Forex News
- EUR/USD inched back toward the 1.1200 handle amid general USD weakness on Tuesday.
- Market sentiment is climbing in the face of possible trade deals that will push the Trump administration away from its own tariff policies.
- EU GDP growth, US PPI and UoM Consumer Sentiment are the week’s key remaining datapoints.
EUR/USD rose on Tuesday, clawing back most of the week’s starting losses. The pair is now testing back into the 1.1200 handle, thanks to a general broad-market weakening in the Greenback than any particular bullish momentum bootstrapping Euro market flows.
Market response to the US Consumer Price Index (CPI) inflation was largely subdued on Tuesday. Investors remain optimistic that ongoing trade deal negotiations between the Trump administration and various parties will sustain positive sentiment, although all trade tariff concessions offered by the Trump team have been strictly temporary.
In the US, CPI inflation reduced slightly in April, reaching a new three-year low for annualized headline inflation. Nonetheless, the Trump administration’s approach of enforcing triple-digit tariffs on key trading partners is anticipated to have repercussions starting in May, leading market experts to expect this will be the last strong CPI report for some time.
German Harmonized Index of Consumer Prices (HICP) are due during Wednesday’s European market session, but the non-preliminary figures are unlikely to generate much interest. Pan-European Gross Domestic Product (GDP) figures for the first quarter are also due on Thursday, but median market forecasts are expecting the figures to print similar to the previous quarter.
On the US side, inflation figures for the US Producer Price Index (PPI) and the latest Consumer Sentiment Survey from the University of Michigan are scheduled for release in the latter part of the trading week. The US PPI inflation data will be published on Thursday, followed by important consumer sentiment figures on Friday.
EUR/USD price forecast
Markets pushed hard to muscle EUR/USD back over the 1.1200 handle on Tuesday, falling just shy of the key technical level. However, despite limited upside, the Fiber is back above the 50-day Exponential Moving Average (EMA) near 1.1070. Bullish momentum remains absent from the daily candlesticks, but technical oscillators are rolling over sharply from oversold territory, hinting at the potential for a bullish extension.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/USD rebounded above 1.3300 on Tuesday amid Greenback weakness.
- Markets took US inflation data in stride, investors continue to focus on US trade deal hopes.
- UK GDP growth figures loom ahead on Thursday, numbers are expected to come in mixed.
GBP/USD caught a bid on Tuesday, rebounding above the 1.3300 handle and reversing early week losses as global markets tilt and twist around general Greenback flows based on broad-market sentiment. UK labor figures barely moved the needle, and market reaction to US Consumer Price Index (CPI) inflation was likewise muted. Investors continue to focus on hopes that continued trade deal negotiations between the Trump administration and literally everybody else continues to drive general sentiment, however all trade tariff concessions delivered by team Trump have been strictly temporary in nature.
The UK’s quarterly ILO Unemployment Rate ticked slightly higher to 4.5% as expected, while Claimant Count Change in April rose far less than expected, rising to just 5.2K. However, the figure still wasn’t as good as March’s -16.9K contraction in the number of newly-unemployed workers. On the US side, CPI inflation eased slightly in April, with annualized headline inflation falling to a fresh three-year low. However, the Trump administration’s trade strategy of imposing triple-digit tariffs on its own major trading partners is expected to come home to roost beginning in May, and market experts are broadly expecting this to be the last decent CPI print for a while.
Pound Sterling markets will be waiting until Thursday for the latest batch of UK Gross Domestic Product (GDP) growth figures for the first quarter. Median market forecasts are expecting an upswing in QoQ GDP, anticipating Q1 GDP to rise to 0.6% QoQ versus the previous quarter’s 0.1%. On an annualized basis, forecasts expect last year’s GDP slump to still impact the data, forecasting QoY GDP to ease to 1.2% from 1.5%.
US Producer Price Index (PPI) inflation figures and the University of Michigan’s latest Consumer Sentiment Survey are also slated for the back half of the trading week. US PPI inflation will be printing on Thursday, with key consumer sentiment figures due on Friday.
