Currency Hedger No Comments

Indian Rupee flattens while flaring US-Iran tensions dampen outlook

  • The Indian Rupee trades calmly at open against the US Dollar; however, the outlook has become uncertain.
  • The exchange of attacks between the US and Iran has renewed Middle East tensions.
  • Investors await the US-India CPI data for May.

The Indian Rupee (INR) opens almost flat against the US Dollar (USD) on Wednesday. The USD/INR pair consolidates around 95.42; however, the outlook of the pair has turned bullish as Middle East tensions have flared up again, following the United States (US) retaliation against Iran over the shooting down of an American helicopter.

Renewed US-Iran tensions have offered support to oil prices. As of writing, the MCX Crude Oil contract expiring on June 18 is up 0.8% to near 8,490. Oil prices also clawed back half of their early losses on Tuesday after sliding to 8,212.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

US strikes after Trump vows retaliation over the shooting down of an Apache helicopter over Hormuz

On late Tuesday, the US Central Command (CENTCOM) announced that it launched a series of attacks on Iran’s air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz, a vital passage to almost 20% of global energy supply. The US was expected to conduct military operations against Iran as President Donald Trump vowed retaliation for shooting down a US Apache helicopter over Hormuz.

In response, Iran has launched missiles on various US airbases in Jordan, Kuwait, and Bahrain, and has warned Washington to leave the Gulf region for their own safety.

“Powerful armed forces will not ignore any attack or threat,” Iran’s Foreign Minister Abbas Araghchi said, adding, “Get out of our region if you want to be safe.”

FIIs remain net sellers on all trading days so far in June

Overseas investors continue to dump their stake in the Indian stock market, as Middle East tensions continue to hurt their sentiment towards risky assets. So far in June, Foreign Institutional Investors (FIIs) have remained net sellers in all trading days of June and have offloaded their stake worth Rs. 60,529.36 crore.

US-India CPI data under spotlight

Later in the day, investors will pay close attention to the US Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT. The US Bureau of Labor Statistics (BLS) is expected to show that the headline CPI grew at an annualized pace of 4.2%, faster than 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – is expected to have risen at a faster pace of 2.9% against the previous reading of 2.8%.

Signs of price pressures accelerating further would prompt expectations of the Federal Reserve’s (Fed) interest rate hikes for the year. As of now, the CME FedWatch tool shows that the odds of the Fed delivering at least one interest rate hike this year are almost 72%.

Meanwhile, India’s CPI data on Friday is expected to arrive higher at 4% YoY from 3.48% in April.

Technical Analysis: USD/INR trades in a Symmetrical Triangle formation

USD/INR trades almost flat at around 95.43 at press time. The Symmetrical Triangle formation and pair’s stickiness to the 20-period Exponential Moving Average (EMA) at 95.46, reflects that the immediate trend has turned sideways.

The Relative Strength Index (RSI) wobbles inside the 40.00-60.00 zone, suggesting indecisiveness among investors.

On the topside, immediate resistance is located near the downward-sloping border of the above-mentioned chart pattern at around 96.00. A decisive break above 96.00 would open the door for further upside towards the all-time high at 97.10. On the downside, initial support is seen at the upward support trend-line break level near 95.04, ahead of the structural trend-line origin around 94.49; a sustained drop below these marks would open the way for a deeper corrective phase, while holding above them would keep the broader constructive pattern intact.

Currency Hedger No Comments

EUR/JPY Price – Strengthens above 185.00, while bullish trend eyes consolidation

  • EUR/JPY gains ground to around 185.20 in Wednesday’s early European session.
  • Likelihood of hawkish stance hikes from the ECB supports the Euro.
  • The cross keeps the bullish vibe, but consolidation cannot be ruled out in near term with neutral RSI momentum.
  • The first upside barrier emerges at 186.05; the initial support level is located at 185.15.

