Currency Hedger No Comments

Dolar snaps back – the return of Middle East hostilities drains currency markets

ge market has turned defensive following a sudden escalation in the conflict between Iran and the United States. Iranโ€™s attack on commercial vessels in the Strait of Hormuz brought an end to the month-long ceasefire that had been in place. As a result, the geopolitical risk premium has returned to the FX market, draining capital from most currencies and redirecting it toward the U.S. dollar. Timeline of the escalation: How did the memorandum collapse?

The renewed escalation followed the sequence of events below:

  • Signing of the memorandum: Last month, the United States and Iran reached a temporary 60-day agreement. The deal guaranteed safe, toll-free passage for ships through the Strait of Hormuz in exchange for the temporary suspension of U.S. sanctions on Iranian oil exports and the launch of negotiations over Tehranโ€™s nuclear program.
  • Iran attacks commercial vessels (beginning of the escalation): Iran violated the agreement by targeting three commercial ships transiting the Strait of Hormuz, including an LNG tanker carrying liquefied natural gas.
  • U.S. retaliation: In response to the attacks on commercial shipping, U.S. forces launched a large-scale retaliatory strike against more than 80 targets across Iran. Washington also immediately reinstated sanctions on Iranian oil trade.
  • Iranian counterattack: Tehran responded with another wave of strikes, this time targeting sites in Bahrain and Kuwait.
  • Official end of the ceasefire: Speaking to reporters during the NATO summit in Ankara, Donald Trump ended any speculation by declaring that the ceasefire was over (“as far as I’m concerned, it’s over”). The President sharply criticized the Iranian leadership, calling them “scum” and “liars,” effectively ruling out any near-term return to diplomacy.

FX market reversal: Risk aversion weighs on emerging-market currencies

Smaller emerging-market currencies are the biggest losers of today’s session, rapidly surrendering the gains accumulated during the past several weeks of relative geopolitical calm. The Hungarian forint is the weakest performer today ( EUR/HUF: +0.85%, USD/HUF: +1.0% ), falling to a two-month low against the euro and a three-month low against the U.S. dollar. However, the forint entered this new phase of the Middle East conflict from a position of considerable strength, retreating from multi-year highs reached on the back of investor optimism following Peter Magyar’s party’s victory in the parliamentary elections. For the HUF, the current move may represent a justified correction after most positive developments had already been priced in. Any further appreciation will likely depend on more structural improvements in the Hungarian economy, particularly stronger foreign direct investment. Alongside the forint, the South African rand (USD/ZAR: +0.6%, EUR/ZAR: +0.4%) and the Indian rupee (USD/INR: +0.5%) are also posting broad losses. India remains directly dependent on crude oil shipments passing through the Strait of Hormuz, while South Africa relies heavily on refined petroleum products. Meanwhile, the Polish zloty is down around 0.3% against both the euro and the U.S. dollar.

Chart 1: EUR/HUF and USD/HUF exchange rates (yellow)

Wykres 1: Kurs EURHUF oraz USDHUF (ลผรณล‚ty)

Source: xStation5

EUR/USD: Bears regain the upper hand

The increase in risk aversion is also weighing on the broader G10 currency complex. The only notable exceptions are the New Zealand dollar , supported by the Reserve Bank of New Zealand’s recent rate hike to 2.50% and hawkish remarks from the RBNZ Governor, and the Norwegian krone , which continues to benefit from renewed upward pressure on oil prices. The resumption of hostilities in the Middle East has effectively erased a week’s worth of gains on EUR/USD. The world’s most traded currency pair has declined by roughly 0.4% since yesterday and, despite relatively flat trading today, remains vulnerable to further downside. This is especially true given that the European Central Bank is unlikely to respond with the kind of reactive hawkish rhetoric that would provide meaningful support for the euro. Options market participants are also increasingly hedging against further EUR/USD declines. The one-month Risk Reversal indicator has remained below zero almost continuously since March 2026, indicating that demand for EUR/USD put options exceeds demand for call options. In other words, investors are showing a greater preference for contracts that protect against further euro weakness.