GBP/USD price forecast
GBP/USD’s bullish reversal puts the pair on pace to enter a rough congestion pattern in the near-term. Price action has been in a choppy phase since slipping back from recent highs near 1.3450, but bearish momentum has been struggling to drag bids back down to the 50-day Exponential Moving Average (EMA) near 1.3100.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- AUD/NZD trades near the 1.09 zone, maintaining a modest bullish tone.
- Momentum remains mixed, with short-term averages supporting the upside.
- Key support sits near 1.0880, with resistance around 1.0920 and 1.0950.
The AUD/NZD pair is trading around the 1.09 zone ahead of the Asian session on Tuesday, reflecting a slight bullish tone with minor gains on the day. The pair remains within the mid-range of its recent fluctuation, signaling a stable but cautious upward bias as traders assess broader market dynamics. Key technical indicators suggest a mixed picture, with shorter-term signals supporting the current trend while longer-term averages hint at potential headwinds.
From a technical standpoint, the Relative Strength Index (RSI) hovers in the 60s, reflecting neutral conditions, while the Moving Average Convergence Divergence (MACD) supports ongoing buy momentum. The Ultimate Oscillator (7, 14, 28) also remains in the 60s, adding to the stable but cautiously positive outlook. Meanwhile, the Average Directional Index (14) in the 20s signals a lack of clear directional strength, aligning with the neutral reading of the Stochastic RSI Fast (3, 3, 14, 14), which rests in the 100s.
Short-term moving averages, including the 10-day Simple Moving Average (SMA) and 10-day Exponential Moving Average (EMA), align with the broader buy signals, further reinforcing the pair's current bullish stance. However, the 100-day and 200-day SMAs suggest a more cautious long-term outlook, reflecting underlying selling pressure that could limit further upside.
Immediate support levels are identified near 1.0881, followed by 1.0876 and 1.0868. On the upside, resistance is likely around 1.0924, with stronger barriers at 1.0947 and 1.0974, potentially capping gains in the near term.
Daily Chart
- Mexican Peso strengthens sharply, clearing 19.50 support with eyes on 19.00 amid risk-on momentum.
- April US CPI data misses expectations; core inflation holds steady, weakening the Greenback.
- US-China 90-day tariff rollback lifts global sentiment; S&P 500 posts over 1% gain.
The Mexican Peso (MXN) rallied to a new year-to-date (YTD) high against the US Dollar (USD) after a softer-than-expected inflation report in the United States (US) weighed on the Greenback. Also, an improvement in risk appetite boosted the emerging market (EM) currency’s appeal. At the time of writing, the USD/MXN trades at 19.41, down more than 1%.
Wall Street ended Tuesday’s session in the green, erasing the stock market losses for the year as market participants assessed US President Donald Trump's decision to dial back tariffs applied to Chinese products. The 90-day truce and the reduction of tariffs agreed between the US and China improved risk appetite, as portrayed by the S&P 500 climbing over 1%.
Consequently, risk-sensitive currencies in the FX space, such as the Peso, extended their gains as the USD/MXN cleared the crucial 19.50 psychological support level before sliding towards the 19.00 figure.
Mexican Peso capitalizes on US Dollar weakness after US CPI miss
In the US, April’s headline inflation on a year-over-year basis was in line with forecasts. The so-called core, which excludes volatile items, was unchanged.
Daily digest market movers: Mexican Peso advances as US Dollar falls
- Traders are awaiting Banxico’s monetary policy decision on May 15, in which the Mexican institution is expected to reduce rates for the seventh consecutive meeting.
- Banco de México -also known as Banxico- is expected to reduce interest rates by 50 basis points (bps), according to a poll revealed by Reuters. This would be the seventh straight meeting that Banxico cut rates.
- Recently, Mexico’s Economy Minister, Marcelo Ebrard, announced that the USMCA revision will commence in the second half of 2025.
- On Monday, Mexico’s Industrial Production slowed in March, as revealed by the Instituto Nacional de Estadística, Geografía e Informática (INEGI). This, along with GDP figures that barely triggered a technical recession, would likely undermine the Mexican currency.
