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GBP/USD Inches Close to 1.3500 as Weak US Dollar and BoE Halt Bets Fuel Sterling

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  • June 2, 2025
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GBP/USD exchange rate starts the week strong, moving nearer to the important 1.3500 level as renewed US Dollar weakness keeps pressures on the pair. The weakening of the USD is fueled by increasing expectations of Federal Reserve rate reductions after soft PCE inflation readings and rising apprehensions regarding the US fiscal situation, especially in light of President Trump’s recent spending bill. In the meantime, the British Pound gets support from speculation that the Bank of England will maintain interest rates unchanged at its next June meeting. Yet, generalized caution in markets on account of rising geopolitical tensions and new US-China trade uncertainties might restrict the pair’s gains. The market now looks to future US economic news and Fed Chairman Powell’s statements for additional guidance. KEY LOOKOUTS • Market focus will be on near-term US economic releases, such as the ISM Manufacturing PMI, and remarks from Fed Chair Jerome Powell for additional indications about the direction of Fed interest rates. • Expectations of the BoE halting rate cuts at its June 18 gathering remain underpinning the GBP, with central bank guidance being a key variable in shaping GBP/USD sentiment. • Concerns about the US fiscal deficit, fueled by President Trump’s latest spending budget, and heightened US-China trade tensions can pressure the USD in the short term. • Rising geopolitical tensions—led by Russia, Ukraine, and the Middle East—can drive safe-haven demand for the USD and cap gains in GBP/USD even with underlying positive drivers. GBP/USD pair remains volatile to a variety of key factors that can influence its near-term direction. Market players will be keenly watching Fed Chair Jerome Powell’s forthcoming comments and the newest US macroeconomic reports, such as the ISM Manufacturing PMI, for cues on the Federal Reserve rate outlook. On the British side, hopes that the Bank of England will leave interest rates unchanged at its June 18 meeting remain behind the support for the Pound. But chronic worries over the US fiscal deficit, fueled by President Trump’s recent spending bill, and escalating tensions in US-China trade relations could further pressure the US Dollar to the downside. Meanwhile, wider risk-off sentiment sourced from the geopolitical tensions in Eastern Europe and the Middle East might provide some support to the Greenback, potentially putting a lid on the upside for GBP/USD. The GBP/USD currency pair is supported by hopes of a BoE rate standstill and continued USD weakness fueled by weak US data and fiscal issues. Nevertheless, geopolitical tensions and a conservative global risk tone could cap any further appreciation. Traders are now looking to essential US data and Fed commentary for new direction. •  GBP/USD trades around 1.3500, gaining positive momentum in the face of new USD weakness. •  Expectations for Fed rate cut increase after weak PCE inflation data in the US. •  US fiscal worries deepen following President Trump’s spending bill, putting pressure on the Dollar. •   BoE to keep rates steady in its June 18 meeting, favoring GBP strength. •  Geopolitical tensions in Eastern Europe and the Middle East weigh on global risk appetite. •   US-China trade uncertainty returns after Trump’s remarks, contributing to USD pressure. •   Upcoming US data and Powell’s address are in the spotlight for short-term direction for markets. GBP/USD pair has begun the week on a firm footing, helped by more general weakness in the US Dollar and enhanced confidence in the British Pound. A milder US inflation reading, as expressed through the most recent PCE Price Index, has further fueled bets that the Federal Reserve will choose additional policy loosening in the months ahead. This mood, together with increasing unease regarding the US fiscal situation in the wake of passage of a new government appropriation bill, has further contributed to the downward pressure on the Dollar. In the meantime, the British Pound holds steady, supported by hopes the Bank of England will be less willing to make further cuts in future interest rates, with no near-term moves anticipated at its next policy session. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView All the while, global market sentiment is being influenced by heightened geopolitical tensions and uncertainty regarding US-China trade relations. Recent comments from President Trump, in which he hinted that China might not completely live up to the terms of their trade deal, have also added to investor wariness. Also, all the recent conflicts in places like Eastern Europe and the Middle East still bear down on overall market sentiment. Therefore, investors are remaining close to upcoming US economic data and Federal Reserve speeches by officials, especially Chair Jerome Powell, for any signals that might impact policy expectations and currency market trends. TECHNICAL ANALYSIS GBP/USD is demonstrating signs of bullish momentum as it slowly inches towards the important psychological resistance around the 1.3500 level. Sustained break above this point may pave the way for further appreciation, with the next resistance at 1.3570–1.3600. On the downside, near-term support is at 1.3420, followed by firmer support at 1.3370, where the buyers may get back in. The overall framework is positive, but a decisive breakout above 1.3500 is required to ensure further uptrend. FORECAST GBP/USD pair holds scope for additional upside if prevailing momentum is sustained and the pair is able to achieve a clear breakout above the 1.3500 psychological mark. A change in market sentiment, aided by dovish communications from the Federal Reserve or improved UK economic indicators, could propel the pair to the next level of resistance around 1.3570–1.3600. Moreover, if the Bank of England is reticent about rate cuts while the Fed tends to ease, the policy differences might further favor bullish action in the pair. Conversely, any indication of strength in US economic statistics or even a more aggressive stance at the Fed can revive demand for the US Dollar at the expense of GBP/USD. A failure to hold above the 1.3500 level could trigger a short-term pullback, with initial support at 1.3420, and a further correction feasible towards 1.3370 if bearish momentum takes over. In addition, rising geopolitical tension or

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Currencies

USD/CAD Reaches Weekly Highs on USD Strength, But Increases Might Be Limited in the Face of Important Economic Releases and FOMC Minutes