The EUR/JPY cross gathers strength to near 185.20 during the early European session on Wednesday. The Euro (EUR) edges higher against the Japanese Yen (JPY) amid expectations that the European Central Bank (ECB) would raise rates at its June policy meeting on Thursday.

The ECB is set to raise its key interest rate for the first time in almost three years on Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East. While money markets are already pricing in a second 25 basis points (bps) hike for September, economists expect the ECB to maintain a “gently hawkish” but highly data-dependent tone without pre-committing to a fixed path.

“Lagarde may provide some indication of the ECB’s next move after she muddled communication on the rate outlook in March. We expect her to be clearer than in the past that a second hike may be in the pipeline,” said Simona Delle Chiaie, chief euro-area economist at Bloomberg. Any hawkish comments from ECB policymakers could lift the EUR against the JPY in the near term.

Chart Analysis EUR/JPY

Technical Analysis:

In the daily chart, EUR/JPY holds a constructive near-term bias as it consolidates just above the Bollinger middle band and remains comfortably over the 100-day simple moving average, suggesting underlying demand on dips. The Relative Strength Index (14) at 49.99 is effectively neutral, hinting at a pause rather than exhaustion after the recent grind higher.

On the topside, the immediate hurdle is the Bollinger upper band near 186.05, where fresh selling interest could emerge. The next hurdle is seen at the February 9 high of 186.24, en route to the January 23 high of 186.88. On the downside, initial support is seen at the Bollinger middle band around 185.15, ahead of the 100-day SMA at 184.50, while a deeper pullback towards the lower Bollinger band near 184.25 would be expected to attract buyers as long as the broader bullish structure is preserved.

Currency Hedger No Comments

Japanese Yen languishes despite wholesale inflation accelerates in May

  • USD/JPY steadies as the Japanese Yen receives no support after May wholesale inflation rose to a three-year high of 6.3%.
  • Surging factory-gate inflation solidifies market expectations for an imminent hawkish interest rate pivot by the Bank of Japan.
  • The US Dollar may regain ground on safe-haven demand after Iran’s IRGC claimed drone attacks on the US Fifth Fleet.

USD/JPY flatlines after experiencing volatility, trading around 160.40 during the Asian hours on Wednesday. The pair continues to hold its ground, reflecting a struggling Japanese Yen (JPY) that has failed to find support despite a massive acceleration in wholesale inflation. Driven by surging energy costs linked to the ongoing Middle East conflict, Japan’s Producer Price Index (PPI) jumped 6.3% year-over-year in May. This hot printing comfortably outpaced April’s upwardly revised 5.3% figure and surpassed market consensus of 5.5%, marking the fastest pace of wholesale price growth in three years.

This dramatic uptick in Japan’s factory-gate inflation has solidified market expectations for a hawkish pivot from the Bank of Japan (BoJ). With policymakers highly sensitive to the double-whammy of a sharply depreciating JPY and rising import costs, the central bank is widely expected to lift interest rates at its policy meeting next week. Traders are now closely parsing every signal from BoJ Governor Kazuo Ueda, as aggressive market speculation builds for consecutive rate hikes in September and December to rein in stubborn price pressures.

The USD/JPY pair may further appreciate as the safe-haven demand could support the US Dollar (USD), which could be attributed to the renewed Middle East tensions. Iran’s Islamic Revolutionary Guard Corps (IRGC) said it attacked the US Fifth Fleet in Bahrain with drones in response to US strikes on areas in southern Iran. The IRGC warned of “a more severe response” if what it describes as US “aggression” continues.

Earlier, the US launched a third wave of retaliatory strikes on Iranian coastal targets on Wednesday after Iran fired at least three ballistic missiles from Isfahan. This followed an initial round of US strikes on Tuesday, which Washington called a proportional response to Iran downing a US helicopter gunship near the critical Strait of Hormuz.

Stronger-than-expected US May jobs data have boosted expectations of a Federal Reserve (Fed) rate hike this year. Traders will take more cues from the US CPI report later in the day. The headline US CPI is expected to show a rise of 4.2% YoY in May, compared to 3.8% in April. The core CPI is projected to show an increase of 2.9% YoY during the same period, versus 2.8% prior.