- Recent data revealed that Mexico’s economy is undergoing a deceleration while inflation Mexico’s inflation data for April, which expanded above expectations in both headline and core figures, would not prevent Banxico from prolonging its easing cycle.
- Worth noting that investors reduced their bets that the Federal Reserve (Fed) might only cut rates twice instead of thrice, as revealed by data from the Chicago Board of Trade (CBOT). The December 2025 fed funds rates futures contract shows that market players expect 57 basis points of easing.
- Therefore, monetary policy divergence between the Fed and Banxico might add pressure on the Peso and push USD/MXN exchange rate higher.
USD/MXN technical outlook: Mexican Peso advances as USD/MXN tumbles below 20-day SMA
The USD/MXN has fallen to a new year-to-date (YTD) low of 19.41, with the pair remaining bearish-biased after achieving a series of successive lower highs and lower lows. Additionally, prices are below the 20-day Simple Moving Average (SMA) at 19.58. A daily close below 19.50 may exacerbate a test of the 19.00 figure. On further weakness, the next target would be the August 19, 2024 swing low of 18.59.
Conversely, if USD/MXN climbed past the 19.50 area and reached a three-day high of 19.66, past the 20-day Simple Moving Average (SMA) before retreating somewhat.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The pair trades around 0.5900, gaining over 1.5% on the day.
- Softer US CPI and mixed Fed expectations keep the USD under pressure.
- New Zealand Dollar benefits from risk sentiment, testing key resistance levels.
NZD/USD trades around the 0.5900 level during the North American session on Tuesday, benefiting from a softer US Dollar (USD) and improving risk sentiment. US President Donald Trump dominated headlines, reiterating his aggressive stance on trade and investment policies. Trump’s remarks included calls for “investment agreements” with major corporations, pushing for economic policies that aim to strengthen the US economy but add to market uncertainty.
Meanwhile, the US Dollar Index (DXY), which tracks the performance of the USD against six major currencies, corrected to near 101.50, reflecting broader dollar weakness after the US Consumer Price Index (CPI) for April came in below expectations. The headline inflation rate dropped to 2.3% year-on-year, down from 2.4% in March, as reported by the US Bureau of Labor Statistics (BLS). This reading failed to meet the market consensus of 2.4%, raising doubts about the Federal Reserve’s (Fed) ability to maintain its current monetary policy stance.
Additionally, Trump’s comments about potentially reducing tariffs on Chinese goods and easing investment restrictions have contributed to a more favorable risk environment, supporting commodity-linked currencies like the New Zealand Dollar (NZD). However, Fitch Ratings noted that the effective tariff rate on Chinese imports remains above 40%, despite recent cuts.
Technical Analysis
NZD/USD is showing bullish signals, trading around 0.5900, up approximately 1.5% on the day. The pair sits near the top of its daily range (0.5847 – 0.5942). The Relative Strength Index (RSI) hovers in the 50s, indicating neutral conditions, while the Moving Average Convergence Divergence (MACD) signals sell momentum. Momentum (10) is around 0, suggesting buy conditions, as do the 10-day Exponential Moving Average (EMA) and Simple Moving Average (SMA), both hovering around 1. The Commodity Channel Index (20) and Awesome Oscillator are both around 0, signaling neutral conditions.
Despite the 20-day SMA signaling a potential sell, longer-term SMAs (100-day and 200-day) favor a continued bullish outlook. Immediate support levels are found around 0.5931, 0.5925, and 0.5909, while resistance lies around 0.5944 and 0.5947. A clear break above 0.5947 could open the door for a move towards the psychological 0.6000 level, while a drop below 0.5900 may expose the pair to further downside risks.
Daily Chart
- NZD/JPY trades near the 87.50 zone, maintaining a bullish tone.
- Momentum remains positive, supported by short-term averages.
- Key support sits around 86.90, with resistance near 87.95.