Chart 2: One-month EUR/USD Risk Reversal and EUR/USD spot

Wykres 2: Risk Reversal 1M dla EURUSD oraz Spot EURUSD

Source: Bloomberg Finance LP

On the other hand, developments in the bond market may provide fundamental support for EUR/USD. Yields on two-year German government bonds have rebounded much more sharply (around +10 bps) than their U.S. counterparts, reflecting the euro area’s significantly greater sensitivity to a prolonged energy shock. If military tensions persist over the longer term, the ECB may be forced to adopt a more hawkish, inflation-focused stance. Even without additional rate hikes, such a shift in communication could help EUR/USD defend support around 1.1400. Chart 3: EUR/USD and the yield spread between two-year German and U.S. government bonds

Wykres 3: EURUSD oraz spread rentownoล›ci miฤ™dzy 2-letnimi obligacjami (Niemcy - USA)

Source: Bloomberg Finance LP

Currency Hedger No Comments

Chart of The Day – EUR/USD Caught Between the Fed, ECB and Middle East Risks

Wednesdayโ€™s session on the EURUSD market is being shaped by a clash of three key forces: expectations regarding the future path of Federal Reserve policy, the increasingly firm stance of the European Central Bank, and the renewed risk premium linked to geopolitical developments in the Middle East. The market is currently at an unusual point, as investors are no longer focused solely on which central bank will maintain the more restrictive stance.

The key question now is how long the Fed will keep rates at current levels and whether the ECB will indeed be forced to deliver further rate hikes. Todayโ€™s release of the FOMC meeting minutes could provide important clues about the future direction of US monetary policy. At the same time, markets must also factor in geopolitical developments and rising oil prices, which could once again complicate the inflation outlook on both sides of the Atlantic.

Source: xStation5

Three factors currently shaping EURUSD

1. FOMC Minutes: Markets are looking for clues on future Fed rate cuts

The main event of the day remains the release of the latest Federal Open Market Committee meeting minutes. This time, markets are not focusing solely on whether the Fed will remain restrictive. The more important question is when and under what conditions the Federal Reserve will be ready to shift the direction of monetary policy.

Markets have been increasingly assessing the possibility of future rate cuts in the United States, but the Fed must remain extremely cautious in its communication. Signalling readiness to ease policy too quickly could be interpreted as declaring victory over inflation prematurely and could undermine the central bankโ€™s credibility. The fact that markets are analysing the first signals of Fed communication under Kevin Warshโ€™s leadership adds further importance to todayโ€™s release. The new Fed Chair faces a difficult balancing act: acknowledging market expectations for lower interest rates while avoiding any suggestion that the fight against inflation has already been won. Todayโ€™s minutes may provide insight into how FOMC members assess:

  • the persistence of inflationary pressures,
  • the resilience of the US economy,
  • the timing of a potential rate-cut cycle.

If the document shows greater caution towards rate cuts, the dollar could receive additional support. However, if markets interpret the minutes as signalling greater willingness to ease policy, the US currency could come under renewed pressure.

2. ECB remains hawkish and continues to support the euro

The situation across the Atlantic currently looks different. Following its 25 basis point rate hike in June, the European Central Bank remains focused on risks related to persistent inflationary pressures. Markets are increasingly pricing in a scenario where the ECB could deliver another rate increase later this year. This marks a significant shift compared with the previous period, when the main concern for the euro was slowing economic growth and the possibility of monetary easing. Currently, markets must consider that persistent inflation, particularly in the services sector, combined with the potential for higher energy prices, could force the ECB to maintain a restrictive policy stance for longer. For EURUSD, this provides an important source of support. Even if the dollar remains strong due to the relative strength of the US economy and its safe-haven status, the euro continues to benefit from the prospect of higher interest rates in the euro area.

3. Rising US-Iran tensions and the renewed importance of oil markets

One of the most important new drivers for global markets remains the situation in the Middle East. Rising tensions between the United States and Iran, along with concerns over restrictions on Iranian oil exports, have increased the risk of supply disruptions in energy markets. The market response has been a rise in Brent and WTI crude prices, with investors once again considering the possibility that inflationary pressures could remain elevated for longer. The impact of this factor on EURUSD is not straightforward. On one hand, geopolitical uncertainty traditionally supports the US dollar as a safe-haven asset. During periods of increased risk aversion, investors often turn towards the American currency. On the other hand, higher energy prices increase inflationary pressure and complicate central bank decisions. The euro area economy remains particularly vulnerable to rising import costs due to its dependence on energy supplies. If oil prices move significantly higher again, markets may begin pricing in the risk of both the Fed and the ECB maintaining tighter monetary policy for longer.

