we will see “higher inflation, and lower employment” if large increases in tariffs as announced are “sustained”.

    Daily digest market movers: EUR/USD plunges on absence of progress in US-EU trade talks

    • EUR/USD plunges on Monday as the US Dollar surges after the US and China lowered tariffs. The Euro (EUR) trades lower against other currencies, while investors seek cues on how the temporary US-China trade truce will influence the Eurozone economic outlook. 
    • Ahead of the Sino-US trade talks, financial market participants anticipated that the trade war between the two largest world economic countries would be unfavorable for the shared continent, assuming that Beijing would move to other markets to sell its products to offset the impact of a trade war with Washington. Given China’s low-cost competitive advantage, its products could be disruptive for the global economy.
    • After the US unveiled a 90-day tariff pause with China, a bilateral deal with the UK, and progress in trade talks with Japan, India, and other nations, no announcement regarding trade discussions with the European Union (EU) is also weighing on the Euro. Investors are seeing the scenario as unfavorable for the Eurozone economic outlook, assuming that the confidence of market participants will diminish in the economy if uncertainty prevails.
    • Meanwhile, firm expectations that the European Central Bank (ECB) could continue the monetary policy expansion cycle in the wake of easing inflationary pressures are also acting as a tailwind for the Euro. A string of ECB officials has signaled that more interest rate cuts are needed amid trade tensions with the US, while remaining confident that the disinflation trend is intact.
    • Contrary to several officials supporting more interest rate cuts, ECB board member Isabel Schnabel has signaled that there is no need to reduce interest rates further. “The appropriate course of action is to keep rates close to where they are today – that is, firmly in neutral territory,” Schnabel said in a conference at Stanford University on Friday. Schnabel warned of risks to inflation exceeding the central bank’s 2% target in the medium term amid global economic turmoil.
    • On the economic front, the EUR/USD pair will be influenced by the US Consumer Price Index (CPI) data for April, which will be released on Tuesday. The inflation data is expected to show that the headline CPI rose steadily by 2.4% YoY. 

    Euro PRICE Today

    The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 1.15% 0.82% 1.15% 0.67% 0.35% 0.71% 0.95%
    EUR -1.15% -0.20% 0.54% 0.01% -0.16% 0.05% 0.28%
    GBP -0.82% 0.20% 0.94% 0.21% 0.05% 0.17% 0.48%
    JPY -1.15% -0.54% -0.94% -0.49% -1.41% -1.29% -0.43%
    CAD -0.67% -0.01% -0.21% 0.49% -0.05% 0.04% 0.27%
    AUD -0.35% 0.16% -0.05% 1.41% 0.05% 0.11% 0.41%
    NZD -0.71% -0.05% -0.17% 1.29% -0.04% -0.11% 0.21%
    CHF -0.95% -0.28% -0.48% 0.43% -0.27% -0.41% -0.21%

    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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

    Technical Analysis: EUR/USD slides below 200-period EMA

    EUR/USD declines on Monday after a breakdown of the 1.1200-1.1440 range formed in the last 20 trading days. The major currency pair extends its downside move below the 200-period Exponential Moving Average (EMA), which is around 1.1200, indicating a bearish trend.

    The 14-period Relative Strength Index (RSI) slides below 40.00, suggesting that a fresh bearish momentum has been triggered.

    Looking up, the April 28 high of 1.1425 will be the major resistance for the pair. Conversely, the March 27 low of 1.0733 will be a key support for the Euro bulls.



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  • Australian Dollar under pressure as global trade and economic uncertainties persist

    Australian Dollar under pressure as global trade and economic uncertainties persist


    • The US Dollar holds steady as global trade negotiations remain in focus.
    • The PBoC continues Gold purchases, signaling long-term interest.
    • Chinese Copper production expands, reducing reliance on imports.