Currency Hedger No Comments

USD/CNH Price Forecast: More downside likely below 6.7500

  • USD/CNH trades marginally lower to near 6.7750 as the US Dollar edges down.
  • China’s CPI remains steady at 1.2% YoY in May, misses 1.3% estimates.
  • Investors await the US inflation data for May.

The USD/CNH pair trades slightly lower to near 6.7750 during the early European trading session on Wednesday. The pair faces selling pressure due to continued outperformance by the Chinese Yuan (CNY), being a trade surplus economy.

On Tuesday, China’s Trade Balance data for May also came in stronger than projected. Trade Balance arrived at $105.43 Billion, higher than the $92.1 Billion estimate and the previous reading of $84.82 Billion. Imports grew strongly by 27.4%, while they were anticipated to rise moderately by 25% vs. the prior release of 25.3%. While Exports rose 19.4% against expectations of 15% and the previous release of 14.1%.

Meanwhile, China’s Consumer Price Index (CPI) data for May has remained steady at an annualized pace of 1.2%, while it was expected to grow at a faster pace of 1.3%.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.12% lower to near 99.87 ahead of the United States (US) CPI data for May, which will be published at 12:30 GMT. The US headline inflation is expected to come in higher at 4.2% Year-on-Year (YoY) from 3.8% in April.

USD/CNH technical analysis

USD/CNH trades lower at around 6.7763, extending the downside bias as spot holds below the 20-day Exponential Moving Average (EMA) at 6.7867. The pair trading below this short-term average suggests sellers retain control, while the 14-day Relative Strength Index (RSI) around 42 stays below the neutral 50 line, hinting at lingering bearish momentum rather than an oversold condition.

On the topside, immediate resistance is now aligned with the 20-day EMA at 6.7867, and a daily close above this barrier would be needed to ease current downside pressure and open the way for a more sustained recovery. On the downside, the pair could slide further towards 6.7500 if it falls below the June 2 low at 6.7580.

Currency Hedger No Comments

British Pound gains ground to near 1.3400 ahead of US CPI release

  • GBP/USD gains traction to near 1.3390 in Wednesday’s early European session. 
  • Iranian officials warned Gulf states have a “legal and moral responsibility” to prevent US and Israeli strikes. 
  • The US May CPI inflation report will take center stage on Wednesday. 

The GBP/USD pair trades in positive territory around 1.3390 during the early European trading hours on Wednesday. Markets might turn cautious later in the day ahead of the US May Consumer Price Index (CPI) inflation report. On Friday, the monthly UK Gross Domestic Product data will be in the spotlight. 

Financial markets had expected the Bank of England (BoE) to cut interest rates twice this year to 3.25%. Since the US-Iran war began, the situation has reversed, and now a rise of 25 basis points (bpd) before December is projected, according to CNBC.

Nonetheless, the potential upside for the British Pound (GBP) might be limited as renewed tensions in the Middle East weigh on the riskier assets. Iran’s Foreign Minister Abbas Araghchi on Wednesday warned that its neighbors in the Gulf have a “legal and moral responsibility” to prevent American and Israeli strikes. 

This statement came as the US launched retaliatory strikes against Iran on Tuesday in what it called a proportional response to the shooting down of a US helicopter gunship near the Strait of Hormuz a day earlier. 

The US CPI inflation report will be closely watched as it could give some hints about the US interest rate path. If the reports show hotter-than-expected outcomes, this could lead traders to price in a higher probability of the Federal Reserve (Fed) raising interest rates, which would provide some support to the USD against the GBP. 