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  • May 28, 2025
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The USD/CAD currency pair has continued to recover for a third straight day, rising to a new weekly high at the 1.3840 level due to slight US Dollar appreciation after robust US economic reports. Yet, still lingering over the US fiscal horizon and increasing hopes of Fed rate reductions in 2025 might cap further gains. On top of this, traders are being cautious before the FOMC meeting minutes and major economic announcements, such as US GDP, PCE statistics, and Canada’s monthly GDP. Though higher crude oil prices and firmer Canadian inflation statistics might underpin the Loonie, a conclusive trend might only be seen with continued follow-through buying. KEY LOOKOUTS •  Traders will be keeping a close eye on the minutes for insight into the Fed’s interest rate outlook, which may determine USD sentiment and near-term price action. •  The coming Prelim Q1 GDP and PCE Price Index releases will be pivotal in influencing expectations for future Fed policy action and shaping USD demand. •  Canada’s monthly GDP and variations in crude oil—Canada’s major export—will be crucial in deciding CAD strength. •  Continuous worries over the US fiscal health can keep the USD under pressure, keeping gains in the USD/CAD pair in check even with positive information. USD/CAD pair trades at weekly highs, market players are closely eyeing a number of crucial factors that can decide its next direction. The release of the FOMC meeting minutes is eagerly awaited, as investors want to know the Fed’s rate-cut path. Along with that, the next US economic data releases—specifically the preliminary Q1 GDP and the PCE Price Index—will be crucial in deciding the momentum of the USD. On the Canadian front, more-than-anticipated core inflation and the next monthly print of GDP, along with crude oil price fluctuations, may provide the Loonie with support. Also, ongoing worries regarding the US fiscal horizon could still limit the greenback’s appreciation, contributing to the pair’s short-term ambiguity. Traders are looking to the FOMC meeting minutes and leading US data such as Q1 GDP and PCE for hints at the Fed’s rate trajectory. On the Canadian front, firmer inflation and coming GDP prints, as well as oil price action, may underpin the Loonie. US fiscal issues may also cap additional USD gain. • USD/CAD is trading around 1.3840, a third consecutive day of rising gains and a new weekly high. • Positive US economic data has propped up the USD, alleviating recession concerns and boosting the DXY. • FOMC meeting minutes are expected for some clarity on the Fed’s rate-cutting outlook in 2025. • US fiscal issues and dovish Fed expectations could cap further gains for the USD. • Prelim US Q1 GDP and PCE Index figures may have a strong bearing on the direction of the USD this week. • Warmer Canadian core inflation has taken away some possibility of a June BoC rate cut, supporting CAD strength. • Crude oil price action and Canadian monthly GDP will be major drivers for the Loonie. The USD/CAD pair is still in the spotlight this week as a number of significant economic events on both sides of the border continue to happen. The US Dollar is finding support from some recent encouraging economic data, which has helped to alleviate some recession fears and lift sentiment in the markets. While investor attention is firmly focused on the upcoming release of FOMC meeting minutes, which should give more definitive direction on future interest rate policy by the Federal Reserve. Simultaneously, persistent worries about the US fiscal picture are causing volatility and may affect the overall demand for the USD in the near future. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView In Canada, better-than-anticipated core inflation readings have caused the market expectations for potential interest rate reductions by the Bank of Canada to change. This, along with higher crude oil prices, has supported the Canadian Dollar beneath. In the coming week, the release of Canada’s monthly GDP report will be under keen observation for additional evidence of economic strength. Along with the important US releases of Q1 GDP and the PCE Price Index, these are the elements most likely to determine the market mood towards the USD/CAD currency pair for the rest of the week. TECHNICAL ANALYSIS USD/CAD has continued its recovery from the recent low around the 1.3685 area, with the pair now sitting near the 1.3840 resistance area. This area represents a significant barrier, and a breakout above it can be a signal of bullish continuation in the short term. Still, momentum indicators such as the Relative Strength Index (RSI) are nearing overbought levels on the daily chart, which means buyers might get tired if the pair is unable to break higher convincingly. On the bearish side, near-term support is around the 1.3780 level, followed by the 1.3725-1.3700 area, which would serve as a cushion if the pair is subject to selling pressure. FORECAST If the bullish trend remains and USD/CAD decisively breaks above the 1.3840 resistance zone, then the pair may target the next levels on the upside at 1.3880 and possibly 1.3915. More robust US economic data and a hawkish interpretation of FOMC meeting minutes will fuel additional support for the USD to drive the pair further up. Moreover, any backtracking in crude oil prices or softer-than-anticipated Canadian GDP figures might soften the Canadian Dollar, providing more space for further upsides. Alternatively, a failure to sustain above the 1.3840 threshold might spark a short-term correction, with near-term support around the 1.3780 region. A more severe pullback can also challenge the 1.3725–1.3700 support level, particularly if US data is disappointing or if the FOMC minutes suggest a more dovish policy. Some strong Canadian economic data or a continuation of the oil price increase can also reinforce the Loonie and push the pair down towards a revisit of the recent low around 1.3685.

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Currencies GBP/USD

GBP/USD Approaches 39-Month High as US-EU Trade Tensions Ease and BoE Rate Cut Odds Fade

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  • May 27, 2025
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GBP/USD pair maintains its bullish run, trading close to a 39-month high of 1.3593 as risk appetite improves in the markets. US Dollar drops as easing of US-EU trade tensions, after President Trump’s tariffs delay, combined with increasing worries about the US fiscal outlook linked to the proposed “One Big Beautiful Bill,” counters any strength from yesterday’s data. The Pound Sterling, however, gets stronger as hotter-than-forecast UK inflation and retail sales data lead to traders reducing bets for hostile rate cuts from the Bank of England. The pairing of a weaker USD and more resilient GBP has boosted the pair’s sustained rally. KEY LOOKOUTS • Market attention will stay focused on future UK economic data, particularly inflation and employment numbers, that may determine the Bank of England’s future actions on interest rates. •  Investors are monitoring the fate of Trump’s “One Big Beautiful Bill” in the Senate, whose potential to increase the fiscal deficit might still be a drag on the US Dollar. •  Any trade negotiation news or changes between the EU and the US could play a major role in affecting risk sentiment and USD strength. •  Traders will watch if GBP/USD can convincingly move above the 39-month peak of 1.3593, which would make the door open to more bullish strength. In the coming weeks, traders will stay focused on major economic data releases from the UK, such as future inflation and employment figures, for additional hints regarding the direction of policy at the Bank of England. A persistent change in rate cut expectations could further buoy the Pound. In the US, news regarding President Trump’s intended “One Big Beautiful Bill” and its effects on the fiscal deficit might continue to put pressure on the US Dollar, particularly in case concerns over increasing debt continue. Furthermore, any shift in the tone of US-EU trade relations can affect market risk appetite and create volatility in the GBP/USD pair. Technically, a clean break above the 39-month high of 1.3593 would indicate additional room for the currency pair to move higher. Pound traders are waiting to see UK data and BoE policy cues as diminished rate cut hopes keep the Pound supported. Against this backdrop, US fiscal issues and softening US-EU trade tensions keep the Dollar under pressure. A breakout above 1.3593 may prompt additional gains in GBP/USD. •  GBP/USD hovers at a 39-month high of 1.3593 on the back of unwavering bullish momentum. •  US Dollar drops on damping US-EU trade tensions and escalating fiscal deficit fears. •  President Trump postpones EU tariff deadline, enhancing market risk appetite. •  Trump’s suggested “One Big Beautiful Bill” sparks fears of a $3.8 billion addition to the US deficit. •  Higher US bond yields may persistently drive high borrowing costs, weighing on the USD. •  Faster-than-anticipated UK inflation and retail sales lower the expectations of dovish BoE rate cuts. •  Technical interest continues at the 1.3593 resistance level, with a breakout indicating potential for additional GBP/USD gains. GBP/USD pair is well-supported as sentiment continues to improve due to decreasing trade tensions between the United States and the European Union. The last-minute postponement of US tariff action against the EU, after a call between European Commission President Ursula von der Leyen and President Trump, has given investor sentiment a boost and supported risk-taking. This has put a bearish squeeze on the US Dollar, which is already weak due to increasing worries over the nation’s fiscal prospects. The suggested “One Big Beautiful Bill,” comprising tax cuts and higher spending, is set to widen the US deficit by $3.8 billion, triggering concerns about economic stability in the long term. GBP/USD DAILY PRICE CHART CHART SOURCE: TradingView Simultaneously, the British Pound is strengthening as investors rethink expectations over UK monetary policy. April’s recent retail sales and inflation data were hotter than anticipated, prompting markets to revise downwards expectations of large interest rate reductions by the Bank of England. Traders now price just one possible rate reduction in 2025 and a 50/50 chance of a second, futures data quoted by Reuters show. This more aggressive tone has contributed to the appeal of the Pound, particularly as economic data provides evidence of robustness in consumer spending and inflation pressures. TECHNICAL ANALYSIS GBP/USD is continuing its strong uptrend, consolidating short of the 39-month high of 1.3593. The pair has been underpinned by sustained buying interest, with momentum indicators like the RSI remaining in bullish conditions, suggesting underlying strength. The key support is seen at the 1.3550 region, which has served as a good base in recent sessions. A decisive break above the resistance of 1.3593 may set the stage for more upside, while inability to hold above support may result in short-term consolidation. FORECAST If the positive mood persists and UK economic indicators continue to be robust, GBP/USD may move further higher. The dissolving hopes of aggressive rate cuts by the Bank of England, coupled with a weak US Dollar on the back of fiscal worries and better global risk appetite, could promote further gains. If such factors hold, the pair will look to set new highs at higher levels than of late, especially if future data continues to assert the UK’s economic robustness. Yet, any surprise decline in UK economic signals or change in Bank of England tone towards dovishness can put pressure on the Pound. On the other hand, if US fiscal worries recede or safe-haven demand for the Dollar comes back—perhaps prompted by renewed geopolitical tensions or soft global growth numbers—GBP/USD is likely to be under pressure. Renewed trade tension between the US and EU or political turmoil can also adversely influence overall market sentiment, cap the pair’s rally potential.