    The Australian Dollar (AUD) remains under pressure as global trade uncertainties persist, particularly surrounding the US-China trade talks. While there has been a slight rebound in copper production from China, trade deals and economic policies continue to impact sentiment in the market, with limited positive moves for the Aussie.

    Daily digest market movers: Aussie steady ahead of trade talks

    • The US Dollar (USD) holds steady as the market reacts to trade deal uncertainties and key upcoming data.
    • Copper production in China continues to expand, potentially reducing future copper imports.
    • Gold purchases by the People’s Bank of China (PBoC) have slowed, although purchases remain robust.
    • The US Dollar Index (DXY) remains near 100.30, showing signs of resistance despite trade deal headlines.
    • Trade talks between the US and China are scheduled for the weekend, raising hopes but also cautious expectations.
    • Despite a positive market reaction to the potential US-UK trade deal, the UK’s 10% tariff remains in place.
    • China’s crude oil imports increased, signaling continued demand despite global uncertainties.
    • Chile’s largest copper producer has raised its output, somewhat easing fears of a global shortage.
    • The PBoC’s Gold purchases rose by 70 thousand ounces, continuing their long-term strategy.
    • US Federal Reserve officials remain cautious, with no immediate interest rate cuts expected despite global trade tensions.
    • China’s economic outlook weighs heavily on commodity-linked currencies, including the Australian Dollar.
    • While China is expanding its domestic copper production, it could still face challenges from ongoing global supply issues.
    • Oil markets are tightening, with concerns about future import volumes, particularly from Iran.

    Technical Analysis

    The Australian Dollar is currently trading around 0.6400, up 0.30% on the day. The Relative Strength Index (RSI) at 54.85 suggests a neutral momentum, while the Moving Average Convergence Divergence (MACD) indicates a sell signal. Short-term moving averages, including the 20-day Simple Moving Average (SMA) at 0.6401, suggest a bullish outlook, supported by the 100-day SMA at 0.6289 and the 10-day Exponential Moving Average (EMA) at 0.6419. However, the 200-day SMA at 0.6460 indicates a bearish trend. Key support levels are at 0.6419, 0.6413, and 0.6401, with resistance at 0.6425, 0.6431, and 0.6460.

    Australian Dollar FAQs

    One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

    The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

    China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

    Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

    The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.



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  • Gold sticks to intraday losses; lacks follow-through amid geopolitical risks, ahead of FOMC

    Gold sticks to intraday losses; lacks follow-through amid geopolitical risks, ahead of FOMC


    • Gold price struggles to capitalize on its weekly gains registered over the past two days.
    • The optimism over US-China trade talks is seen weighing on the safe-haven commodity.
    • Investors now look to the crucial FOMC policy decision for a fresh directional impetus.

    Gold price (XAU/USD) recovers slightly from the Asian session low, around the $3,360 area, though maintains its offered tone amid the latest optimism over the announcement of the US-China trade talks in Switzerland this week. Apart from this, some repositioning trades ahead of the key central bank event risk assists the US Dollar (USD) to gain some positive traction, which is seen as another factor undermining the commodity.

    The USD bulls, however, seem reluctant to place aggressive bets and opt to wait for the outcome of the highly-anticipated two-day FOMC policy meeting. Furthermore, persistent geopolitical risks stemming from the protracted Russia-Ukraine war, conflicts in the Middle East, and a military escalation along the India-Pakistan border act as a tailwind for the safe-haven bullion. This, in turn, warrants some caution for the XAU/USD bears.