EURUSD: Markets await the next move in the Fed-ECB policy divergence

The current situation in the major currency pair reflects the clash of three different narratives:

  • Fed โ€“ markets are trying to determine the timing of potential interest rate cuts,
  • ECB โ€“ investors are pricing in the possibility of further monetary tightening,
  • Middle East tensions and oil prices โ€“ a factor increasing inflation uncertainty and market volatility.

In this environment, EURUSD remains highly vulnerable to sharp moves, as every new development can quickly change expectations regarding the policy gap between the two central banks. US bond yields will remain a key transmission channel. Rising yields could support the dollar by increasing the market pricing of higher financing costs, while falling yields could increase pressure on the US currency.

Key takeaways

  • Todayโ€™s FOMC minutes could become the most important event for the dollar market.
  • The Fed is now at a stage where investors are analysing not the possibility of further rate hikes, but the timing of potential rate cuts.
  • Kevin Warsh must balance market expectations for easier policy with the need to preserve credibility in the fight against inflation.
  • The ECB remains an important source of support for the euro due to expectations of another rate hike this year.
  • Escalating tensions in the Middle East and rising oil prices could once again increase inflationary pressures.

EURUSD therefore remains at a point where the next major move may be determined by one key question: will Fed policy

Currency Hedger No Comments

AUD/USD Price Forecast: Hawkish remarks from RBAโ€™s Hunter lift Australian Dollar

  • AUD/USD rises to near 0.6943 as the Australian Dollar outperforms.
  • RBAโ€™s Hunter signals that the central bank is committed to bringing inflation back to the target.
  • Investors await the FOMC Minutes and Chinaโ€™s CPI data for June.

The Australian Dollar (AUD) trades 0.23% higher to near 0.6943 against the US Dollar (USD) during the Asian trading session on Wednesday. The Aussie pair gains as the Australian Dollar outperforms its major currency peers, except the New Zealand Dollar (NZD), with the Reserve Bank of Australia (RBA) keeping the door open for further monetary policy tightening, if needed, to bring inflation back to the central bankโ€™s target.

Australian Dollar Price Today

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

USDEURGBPJPYCADAUDNZDCHF
USD-0.03%0.03%0.15%-0.02%-0.21%-0.50%0.03%
EUR0.03%0.05%0.17%-0.00%-0.18%-0.49%0.05%
GBP-0.03%-0.05%0.13%-0.03%-0.25%-0.52%-0.03%
JPY-0.15%-0.17%-0.13%-0.18%-0.34%-0.65%-0.15%
CAD0.02%0.00%0.03%0.18%-0.18%-0.48%0.02%
AUD0.21%0.18%0.25%0.34%0.18%-0.30%0.18%
NZD0.50%0.49%0.52%0.65%0.48%0.30%0.49%
CHF-0.03%-0.05%0.03%0.15%-0.02%-0.18%-0.49%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Earlier in the day, RBA Assistant Governor Sarah Hunter said that the central bank will act as needed to bring inflation back to target, even as the recent oil shock has yet to produce a marked slowdown in economic activity.

This year, the RBA has already delivered three interest rate hikes of 25 basis points (bps) and has pushed the Official Cash Rate (OCR) to 4.35%.

Going forward, investors will focus on Chinaโ€™s Consumer Price Index (CPI) data for June, which will be released on Thursday.

Meanwhile, the US Dollar trades marginally lower ahead of the Federal Open Market Committee (FOMC) minutes of the June policy meeting, which will be published at 18:00 GMT. Investors will pay close attention to FOMC minutes to get fresh cues regarding the Federal Reserveโ€™s (Fed) monetary policy outlook.

AUD/USD technical analysis

AUD/USD trades higher at around 0.6944 at press time. However, the near-term tone is mildly bearish as it holds below the 20-period exponential moving average (EMA), which is at 0.6967. The pairโ€™s inability to reclaim this nearby EMA resistance suggests topside attempts remain capped, while the Relative Strength Index (RSI) at 42.75 stays below the midline, hinting at subdued but not extreme selling pressure.