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Currencies

USD/CAD Extends Losses with Crude Oil Strength and Dovish Fed Outlook

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  • May 22, 2025
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USD/CAD currency pair continues to trade with a bearish trend, extending losses for the fourth day in a row in response to bolstering crude oil prices and reduced prospects for a Bank of Canada rate reduction. The Canadian Dollar is supported by warmer-than-anticipated domestic inflation numbers, whereas the US Dollar continues to suffer due to dovish Federal Reserve hopes, fresh US-China trade tensions, and increasing fiscal worries after a US credit rating downgrade. Technically, a break below the critical 1.3900 support and rejection from the 200-day SMA further increase the bearish outlook, making the pair susceptible to greater losses in the near term. KEY LOOKOUTS • More robust than expected Canadian core inflation has taken some sting out of the chances of a near-future rate cut by the Bank of Canada, offering underlying support to the Loonie. • Being a commodity-linked currency, the Canadian Dollar is inextricably linked with oil prices. Any persistent rise in crude oil—under geopolitical tensions or supply issues—can further buoy the CAD. • Traders are waiting for forthcoming US macro data, such as flash PMIs, for signals on the Federal Reserve’s interest rate trajectory, with dovish sentiments keeping the USD under pressure. • The inability of the pair to remain above the 1.3900 level and rejection against the 200-day SMA indicate sustained bear pressure, with more falls to come should support at 1.3810 be broken. Traders should closely monitor key drivers influencing the USD/CAD pair, including the impact of elevated Canadian inflation on the Bank of Canada’s rate path, which currently tilts against a near-term rate cut and supports the Loonie. Crude oil prices remain a crucial factor, with recent gains driven by geopolitical uncertainty continuing to bolster the commodity-linked Canadian Dollar. In the meantime, the US Dollar remains under pressure from dovish expectations about the Federal Reserve and the issue of US fiscal stability, particularly after being downgraded by Moody’s credit rating. From a technical perspective, the pair’s inability to retake the 1.3900 level and its rejection of the 200-day SMA support a bearish direction, with traders on high alert for a possible break below the 1.3810 support area. USD/CAD is under pressure as increasing oil prices and higher Canadian inflation support the Loonie. Dovish Fed expectations and US fiscal worries weigh on the US Dollar, while a decline below 1.3810 could indicate further declines for the pair. •  USD/CAD is trading with a bearish bias, extending its losses for the fourth day running. •  Reversal in crude oil prices supports the Canadian Dollar owing to its commodity-linked nature. •  Higher-than-anticipated Canadian inflation lowers the prospect of a June cut by the Bank of Canada. •  US Dollar declines in line with dovish Federal Reserve hopes and increasing fiscal worries. •  US sovereign credit rating downgrade by Moody’s adds to pressure on the USD. •  Technical breakdown under 1.3900 and rejection from the 200-day SMA indicate sustained downside risk. •  Focus turns to US macro data due later in the day and global flash PMIs for new trading signals. The USD/CAD currency pair is still saddled by wider macroeconomic considerations affecting the US Dollar as well as the Canadian Dollar. On the Canadian front, recent inflation numbers were higher than anticipated, lowering the potential for an instant interest rate reduction by the Bank of Canada. This has bolstered faith in the Loonie, particularly when coupled with the recovery of crude oil prices, which are the backbone of Canada’s economy. Stronger oil prices, underpinned by geopolitical tensions like uncertainty over US-Iran nuclear talks, still provide support to the Canadian Dollar. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView On the American side, the Dollar is under constant pressure because of escalating fiscal worries and weakening expectations regarding upcoming interest rate increases by the Federal Reserve. Moody’s sovereign downgrade of the US credit rating and anxieties regarding swelling deficits have triggered caution among investors. Furthermore, tensions between the US and China have reemerged, also placing the USD under increased risk aversion, adding to the pressure on the currency. Market participants are now intently following future economic indicators, including US macro data and world flash PMIs, for clues that may affect the policy direction and investor appetite in the future. TECHNICAL ANALYSIS USD/CAD is still under pressure after it was unable to stay above the key 1.3900 level and was rejected close to the 200-day Simple Moving Average (SMA), indicating bearish momentum. The recent breakdown of the pair below a short-term consolidation area indicates a change in sentiment in the direction of sellers. If the support area of 1.3810–1.3800 is broken convincingly, it may pave the way for a further decline towards the next significant support levels. Momentum indicators also have a negative bias, supporting the possibility of further downside in the short term. FORECAST USD/CAD is able to remain above the 1.3800 support area and experiences fresh buying interest, a bounce towards the 1.3900 level may be in the pipeline. A move above this area would invite new bullish interest, with the potential to see the pair return to the 1.3950–1.3980 zone. To experience an ongoing upside drive, the pair would have to regain and stay above the 200-day SMA, currently serving as a major resistance. Positive surprises in future US economic data or a recovery in US Treasury yields would also be able to sustain a USD recovery, causing the pair to strengthen in the near term. Conversely, a strong break below the 1.3810–1.3800 support will likely lead to a deeper correction, exposing the next downside targets at 1.3750 and maybe 1.3700. Ongoing rigidity in crude oil prices and sustained cooling of US economic data would most likely continue to keep the Canadian Dollar underpinned, exerting pressure on the pair. Moreover, if the Federal Reserve continues to stick to its dovish stance and US fiscal worries remain, the bearish scenario could deepen, keeping USD/CAD susceptible to more losses during upcoming sessions.