    Daily Digest Market Movers: Gold price bears seem non-committed amid geopolitical risks, ahead of FOMC decision

    • US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are set to meet their Chinese counterparts in Switzerland on Saturday to discuss trade and economic issues. This marks the first direct talks since the US imposed tariffs on China and a step toward resolving a trade war between the world’s two largest economies.
    • Meanwhile, US President Donald Trump said on Tuesday that he and top administration officials will review potential trade deals over the next two weeks to decide which ones to accept. This, however, counters Trump’s earlier statement that his administration could announce trade deals with some countries as soon as this week.
    • Furthermore, Trump had announced 100% tariffs on movies produced outside the US and also indicated that he plans to announce fresh tariffs on pharmaceutical imports over the next two weeks. This keeps investors on the edge and might continue to act as a tailwind for the safe-haven Gold price amid rising geopolitical risks.
    • A Kremlin spokesman says Russia will stick to its plans for a unilaterally-imposed ceasefire between 8 and 11 May but warned that an appropriate response will be given immediately if Ukraine does not also halt the fire. Meanwhile, Russia and Ukraine swapped 205 prisoners of war each in an exchange mediated by the United Arab Emirates.
    • Israel’s security Cabinet unanimously approved a plan to widen the military offensive in Gaza. The plan involves the Israel Defense Forces (IDF) invading and gradually seizing control of Gaza territory. Although no formal details were announced, officials said the operation would not begin until after Trump’s visit to the Middle East next week.
    • Investors keenly await the Federal Reserve’s decision later this Wednesday. The accompanying monetary policy statement and Fed Chair Jerome Powell’s comments at the post-meeting press conference will be scrutinized for cues about the future rate-cut path. This will drive the US Dollar demand and influence the non-yielding yellow metal.

    Gold price needs to break below the $3,360 area to support prospects for a further intraday depreciating move

    From a technical perspective, the overnight sustained breakout through the $3,360-3,365 horizontal barrier and a subsequent move beyond the $3,400 mark was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are holding comfortably in positive territory, suggesting that the path of least resistance for the Gold price is to the upside. However, the strong uptrend witnessed since the beginning of this week falters near the $3,430-3,435 resistance. The said area should now act as a pivotal point, above which the XAU/USD could aim to challenge the all-time peak touched in April and conquer the $3,500 psychological mark.

    On the flip side, weakness below the $3,365-3,360 area could find some support near the $3,328-3,327 region ahead of the $3,300 round figure. Failure to defend the said support levels would negate the near-term positive outlook and make the Gold price vulnerable. The downward trajectory might then drag the XAU/USD pair to the $3,265-$3,260 intermediate support en route to the $3,223-3,222 region and the last week’s swing low, around the $3,200 neighborhood.

    US Dollar PRICE Today

    The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

    USD EUR GBP JPY CAD AUD NZD CHF
    USD 0.12% 0.12% 0.52% 0.10% 0.16% 0.09% 0.35%
    EUR -0.12% 0.00% 0.42% -0.01% 0.05% -0.03% 0.24%
    GBP -0.12% -0.00% 0.42% -0.01% 0.05% -0.03% 0.24%
    JPY -0.52% -0.42% -0.42% -0.43% -0.37% -0.39% -0.15%
    CAD -0.10% 0.01% 0.00% 0.43% 0.07% -0.01% 0.25%
    AUD -0.16% -0.05% -0.05% 0.37% -0.07% -0.08% 0.17%
    NZD -0.09% 0.03% 0.03% 0.39% 0.01% 0.08% 0.27%
    CHF -0.35% -0.24% -0.24% 0.15% -0.25% -0.17% -0.27%

    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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).



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  • Japanese Yen bulls remain on the sidelines ahead of the crucial FOMC policy meeting

    Japanese Yen bulls remain on the sidelines ahead of the crucial FOMC policy meeting


    • The Japanese Yen attracts some intraday sellers on Tuesday, though the downside risk remains limited.
    • Trade-related uncertainties and geopolitical risks continue to act as a tailwind for the safe-haven JPY.
    • The divergent BoJ-Fed expectations further contribute to capping USD/JPY ahead of the FOMC meeting.