On the topside, immediate resistance is clustered at the 20-period EMA at 0.6967, which needs to be overcome to shift the near-term bias toward recovery and open the way for a more sustained rebound. Looking down, the June 30 low at 0.6865 is the key support zone; a break below that would open further downside towards the March 30 low at 0.6833.

Currency Hedger No Comments

EUR/JPY Price Rebounds above confluence around 185.00, moving averages

  • EUR/JPY eyes the primary barrier at the upper boundary of the symmetrical triangle around 185.80.
  • The 14-day Relative Strength Index is at 52.81, hinting at neutral-to-firm momentum.
  • The currency cross could find the initial support at the VWAP of 185.20.

EUR/JPY pares its recent losses from the previous day, trading around 185.30 during the Asian hours on Wednesday. The currency cross is retaining a mildly bullish bias as it holds above the Volume-weighted Average Price (VWAP) and a cluster of Exponential Moving Averages (EMAs), with the 50-day EMA acting as nearby trend support.

The 14-day Relative Strength Index (RSI) at 52.81 sits just above its midline, hinting at steady, rather than aggressive, upside momentum while price remains supported by these underlying levels.

Daily chart technical analysis shows the EUR/JPY cross consolidating within a symmetrical triangle pattern, signaling that both buyers and sellers are growing increasingly aggressive as they compress the price into a narrowing range. This tight consolidation reflects a temporary balance of power, with neither side establishing clear control over the market’s direction just yet.

The initial barrier lies at the upper boundary of the symmetrical triangle around 185.80. A break above the triangle would cause the bullish emergence and expose the all-time high of 187.95, which was recorded on April 17.

On the downside, primary support lies at the VWAP at 185.20, followed by the 50-day EMA at 184.95 and the nine-day EMA at 184.93. Further declines would put downward pressure on the EUR/JPY cross to test the symmetrical triangleโ€™s lower boundary around 183.70. A break below the triangle would expose the four-month low of 181.87, recorded on March 16, and the six-month low of 180.81.

Chart Analysis EUR/JPY
EUR/JPY: Daily Chart

Euro Price Today

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

USDEURGBPJPYCADAUDNZDCHF
USD-0.02%0.02%0.15%-0.03%-0.22%-0.49%0.01%
EUR0.02%0.05%0.19%-0.01%-0.19%-0.47%0.04%
GBP-0.02%-0.05%0.13%-0.05%-0.25%-0.51%-0.03%
JPY-0.15%-0.19%-0.13%-0.18%-0.35%-0.64%-0.15%
CAD0.03%0.00%0.05%0.18%-0.18%-0.47%0.03%
AUD0.22%0.19%0.25%0.35%0.18%-0.28%0.19%
NZD0.49%0.47%0.51%0.64%0.47%0.28%0.49%
CHF-0.01%-0.04%0.03%0.15%-0.03%-0.19%-0.49%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Currency Hedger No Comments

Swiss Franc weakens as US Dollar advances on renewing US-Iran tensions

  • USD/CHF rises as the US Dollar gains following US airstrikes on Iran over Strait of Hormuz ship attacks.
  • Iran’s joint military command denounced the attacks on southern Iran as blatant aggression, promising a crushing military response.
  • Switzerland’s 10-year yield edges above 0.34%, tracking higher global borrowing costs as surging oil prices reignite inflation fears.

USD/CHF extends its gains for the third successive day, trading around 0.8090 during the Asian hours on Wednesday. The pair appreciates as the Greenback receives support from safe-haven demand amid renewing geopolitical tensions. US airstrikes against Iran came in response to Iranian attacks on commercial vessels in the crucial Strait of Hormuz, including a Qatari LNG carrier and a Saudi oil tanker.

Reacting to recent US airstrikes, Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that the era of bullying and extortion has ended and insisted that Iran will not fold under pressure. Meanwhile, the country’s top joint military command denounced the attacks on southern Iran as blatant aggression, promising a crushing military response. Defiant over the strategic waterway, Tehran reaffirmed that it will block any US interference regarding the control and management of the Strait of Hormuz.

However, the upside of the US Dollar could be restrained due to cooling rate-hike expectations, a shift triggered by last week’s weaker-than-expected Nonfarm Payrolls (NFP) data. According to LSEG data, market pricing for total Fed rate increases by December has dropped to roughly 26 basis points, down significantly from the 38 basis points projected just a week ago.