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Currencies NZD/USD

NZD/USD Advances to Above 0.5950 as US Dollar Weakens Further and US-China Trade Dominates the Narrative

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  • May 5, 2025
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NZD/USD pair continued its bull run during Monday’s Asian trading, moving beyond the 0.5950 level on further weakness in the US Dollar and on increasing US-China trade discussion momentum. Statements from President Trump on possible cuts to tariffs and the continued dialogue over trade added volatility to the market, with even stronger-than-projected US job numbers having little effect on the greenback. In the meantime, expectations of sharper unemployment numbers in New Zealand have driven speculation over additional monetary accommodation by the RBNZ, with a cut of 25 basis points highly anticipated later in the month. KEY LOOKOUTS • Any developments or setbacks in the trade negotiations will have a serious impact on the market mood and the direction of NZD/USD. • An increase in the unemployment level could reinforce anticipation of additional RBNZ monetary easing. • The markets are factoring in a 25 basis point rate cut; even a change in tone or guidance from the central bank has the potential to influence the Kiwi’s appreciation. • Following a robust NFP reading, ongoing weakness in the US Dollar indicates that traders are paying attention to larger macroeconomic indicators and possible Fed policy action. NZD/USD currency pair is building a firm upside momentum, trading around 0.5970 as the US Dollar loses strength with fresh attention being given to US-China trade negotiations and the dovish tone of central banks. President Trump’s comments on the possibility of reducing tariffs and the likelihood of resumed negotiations have strengthened risk appetite, propping up the Kiwi. Meanwhile, investors are closely watching upcoming labor data from New Zealand, with expectations of a higher unemployment rate likely reinforcing forecasts of further monetary easing by the RBNZ. Despite stronger-than-expected US job growth in April, the Dollar remains under pressure, keeping the NZD/USD pair supported for a second consecutive session. NZD/USD hovers around 0.5970 as the US Dollar loses strength on fresh US-China trade hopes. New Zealand’s future labor statistics are in the market’s focus, with hopes of a rate cut from the RBNZ. Even with strong US employment figures, the Kiwi keeps finding support for the second consecutive session. •  NZD/USD hovers around 0.5970, posting gains for the second consecutive session. • US Dollar declines, led by trade uncertainty and dovish policy expectations. • US-China trade talks in the spotlight, with Trump affirming that there are still talks but no meeting with Xi this week. • Trump suggests future tariff cuts, improving market mood and risk assets. •  US Nonfarm Payrolls beat forecasts, but the USD did not rally as broader concerns persist. • New Zealand unemployment likely to rise, boosting chances of RBNZ monetary easing. • Markets already price in a 25 bps RBNZ rate cut, with rates set to bottom at 2.75% by October. New Zealand Dollar is finding steady support as market focus shifts to general economic and geopolitical trends. One driving sentiment is the current US-China trade issue, and President Trump has confirmed negotiations are ongoing, although there are no scheduled direct discussions with Chinese President Xi in the week ahead. His words that he might cut tariffs have provided a welcome note of optimism to the market, particularly for nations such as New Zealand which are so reliant on world trade. At the same time, China’s Commerce Ministry said it is examining an American proposal to resume talks, adding further to the optimism. NZD/USD DAILY CHART PRICE CHART SOURCE: TradingView Together with the trade story, economic news from the US and New Zealand is driving expectations. While the US posted good job growth in April, worries regarding long-term economic policy and worldwide conditions have left the Dollar under pressure. In New Zealand, forthcoming labor market figures are due to indicate a modest increase in unemployment, supporting the prognosis for additional policy assistance from the Reserve Bank of New Zealand. Markets are already pricing in a rate cut this month, signaling a guarded but defensive climate for the Kiwi. TECHNICAL ANALYSIS NZD/USD continues to display bullish momentum after breaking out above the 0.5950 resistance point and now trading close to 0.5970. This higher motion indicates buyer demand is increasing, fueled by a softer US Dollar and favorable risk environment. The pair could reach the next resistance level at around 0.6000 if it holds above 0.5970. Support is lower in 0.5920, and a break below there could mark a possible halt to the ongoing uptrend. Momentum gauges such as the RSI continue to be positive, supporting the short-term bull bias. FORECAST NZD/USD may continue its advance towards the psychological level of 0.6000, with additional resistance anticipated around 0.6030. Such an advance would be supported by ongoing US Dollar weakness, a breakthrough in US-China trade talks, or a dovish policy change from the Federal Reserve. Also, if New Zealand economic numbers, especially labor market data, arrive better than anticipated, it may restrict the margin for RBNZ easing and provide further encouragement to the Kiwi. Under such circumstances, the pair may keep going up in the short term as buyers drive it in that direction. On the flip side, if upcoming New Zealand labor data shows a significant uptick in unemployment or if risk sentiment deteriorates due to stalled trade talks, NZD/USD could face downward pressure. A drop below the 0.5920 support zone might trigger further selling, potentially pulling the pair toward the next support level around 0.5880. Moreover, any surprise hawkish comments from the US Federal Reserve or better-than-anticipated US data could support the Dollar and dampen the NZD. The pair might then find it difficult to sustain its latest bullish trend.