    The Japanese Yen (JPY) reverses an Asian session dip against its American counterpart and looks to build on the gains registered over the past two days. The uncertainty over US President Donald Trump’s trade policies and rising geopolitical tensions keep investors on edge, which, in turn, is seen lending some support to the safe-haven JPY. Furthermore, bets that the Bank of Japan (BoJ) will hike interest rates further in 2025, despite last week’s dovish pause, turn out to be another factor underpinning the JPY.

    However, the optimism over the potential de-escalation of the US-China trade war and easing concerns about a US recession hold back the JPY bulls from placing aggressive bets. Traders also seem reluctant and opt to wait for more cues about the Federal Reserve’s (Fed) rate cut path, which will play a key role in influencing the US Dollar (USD) and provide a fresh impetus to the USD/JPY pair. Hence, the market focus will remain glued to the outcome of a two-day FOMC meeting starting this Tuesday.

    Japanese Yen traders seem non-committed amid mixed cues, ahead of the crucial FOMC meeting

    • The Bank of Japan struck a cautious tone last week by slashing its growth and inflation forecasts, forcing investors to scale back their bets for the next rate hike in June or July. The central bank, however, reiterated that it remains committed to raising rates further if the economy and prices move in line with its forecasts.
    • US President Donald Trump’s erratic trade policies overshadow the optimism led by signs of easing US-China trade tensions and keep investors on edge. In fact, Trump on Sunday announced a 100% tariff on all movies produced in foreign countries. Moreover, geopolitical risks lend support to the safe-haven Japanese Yen.
    • Russia’s defense ministry said that Ukraine launched a drone attack targeting Moscow for the second night in a row on Monday. This follows reports of fresh attempts by Ukraine to cross into Russia’s Kursk region. This comes days after Russian President Vladimir Putin declared a three-day ceasefire over May 8-10.
    • Adding to this, Israel struck targets in Yemen in response to the Iranian-backed Houthis’ ballistic missile attack that hit Israel’s main airport on Sunday. The Houthis warned on Sunday that they could strike again and would impose a comprehensive air blockade on Israel by repeatedly targeting airports.
    • Meanwhile, Trump hinted at possible trade agreements with certain countries as early as this week and also signaled that he is open to lowering massive tariffs imposed on China. Furthermore, China’s Commerce Ministry said last Friday that it was evaluating the possibility of trade talks with the US.
    • On the economic data front, the Institute for Supply Management (ISM) survey showed on Monday that the growth in the US services sector picked up in April. Adding to this, signs of a still resilient US labor market help ease concerns about a US recession and act as a tailwind for the US Dollar.
    • Traders, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of a two-day FOMC policy meeting starting this Tuesday. Investors will look for fresh cues about the Fed’s future interest rate-cut path, which, in turn, will influence the USD and the USD/JPY pair.

    USD/JPY remains vulnerable; last week’s failure near the 200-period SMA on H4 remains in play

    From a technical perspective, the USD/JPY pair last week struggled to find acceptance above the 50% Fibonacci retracement level of the March-April downfall and faced rejection near the 200-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent decline and negative oscillators on daily/hourly charts suggest that the path of least resistance for spot prices is to the downside. Hence, any attempted recovery back above the 144.00 mark might still be seen as a selling opportunity near the 144.25-144.30 supply zone. A sustained strength beyond the latter, however, could trigger a short-covering rally and allow spot prices to reclaim the 145.00 psychological mark.

    On the flip side, weakness below the Asian session low, around the 143.55-143.50 area, has the potential to drag the USD/JPY pair to the 143.30 intermediate support en route to the 143.00 mark. The next relevant support is pegged near the 142.65 region, which if broken decisively would expose the 142.00 level before the currency pair eventually drops to the 141.60-141.55 zone and the 141.00 round figure.

    Economic Indicator

    Fed Interest Rate Decision

    The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).


    Read more.

    Last release:
    Wed Mar 19, 2025 18:00

    Frequency:
    Irregular

    Actual:
    4.5%

    Consensus:
    4.5%

    Previous:
    4.5%

    Source:

    Federal Reserve



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