Switzerland’s 10-year government bond yield edged above 0.34%, tracking a global rise in borrowing costs as surging oil prices reignited broader inflation concerns. This uptick comes despite domestic Swiss inflation slowing to 0.5% in June, marking its first decline in eight months and remaining well within the Swiss National Bankโ€™s (SNB) 0โ€“2% target range. The economic backdrop was further supported by the labor market, as Switzerlandโ€™s non-seasonally adjusted unemployment rate fell to 2.9% in June 2026, dropping below the 3.0% seen in the previous two months and beating market forecasts of 3.1%.

Meanwhile, the International Monetary Fund (IMF) recently urged the SNB to maintain flexibility, advising the central bank to stand ready to either tighten policy or slash interest rates into negative territory should stagflation risks materialize. In response, the Swiss central bank reaffirmed its ongoing commitment to currency market interventions to maintain economic stability.

Currency Hedger No Comments

New Zealand Dollar rallies to 0.5700 vs USD on expected RBNZ rate hike

  • NZD/USD gains some positive traction after the widely expected RBNZ rate hike.
  • Renewed US-Iran hostilities underpin the safe-haven USD and cap spot prices.
  • Reviving inflation fears further support the buck ahead of the FOMC Minutes.

The NZD/USD pair attracts some buyers in reaction to the Reserve Bank of New Zealand’s (RBNZ) anticipated interest rate hike and reclaims the 0.5700 mark during the Asian session on Wednesday. Spot prices, for now, seem to have snapped a two-day losing streak, though the upside potential seems limited amid geopolitical uncertainties.

As was widely expected, the RBNZ decided to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 2.50% following the conclusion of the June monetary policy meeting. The New Zealand Dollar (NZD) bulls, however, seem hesitant and opt to wait for further insight if this is a one-off move rather than the start of further tightening. Hence, the focus will be on the post-meeting press conference, where comments from RBNZ Governor Dr. Anna Breman will influence the NZD and provide a fresh impetus to the NZD/USD pair.

In the meantime, renewed US-Iran hostilities assist the safe-haven US Dollar (USD) to stand firm near the weekly high, which is seen acting as a headwind for the currency pair. The US military unleashed a new wave of strikes against Iran on Tuesday following reports of attacks on three oil tankers in the Strait of Hormuz, jeopardizing the already fragile ceasefire. The US also moved to withdraw a concession that allowed Iran to sell oil on international markets, triggering a sharp rally in Oil prices and reviving inflation fears.

The concerns, in turn, lift market expectations that the Fed will hike interest rates at least once by the end of this year, triggering a fresh leg up in US Treasury bond yields and further underpinning the Greenback. This contributes to capping the upside for the NZD/USD pair. Traders also seem hesitant and keenly await the release of FOMC Minutes before positioning for the next leg of a directional move, warranting caution before positioning for the resumption of the recent recovery from the year-to-date low, touched in June.

Currency Hedger No Comments

British Pound declines to near 1.3350 as US launches strikes on Iran

  • GBP/USD softens to around 1.3355 in Wednesdayโ€™s Asian session.
  • US launched strikes on Iran after tankers hit in Strait of Hormuz.
  • Burnham is widely expected to become Prime Minister by July 20.

The GBP/USD pair loses traction to near 1.3355 during the Asian trading hours on Wednesday. The US Dollar (USD) edges higher against the British Pound (GBP) amid renewed geopolitical tensions after the US renewed strikes on Iran. The Federal Reserveโ€™s (Fed) June meeting minutes will be published later on Wednesday.

Washington unleashed a new wave of strikes against Tehran on Tuesday and revoked a license allowing the country to sell oil after three tankers were attacked in the Strait of Hormuz, per Reuters. Geopolitical fears surge following this headline, supporting the Greenback as a safe-haven asset.

Westpac analysts said that concerns for the stability of the peace deal reemerged after Iran attacked ships crossing the Strait of Hormuz. “Concerns over the inflation outlook were in focus, seeing yields jump higher across the globe,” they wrote.

The formal race to replace outgoing Prime Minister Keir Starmer begins on July 9. Frontrunner Andy Burnham is widely expected to become Prime Minister by July 20. The Cable might receive some support as the UK political landscape stabilizes. Investors are pricing out the domestic risk premium as Burnham anchors his position as the leader-in-waiting to succeed Keir Starmer.