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Currencies USD/JPY

Japanese Yen Resists Trade Tensions and BoJ Rate Hike Bets; USD/JPY Fails Below 140

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  • April 22, 2025
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The Japanese Yen strengthened against the US Dollar on Tuesday, fueled by safe-haven demand due to ongoing global trade tensions and increasingly expected Bank of Japan (BoJ) interest rate hike later in 2025. The USD/JPY pair tried to bounce off levels below 140, the bullish bias on the Yen intact as geopolitical uncertainty and differential monetary policy expectations between the BoJ and the Fed continue to place pressure on the Dollar. Market sentiment was further rattled by concerns over the Fed’s independence following fresh criticism from former President Donald Trump, keeping USD gains limited. Investors now await key US economic data and global PMI releases for clearer market direction. KEY LOOKOUTS • Growing market confidence that the Bank of Japan will raise interest rates again in 2025 is expected to keep the Japanese Yen supported in the near term. • Uncertainty regarding the direction of Federal Reserve policy, stoked by political pressure and rate cut speculation in the markets, continues to influence the US Dollar. • Investors are monitoring progress in the latest US-Japan tariff negotiations, particularly comments by influential officials and possible implications for currency flows. • The Richmond Manufacturing Index and world flash PMIs should deliver new insights into economic well-being, driving near-term USD/JPY price action. Japanese Yen remains in focus as investors weigh safe-haven demand against shifting central bank policies and global trade tensions. Despite a modest intraday pullback, the Yen’s strength is underpinned by rising expectations that the Bank of Japan will raise interest rates in 2025, marking a significant divergence from the Federal Reserve’s anticipated rate-cutting path. While this, in turn, is being affected by political uncertainty in the U.S. — fueled by renewed skepticism about the independence of the Fed and continuing trade negotiations — the recovery of the Dollar remains curbed. The market now expects major U.S. economic releases and world PMI reading, which should provide clearer guidance for the USD/JPY pair in upcoming sessions. Japanese Yen remains strong as safe-haven demand and expectations of BoJ rate hikes provide support against a softer US Dollar. Uncertainty surrounding US-Japan trade talks and skepticism regarding the Fed’s policy framework remain weighing factors on sentiment. Investors now look to leading economic indicators for new direction on USD/JPY action. • The Yen remains in demand with global trade tensions and geopolitical uncertainty capping its losses versus the US Dollar. • Speculation in the markets for a Bank of Japan rate increase in 2025 is contributing to the bullishness in the Yen. • The pair rebounded more than 40 pips from around the pivotal 140.00 psychological level but failed to maintain firmness amidst bearish sentiment in the USD. • New political attacks on the Federal Reserve, such as threats against its autonomy, have maintained the Dollar on defensive levels close to multi-year lows. •  Japanese and American official quotes underpin the subtlety in current tariff negotiations, holding back investors. •  USD/JPY encounters strong resistance at 141.65-141.60 and has the vital support zones at 140.45 and 140.00. •  Upcoming events such as Richmond Manufacturing Index and global flash PMIs are to determine USD/JPY’s next decisive movement. Japanese Yen continues to find support in its safe-haven demand, with continuing global trade tensions and geopolitical risks holding investor sentiment in check. Market observers continue to be focused on the status of U.S.-Japan trade negotiations, especially after Japanese officials noted the intricacy involved in securing an agreement given touchy topics such as tariffs on autos and agriculture. As the talks proceed, the Yen will probably continue to be a favored destination for investors seeking stability amid uncertain times. USD/JPY DAILY PRICE CHART CHART SOURCE: TradingView Substantiating the Yen’s support is also the increasing market perception that the Bank of Japan might hike interest rates in 2025, a significant reversal after years of extremely accommodative monetary policy. Conversely, the U.S. Dollar is under siege as political uncertainty regarding the independence of the Federal Reserve and conflicting economic signals create doubts about the direction of U.S. monetary policy. This policy difference between the United States and Japan remains to influence currency market dynamics and reflects the cautious sentiment among traders. TECHNICAL ANALYSIS USD/JPY pair indicates signs of stabilization following a bounce back from the sub-140.00 psychological level, which has now become a significant support point. The 140.45 area, where the pair had recently established a multi-month low, is likely to provide initial downside cushioning. But the general bearish tone is still in place as far as the pair remains below the 141.60–141.65 resistance area — an important horizontal level that had served as support. A break above this region on a sustained basis may initiate a short-covering rally, paving the way for additional advances to the 142.00 and 142.35 resistance areas. To its detriment, a break below 140.45 could leave the pair vulnerable to further losses, potentially testing the yearly swing low around the 139.60–139.55 area. FORECAST USD/JPY pair is able to stay above the 140.45 support level and accumulates sufficient bullish strength, it may try to retest the immediate resistance in the 141.60–141.65 area. A decisive break and sustained strength above this area can pave the way for a short-covering rally, driving the pair towards the psychological 142.00 mark. Additional bullish extension may drive the pair to test the next major hurdle around the 142.35–142.40 area, where sellers are likely to reappear. Conversely, however, if the USD/JPY pair is unable to hold its ground above the 140.45 level, bear pressure may strengthen, pulling the pair back towards the important 140.00 psychological level. A clean break beneath this support level would most probably speed up the downside move, targeting the 2024 yearly swing low at the 139.60–139.55 region. A break below this level may warn of a deeper bear trend and possibly trigger further selling in the near term.

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Currencies USD/JPY

USD/JPY Falls Below 142.50 as Japanese Inflation Remains Strong and US Data Provides Mixed Signals