The NZD/JPY pair has seen a strong upside push, trading near the 87.50 zone with around 0.80% gains ahead of the Asian session on Tuesday. The pair is positioned mid-range within its recent fluctuation, reflecting a steady bullish tone as traders assess broader risk sentiment. Key technical indicators are signaling mixed but generally positive momentum, adding to the overall buy sentiment.
Technically, the pair shows a bullish outlook, supported by the Moving Average Convergence Divergence (MACD), which confirms upward momentum, and the Relative Strength Index (RSI), hovering in the 60s, reflecting neutral but slightly supportive conditions. Meanwhile, the Stochastic %K (14, 3, 3) remains in the 80s, also hinting at neutral bias, while the Commodity Channel Index (CCI) around the 190s and the Ultimate Oscillator (7, 14, 28) in the 50s add further stability to the pair's stance.
In terms of moving averages, the shorter-term 10-day Simple Moving Average (SMA) and 10-day Exponential Moving Average (EMA) both align with the broader buy signal, reinforcing the positive tone seen in the 20-day and 100-day SMAs. However, the longer-term 200-day SMA presents a contrasting signal, suggesting caution over the medium term.
Immediate support is identified around 86.90, followed by deeper levels at 86.23 and 86.15. On the upside, resistance is likely near 87.64, with a stronger barrier around 87.96, which could limit further gains in the near term.
Daily Chart
- The Dow Jones shed some weight, falling to 42,130 on Tuesday.
- Markets largely failed to react to US CPI inflation, which eased slightly in April.
- Despite a general easing in the weighted index, key goods continue to rise, and tariff impacts loom ahead.
The Dow Jones Industrial Average (DJIA) trimmed momentum on Tuesday, easing back slightly around 270 points and getting hung up on the 42,130 region. Steadying bids come off the heels of a stellar start to the trading week that saw the DJIA climb over a thousand points on Monday, but a firm bullish extension in tech stocks that bolstered other equity indexes higher saw the Dow Jones left in the dust on Tuesday.
United States (US) Consumer Price Index (CPI) inflation overall eased in April, with headline CPI inflation rising 0.2% MoM versus the expected 0.3% increase from March’s -0.1% print. Annualized CPI also came in below expectations, rising 2.3% YoY versus the expected hold of 2.4%. Despite the lowest pace of annualized CPI inflation growth in three years, economists and markets are now bracing for tariff impacts to begin wiping out progress on walking back inflation beginning in May. According to reporting by CNBC, the chief of economist from the Moody’s Ratings agency summarized April’s report by saying:
“It felt like we could just about declare victory on putting inflation back in the bottle, and it’s back out again. Soak this report in, it’ll be a while before we get another good one.”
Despite a general easing in key weighted components, such as gasoline, apparel, used cars, and airplane tickets, annualized costs of often-purchased goods continue to soar well above recorded prices a year ago. Egg prices, always a hot topic around the inflation water cooler, remain nearly 50% higher than they were at the same time last year. Many key core consumer goods also chalked in around 10% YoY price increases, including coffee (instant, roasted, and raw), ground beef and beef roasts, gas utility prices, college textbooks, admission to sporting events, and video rentals, including subscription services. Over a similar period, average US wages have risen around a dollar an hour, or a 4% increase.
US Producer Price Index (PPI) inflation figures on Thursday will follow up this week’s CPI inflation print, alongside US Retail Sales data from April. The forward-looking University of Michigan Consumer Sentiment Index for May will also be released on Friday, and give investors a peek under the hood of how US consumers feel about the state of the economy. Median market forecasts are expecting a much-needed uptick in the advance sentiment indicator.
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Dow Jones price forecast
The Dow Jones has halted its early-week surge, pumping the brakes and pausing near 42,300. The major equity index is up over 1.5% on the week, and has reclaimed about 15.5% from early April’s plunge into the 36,600 region. A fresh break to the north side of the 200-day Exponential Moving Average (EMA) near 41,500 has put the Dow Jones back on the bullish side, and bidders will be looking to extend momentum to push price action back toward record highs above 45,000.
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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