Currency Hedger No Comments

Offshore Yuan Remains Firm

The offshore yuan firmed to around 6.77 per dollar on Wednesday as investors assessed the latest inflation data and their implications for China’s economic outlook. Consumer inflation rose 1.2% annually in May 2026, slightly below expectations of 1.3%, indicating that weak household demand continued to offset inflationary pressures from higher global energy prices linked to the Middle East conflict. Meanwhile, producer prices climbed to 3.9% from 2.8% in April and marking the highest reading since July 2022. The increase extended the recovery from China’s long producer-price deflation period, driven largely by higher commodity and energy costs. While China has cushioned part of the energy shock through its strategic oil reserves and renewable energy capacity, persistent cost pressures could squeeze corporate profit margins. A broader pass-through to consumer prices could also erode household consumption, although weak domestic demand has so far limited such spillovers.

Currency Hedger No Comments

Euro: Safe haven appeal grows with structural boosters – BNP Paribas

BNP Paribas strategists argue that Europe is emerging as an alternative safe haven, with the Euro gaining ground as a global safe asset. They note that the European Central Bank’s (ECB) work highlights stronger demand for Euro assets and a higher convenience yield on German bunds, which supports broader Eurozone financing conditions. They stress Europe’s industrial resilience, services strength, tech momentum and improving policy and geopolitical backdrop.

Euro benefits from haven re-rating

“All this turmoil has already made Europe look more attractive, as a haven of stability.”

“Last week, the ECB’s annual report on The International Role of the Euro revealed that the euro is catching up as the world’s safe asset of choice.”

“On multiple occasions, during recent episodes of market turmoil, the euro behaved more like a safe asset than the US dollar.”

“Financial markets have noticed: the so-called convenience yield[2] on German bunds rose threefold from 30 bps to 90 over 2023-25.”

“To the extent that all other bonds (sovereign and private) in euros are priced off German bunds, this benefits the entire Eurozone economy.”

Currency Hedger No Comments

Chart of The Day – USD/NOK

Monday’s rise in energy commodity prices proved short-lived, weighing further on the Norwegian currency. The USDNOK pair is approaching the 9.50 level, which was last seen two months ago. Aside from headlines coming out of the Middle East, tomorrow’s scheduled releases of May inflation data from both Norway and the US should take center stage for the pair.

Geopolitics

The weekend exchange of fire between Israel and Iran has cast doubt on the fragile ceasefire currently in place across the region. Under pressure from Washington, both sides halted further strikes. However, the situation remains highly uncertain, which could sustain high volatility in the prices of key energy commodities.

Macroeconomic Data

Tomorrow’s readings are expected to show core inflation remaining unchanged at 3.2%, alongside a slight decline in the headline figure to 3.1% in Norway. An upside surprise could raise expectations for further monetary policy tightening by Norges Bank. As a reminder, the central bank delivered its first interest rate hike since 2023 back in May, reacting to rapidly rising inflation expectations, persistently elevated wage growth, and the concerning stickiness of core inflation. Meanwhile, the headline CPI figure in the United States is expected to edge upward to 4.2%. The consensus also forecasts a modest increase in the core metric to 2.9%. Investors have already fully priced in a Fed rate hike for 2026. A further build-up of price pressures could increase the likelihood of this hike occurring as early as this autumn.

Technical Analysis

Chart 1: USDNOK (01.07.2025 – 09.06.2026)

Source: xStation, 09.06.2026

After establishing a new local low at the 9.13 level, a strong and aggressive demand-driven rebound ensued. The first two key technical resistance levels have been broken. The price has approached the 50% Fibonacci retracement level, which could serve as a crucial test for the ongoing upward trend. The strong momentum of the move is reflected in technical indicators. The RSI is currently hovering around 67 points, signaling that the market is gradually entering overbought territory, which could trigger a temporary pause in momentum.

Key Levels to Watch:

  • To the Upside: If buyers manage to sustain the price above the tested 50% Fibo level, the next natural target for the market could be the 9.56 level, where both the 61.8% Fibonacci retracement and the 100 EMA coincide.
  • To the Downside: Conversely, a sustained rejection of the current resistance level would mean anticipating a return to the primary trend and a retest of lower support levels.