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  • April 18, 2025
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The USD/JPY currency pair fell below the 142.50 level in Friday’s early Asian session, as the Yen was strengthened by higher-than-anticipated Japanese inflation data. Japan’s Consumer Price Index (CPI) increased 3.6% from year earlier in March, with core CPI rising to 3.2%, meeting market forecasts but supporting the Bank of Japan’s conservative view on policy tightening in the context of external uncertainties, including U.S. tariffs. In contrast, the U.S. dollar fared poorly even as Initial Jobless Claims decreased to a two-month low, as weaker manufacturing data from the Philadelphia Fed Index triggered worries over economic momentum. The blend of resilient Japanese inflation and conflicting U.S. data held the Yen strong, though possible upside is still constrained by cautious central bank cues. KEY LOOKOUTS • Japan’s March CPI data revealed ongoing price pressures, supporting the Yen and questioning the Bank of Japan’s next policy steps. • Even with robust inflation numbers, BoJ authorities, including Governor Ueda, are hesitant to increase rates further, highlighting that uncertainties must be watched, particularly those related to U.S. tariff movements. • Although U.S. Initial Jobless Claims fell to a two-month low, indicating the labor market’s stability, the Philadelphia Fed Index fell short of expectations, which suggested manufacturing weakness. • Markets are keeping close eyes on ongoing trade talks between Japan and the U.S., which may continue to impact currency trends as tensions escalate in global trade. The USD/JPY pair comes under renewed stress with Japan’s March inflation readings highlighting ongoing price growth, lending strength to projections of a dovish but firm economic scenario. Though the stronger CPI readings had earlier boosted the Yen, cues from the Bank of Japan indicating patience regarding coming rate hikes have subdued bullish exuberance. Meanwhile, confusing U.S. economic signals — with unemployment claims falling to a two-month low and manufacturing figures coming in weaker than expected — have kept the U.S. dollar on the defensive. The continuing trade talks between Japan and the U.S. will most probably continue to be a priority for investors, as policy and global trade risks continue to influence market mood in the next few sessions. USD/JPY pair fell under 142.50 following strong Japan’s March inflation that drove up the Yen. Still, BoJ’s dovish position regarding interest hikes and on-going U.S.-Japan trade discussions will act as a deterrent against further gains of JPY. Hesitant U.S. data further exacerbated the weakness in the Dollar earlier in the day in Asian time. • USD/JPY fell under 142.50 in early Asia trading Friday due to better-than-expected Japanese inflation numbers. •  Japan’s March CPI increased 3.6% YoY, down modestly from 3.7% earlier but still showing sustained price firmness. • Core CPI (excluding fresh food) rose to 3.2%, in line with expectations and showing stable underlying inflation. •  BoJ officials indicated restraint on rate hikes, pointing to overseas uncertainties, particularly over U.S. tariff policies. •  The U.S. Initial Jobless Claims declined to a two-month low, showing sustained labor market robustness. •  Philadelphia Fed Index decreased, falling below expectations and prompting worries about the health of U.S. manufacturing. •  Market attention centers on Japan-U.S. trade negotiations, which may determine direction of currencies and markets in the future amidst tariff tensions. Japan’s recent inflation figures showed that consumer prices were still high in March, as the National Consumer Price Index (CPI) increased 3.6% from one year ago. Core inflation, which excludes fresh food, came in at 3.2%, matching market expectations and suggesting steady price growth despite a slight cooling from previous months. The data reflects the ongoing impact of cost pressures on the Japanese economy, while policymakers at the Bank of Japan continue to approach future rate decisions with caution, citing global uncertainties, including the effects of U.S. tariff policies. USD/JPY DAILY PRICE CHART CHART SOURCE: TradingView At the same time, American economic indicators offered a mixed view. Initial Jobless Claims decreased to their two-month lowest level, reflecting a robust labor market. Yet the Philadelphia Fed Index of regional manufacturing activity lagged expectations and caused worries for the health of the manufacturing sector. Investors also monitor the developments of Japan-U.S. trade talks, as negotiations on tariffs and economic cooperation are ongoing between the highest authorities from both nations. TECHNICAL ANALYSIS USD/JPY pair is demonstrating bearish strength after breaking down below the 142.50 support level, which points to further declines if the sellers hold on to power. The pair is oscillating around the 142.20–142.25 zone, which has become an immediate support, and any attempts to bounce back might get resistance at around the 142.80–143.00 zone. The Relative Strength Index (RSI) on the lower timeframes indicates a weak oversold condition, pointing toward the likelihood of a short-term corrective bounce or consolidation preceding the next direction. Market participants will carefully observe price action around these crucial levels for additional indications. FORECAST USD/JPY pair is able to remain above the 142.20 support level and attracts some demand, it may try to stage a recovery towards the 142.80–143.00 resistance area. A continued breakout above here could pave the way for more upside, particularly if U.S. economic statistics surprise on the upside or if risk appetite picks up in international markets. Second, any hint of policy divergence among the Federal Reserve and the Bank of Japan — while the Fed remains resolute on interest rates — could also give a boost to a stronger Dollar in the short term. On the downside, if USD/JPY breaks and settles below the 142.20 support level, it could trigger fresh selling pressure, leading the pair toward the next support around the 141.50 region. Continued strength in Japanese inflation, combined with global trade tensions and weaker U.S. manufacturing indicators, could weigh further on the pair. In this scenario, sellers might target lower levels as investor sentiment leans toward safe-haven assets like the Japanese Yen.

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AUD/USD Currencies

Australian Dollar Remains Steady Despite Budget Release and Global Economic Unrest

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  • March 25, 2025
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The Australian Dollar stabilised after Treasurer Jim Chalmers’ release of the 2025/26 budget, which outlined anticipated deficits of A$27.6 billion in 2024-25 and A$42.1 billion in 2025-26, in addition to tax cuts to spur economic stimulus. The Reserve Bank of Australia’s restraint regarding interest rates and anticipation of Chinese stimulus both lent further support to the AUD. Nonetheless, cross-border uncertainties, such as President Trump’s US trade policies and inconsistent US economic statistics, remain possible threats. In the meantime, technical markers indicate the AUD/USD exchange rate is under stress, trending below significant levels of resistance within continuing market turmoil. KEY LOOKOUTS • The tax cuts and economic projections of the Australian government can shape investor optimism and market stability. • The Reserve Bank of Australia’s conservative approach to rate cutting and its reaction to inflation and international economic trends will be pivotal for the movement of the AUD. • Any possible tariff announcements by President Trump and how these will affect global trade, specifically Australia’s trading relationship with China and the US, may cause volatility. •The currency pair is still below major resistance at 0.6300, with support at 0.6220; a break above or below these levels may indicate the direction of the next market move. The Australian Dollar’s stability after the 2025/26 budget announcement is indicative of cautious optimism, but major factors may determine its path in the weeks ahead. The Reserve Bank of Australia’s interest rate stance continues to be a major focus, as investors weigh the chances of further policy changes. At the same time, worldwide trade tensions, especially possible US tariff announcements, may also weigh on market sentiment and the economic prospects of Australia. Of course, technical levels of resistance around 0.6300 and support at 0.6220 will also be observed closely, as a break through in either direction may indicate the next significant move for the AUD/USD pair. The Australian Dollar is stable following the budget announcement for 2025/26, with investors waiting for tax reductions and economic projections. RBA’s interest rate policy and possible US tariff implications may influence market sentiment. Technical resistance of 0.6300 and support of 0.6220 will be points of interest for AUD/USD action. • The budget for 2025/26 involves tax reductions and economic projections, with a budget deficit of A$42.1 billion for 2025-26. • The Aussie remains firm, helped by RBA holding rates and possible Chinese stimulus. • The Reserve Bank of Australia’s cautiousness towards rate cuts continues to be a leading driver of the AUD. • Looming uncertainty regarding possible tariff announcements from President Trump may generate volatility across markets worldwide. • US Services PMI jumped to 54.3, bolstering the US Dollar, while Manufacturing PMI was lower than forecasted. • Resistance at 0.6300 and support at 0.6220 will be key to deciding the pair’s next direction. • Beijing’s proposals to enhance consumption and wages would indirectly assist the Australian economy because of robust trade links. The Australian Dollar held firm after Treasurer Jim Chalmers delivered the 2025/26 budget that provided significant economic predictions, such as tax relief intended to ease money woes for households. The budget estimates a 2024-25 deficit of A$27.6 billion and A$42.1 billion for 2025-26, as the government aims to balance economic growth with fiscal prudence. Moreover, the GDP of Australia is predicted to expand by 2.25% in 2026 and 2.5% in 2027, indicating modest economic growth. The Reserve Bank of Australia (RBA) remains cautious in its interest rate moves, keeping inflation under control while fostering economic stability. AUS/USD DAILY PRICE CHART CHART SOURCE: TradingView The Australian Dollar maintained its calmness after Treasurer Jim Chalmers presented the 2025/26 budget that made important economic projections, such as the reduction of tax that would help alleviate financial burdens on households. The budget forecasts a deficit of A$27.6 billion for 2024-25 and A$42.1 billion for 2025-26, which shows that the government is striking a balance between economic growth and fiscal prudence. Moreover, Australia’s GDP is projected to increase by 2.25% in 2026 and 2.5% in 2027, indicating moderate economic growth. The Reserve Bank of Australia (RBA) remains cautious in its interest rate policy, keeping inflation under control while maintaining economic stability. TECHNICAL ANALYSIS The AUD/USD currency pair is trading around 0.6290, with technical indicators indicating a cautious market mood. The currency pair continues to be in a bearish trend and trades in a falling channel. The 14-day Relative Strength Index (RSI) is at a level slightly below 50, which means the currency has weak momentum. The important support remains at 0.6220 and breaking below this may drag the pair towards its seven-week low of 0.6187. Resistance on the upside comes at 0.6308 (nine-day Exponential Moving Average) and 0.6310 (50-day EMA). A breakout above these levels may signal short-term bullish momentum, while continued rejection at resistance may reinforce the prevailing downtrend. FORECAST The outlook for the Australian Dollar is mixed and dependent on both local and international considerations. To the upside, solid economic fundamentals from Australia, such as better Manufacturing and Services PMI reports, can underpin the AUD. Also, hopes of further stimulus from China, Australia’s biggest trading partner, could increase demand for Australian exports, supporting the currency. If the Reserve Bank of Australia continues to be cautious on interest rates without hinting at aggressive cuts, investor sentiment in the AUD might stay firm. A move above key technical resistance levels at 0.6310 could pave the way for more gains in the near term. But downside risks remain as uncertainty regarding US trade policies hangs in the air. Possible tariff announcements by President Trump have the potential to upset global trade and hurt risk-sensitive currencies such as the AUD. The US Dollar is also supported by robust Services PMI data and dovish comments from Federal Reserve officials, which could cap the AUD’s upside. If the AUD/USD currency pair is unable to sustain support at 0.6220, then further losses towards 0.6187 may be anticipated, supporting a bearish trend in the short term.

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Currencies NZD/USD

NZD/USD Suffers as Fed is Cautious and Geopolitical Tensions Rise: Can China’s Stimulus Rescue the Kiwi?

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  • March 21, 2025
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The NZD/USD currency pair continues to suffer from downward pressure for a third consecutive session as slight US Dollar strength takes its toll on the Kiwi. The Federal Reserve’s position of offering no more than two rate cuts this year, together with continuing geopolitical tensions in the Middle East and Eastern Europe, has contributed to safe-haven flows towards the Greenback. Though these forces temper the NZD’s outlook, positives surrounding China’s latest stimulus efforts provide some respite to the antipodean currency. Still, without high-profile US economic data releases, traders might still be cautious, waiting for more definitive signals before establishing a reversal in the NZD/USD trend. KEY LOOKOUTS • The US Dollar continues to be supported as markets absorb the Fed’s expectation of just two rate reductions by year-end. • Safe-haven demand for the Greenback continues to be fueled by ongoing Middle East conflicts and Russia-Ukraine war, putting pressure on NZD. • Hopes for China’s recent stimulus efforts may provide near-term support to the Kiwi and other antipodean currencies. • Weak US economic data may result in defensive trading, with investors waiting for a clear trend reversal in NZD/USD. The NZD/USD currency pair is under pressure against a mildly firm US Dollar, fueled by the Federal Reserve’s conservative approach towards interest rate reductions and persistent geopolitical tensions. The safe-haven demand for the Greenback is supported by ambiguity over global wars, especially in the Middle East and Eastern Europe. Nevertheless, hope over China’s newly proposed stimulus packages provides a possible safety net for the New Zealand Dollar, capping further losses. Without major US economic data, market players will resort to a wait-and-see strategy, awaiting clearer signs before affirming a directional change in the NZD/USD trend. NZD/USD continues to struggle for the third consecutive day against the backdrop of modest USD appreciation and increasing geopolitical tensions. Nevertheless, China’s stimulus optimism might serve to confine losses for the Kiwi to a smaller extent. Traders now look for clearer signs before affirming any significant trend change. • NZD/USD is down for the third day in a row, showing ongoing Kiwi weakness in the face of moderate US Dollar firmness. • The Greenback takes support from the Fed estimating only two 25 bps interest rate reductions by the end of the year, enhancing safe-haven demand. • Fed Chairman Powell’s remarks regarding slowed inflation gains and retaliation tariff fears further buoy the Greenback. • Middle East geopolitical tensions and the Russia-Ukraine conflict remain key drivers of demand for the safe-haven USD. • Recent stimulus in China provides some resilience to the New Zealand Dollar, preventing deep declines. • Traders’ restraint due to absence of key US economic data releases keeps them in wait-and-watch mode for more robust cues to take aggressive positions. • Sentiment in markets remains contradictory, with USD strength potential limited by fears of tariff-induced US economic slowdown. The NZD/USD currency pair remains under pressure as general economic and geopolitical considerations shape market sentiment. The US Dollar is supported by the Federal Reserve’s conservative stance towards interest rate reductions, with policymakers only forecasting two cuts this year. Further, comments by Fed Chair Jerome Powell on potential delays in meeting inflation targets due to global tariff retaliation have contributed to the Greenback’s strength. Meanwhile, continued geopolitical tensions, including Middle East tensions and the ongoing Russia-Ukraine war, have increased the need for secure assets such as the US Dollar. NZD/USD Daily Price Chart Chart Source: TradingView Conversely, some of the New Zealand Dollar’s positive momentum is coming from China’s newly announced economic stimulus policies. As a key trading partner for New Zealand, China’s economic outlook plays a crucial role in shaping the Kiwi’s performance. The stimulus efforts are expected to boost economic activity, indirectly benefiting export-driven economies like New Zealand. While these global dynamics continue to unfold, traders are closely monitoring market developments, waiting for stronger signals to determine the long-term direction of the currency pair. TECHNICAL ANALYSIS NZD/USD is appearing to suffer from chronic weakness as it is not able to maintain above crucial levels of support, and new selling pressure is seen near the mid-0.5700s. The pair’s failure to hold a bounce back from the 0.5720–0.5725 area indicates that downward momentum is still intact. The markets are eagerly observing for a firm break below this area of support, which might pave the way for more downside. However, any attempt to recover is threatened by the prospects of sellers cropping up in the 0.5780–0.5800 area, unless there’s a very good bullish stimulus shifting sentiment. FORECAST Any shift in the sentiment towards the riskier assets or a decline in the strength of the US Dollar as a result of the dovish inputs from the Fed or disappointing economic reports might result in NZD/USD recovering. A continued advance past the 0.5780–0.5800 resistance level might indicate fresh buying interest and carry the pair toward the next resistance around 0.5840. Improved Chinese economic news or better-than-anticipated New Zealand data might serve as a further catalyst for further pair upside action. On the negative side, sustained US Dollar strength, ongoing geopolitical tensions, or poor market confidence may continue to keep the NZD under strain. A fall below the 0.5720 support level may initiate further losses, setting the stage for a drop towards the 0.5670–0.5650 area. If bearish momentum gathers pace, the pair may even test lower levels not witnessed in recent months, supporting the bearish outlook unless backed by new fundamental triggers.

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Currencies

USD/CHF Remains Stable Around 0.8800 as Traders Look Towards Fed and SNB Rate Moves Under Geopolitical Uncertainty

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  • March 18, 2025
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The USD/CHF currency pair holds stable at around the 0.8810 mark in early European trading on Tuesday amid geopolitical uncertainty, as traders keep an eye out for pivotal monetary policy actions by the US Federal Reserve and Swiss National Bank (SNB) later this week. While the US Dollar draws modest support from better-than-anticipated retail sales and a marginal increase in the Dollar Index (DXY), increasing Middle Eastern geopolitical tensions are driving safe-haven flows into the Swiss Franc, possibly capping the pair’s upside potential. Market players overwhelmingly anticipate the Fed to leave rates stationary, while the SNB is expected to reduce its policy rate by 25 basis points, adding more interest in USD/CHF’s near-term direction. KEY LOOKOUTS • The Federal Reserve is expected to keep interest rates unchanged on Wednesday, with an eye on revised economic projections that could offer clues on the timing of future rate cuts. • The Swiss National Bank is expected to lower its key policy rate by 25 basis points on Thursday, with expectations of leaving it unchanged until at least 2026. • Escalating tensions in the Middle East, specifically Israel’s military buildup, could increase safe-haven demand for the Swiss Franc, exerting downside pressure on USD/CHF. • The US Dollar Index (DXY) is backed by a recovery in US retail sales, but any further move will wait for Fed cues and subsequent macroeconomic data. The USD/CHF cross is trading steadily around the 0.8810 level as traders await key central bank announcements from the US Federal Reserve and the Swiss National Bank (SNB) later this week. Although the US Dollar is mildly supported by a recovery in retail sales and a firmer Dollar Index (DXY), the upside for USD/CHF is capped by rising geopolitical tensions in the Middle East, which are increasing safe-haven demand for the Swiss Franc. Markets anticipate the Fed to leave interest rates on hold while releasing new economic forecasts that may influence future rate expectations. In the meantime, the SNB is expected to lower its policy rate by 25 basis points, a move that could impact the pair’s short-term movement. USD/CHF remains flat around 0.8810 as traders wait for critical interest rate announcements from the Fed and SNB this week. Although the US Dollar finds some support in retail sales figures, increasing geopolitical tensions in the Middle East enhance safe-haven demand for the Swiss Franc. • USD/CHF is flat around 0.8810 in early European trading on Tuesday. • Investors expect important interest rate decisions from the US Federal Reserve (Wednesday) and the Swiss National Bank (Thursday). • The US Dollar Index (DXY) advances to 103.55 on the back of a recovery in US retail sales figures. • Markets are expecting the Fed to remain unchanged, with possible rate reductions likely from June. • The SNB is expected to lower its policy rate by 25 basis points to 0.25%, according to economist expectations. • Geopolitical tensions in the Middle East, particularly Israel’s heightened military activity, are driving demand for safe-haven currencies such as the Swiss Franc. • Safe-haven flows and uncertainty in global markets can limit the near-term upside potential for the USD/CHF pair. The USD/CHF exchange rate is holding firm as global investors turn their attention to two key central bank announcements this week — the US Federal Reserve and the Swiss National Bank (SNB). Investors are keenly monitoring the results of the Fed meeting, which is expected to leave interest rates untouched. The economic forecasts of the central bank will also be significant, as they might provide some clues towards the US economy outlook and possible rate cuts in the later part of this year. Meanwhile, recent US retail sales data registered a modest rebound, providing some support to the overall sentiment of the market. USD/CHF Daily Price Chart Chart Source: TradingView Meanwhile, the spotlight is also on the SNB, which is expected to reduce its key policy rate. The policy action may herald a change in the Swiss economic sentiment and will have an important influence on forming market expectations in the future. Further, growing geopolitical tensions in the Middle East have seen a rise in demand for safe-haven currencies such as the Swiss Franc. Words from world leaders and rising tensions are still holding markets in reserve, creating yet another level of sophistication for this week’s central bank-driven news. TECHNICAL ANALYSIS USD/CHF is ranging narrowly around the 0.8810 mark, reflecting indecision on the part of traders prior to important central bank announcements. The pair is close to its short-term moving averages, which reflects a lack of strong momentum in either direction. A continued break above the near resistance at 0.8840 would set the stage for more upside towards the 0.8880–0.8900 area. On the other hand, support on the first hit is at 0.8780, and it has more robust support at the 0.8740 level. The technical indicators RSI and MACD are also neutral, supporting the period of consolidation until a positive directional break. FORECAST If the US Federal Reserve leans more towards hawkishness during its next policy meeting or communicates a postponement of interest rate reductions, the US Dollar could further appreciate. A strong economy underpinned by recent indications, including the recovery in retail sales, may also help bolster positive sentiment toward the Greenback. Under such circumstances, USD/CHF may experience upwards direction, provided that the Swiss National Bank follows through with a rate cut and further increases the interest rate spread between the US and Switzerland. Alternatively, escalating Middle Eastern tensions may continue to fuel safe-haven demand for the Swiss Franc, exerting pressure on the USD/CHF pair. In addition, if the SNB adopts less dovish positioning than anticipated or suggests maintaining rates unchanged for a longer duration than expected, this may make the Swiss Franc stronger. Any news of slowing economies or dovish forecasts by the Fed will also bear on the US Dollar and add to the potential short-term downside risk of USD/CHF.

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