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EUR/GBP holds above 0.8650 as hawkish ECB comments support the Euro

  • The Euro regains ground against the Pound Sterling on Thursday, with the cross returning to the upper range of the 0.8600s.
  • EUR/GBP edges up following hawkish comments from ECB’s Nagel.
  • From a wider perspective, the cross remains sideways, with both currencies weighed by risk aversion.

The Euro (EUR) edges up slightly against the British Pound (GBP) on Thursday, yet moving within previous ranges, following downbeat German consumer confidence figures and hawkish comments by European Central Bank (ECB) member and Bundesbank President Joachim Nagel.

Nagel said earlier on Thursday that an interest rate hike in April will be an option at next month’s ECB meeting “if the war in the Middle East raises the spectre of an inflation surge in the Eurozone”.

These comments follow Wednesday’s remarks by ECB President Christine Lagarde, who affirmed that the central bank will have to respond “in a forceful pr persistent way” if consumer inflation looks set to be well above the bank’s 2% target. 

Higher borrowing costs might derail recovery

The prospect of higher interest rates amid sluggish economic growth in the region’s leading economies is keeping investors wary, weighing on demand for the common currency.

On Thursday, the German GfK Index showed that consumer confidence is expected to plunge to -28 in April from -24.8 in March. Data from Wednesday showed that the German IFO Business Climate deteriorated too, albeit less than expected, while the PMI survey underscored that the rise in energy prices could easily derail a tame economic recovery.

The Pound Sterling (GBP), however, is not faring much better, which keeps the cross in a choppy, sideways trading cycle. UK inflation data revealed that consumer prices remained at 3%, even before the start of the war, which has boosted market expectations that the Bank of England will be forced to hike rates more than once this year.

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GBP moves little as uncertainty prevails over US-Iran peace talks

  • GBP/USD steadies as the US Dollar holds firm amid ongoing uncertainty over efforts to end the Iran war.
  • Iranian officials are reviewing the US proposal but signaled no willingness to engage in talks with Washington.
  • UOB economist highlighted a hawkish BoE shift, holding the Bank Rate at 3.75% after a 9–0 vote.

GBP/USD remains flat after two days of losses, hovering around 1.3360 during the Asian trading hours on Thursday. The pair remains steady as the US Dollar (USD) holds firm, with traders closely tracking developments in the Middle East amid persistent uncertainty over efforts to end the Iran war.

The White House stated that talks are ongoing, with the Trump administration reportedly sending a 15-point proposal to Iran via Pakistan to resolve the conflict. Senior Iranian officials are reviewing the US proposal but have signaled no willingness to engage in talks with Washington. However, Tehran indicated it would reject a US ceasefire offer, instead putting forward a five-point plan that includes sovereign control over the Strait of Hormuz.

The Pound Sterling (GBP) may find support from easing oil prices amid hopes of de-escalating Middle East tensions. UK inflation data for February showed headline CPI steady at 3%, in line with expectations, while core CPI edged higher to 3.2%, surpassing the 3.1% forecast. However, these pre-conflict figures had a limited impact on market sentiment.

UOB economist Lee Sue Ann pointed to a hawkish shift by the Bank of England (BoE), with the Bank Rate held at 3.75% following a unanimous 9–0 vote. The report removes earlier expectations for three rate cuts in 2026, now projecting the GBP Repo Rate to remain at 3.75% through the fourth quarter of 2026 as inflation risks persist.

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Japanese Yen hangs near YTD low vs. USD amid Middle East tensions, intervention fears

  • USD/JPY bulls pause for a breather amid fears of JPY intervention, though the downside appears limited.
  • War-driven economic concerns continue to undermine the JPY and lend support to the currency pair.
  • Inflation fears and hawkish Fed bets underpin the USD, further acting as a tailwind for the spot prices.

The USD/JPY pair consolidates around mid-159.00s during the Asian session on Thursday and remains within striking distance of its highest level since July 2024, touched earlier this month.

The Japanese Yen (JPY) continues with its relative underperformance amid concerns that the war-driven surge in energy prices would weigh on Japan’s trade balance and economic outlook. Furthermore, a sustained increase in Oil prices would drive up inflation and create a classic stagflationary environment, complicating the Bank of Japan’s (BoJ) normalization efforts. This, along with the underlying US Dollar (USD) bullish sentiment, acts as a tailwind for the USD/JPY pair.

Iran’s foreign minister said on Wednesday that Tehran is reviewing a US proposal to end the war but has no intention of holding talks to wind down the widening Middle East conflict. Furthermore, the deployment of additional US troops in the region points to the risk of a further escalation of the conflict and overshadows US President Donald Trump’s ceasefire rhetoric. Apart from this, hawkish US Federal Reserve (Fed) expectations benefit the USD and support the USD/JPY pair.

In fact, traders have nearly priced out the possibility of any further rate cuts by the Fed and are rapidly increasing bets for a hike by the end of this year. The hawkish outlook, along with persistent geopolitical uncertainties, continues to underpin the USD’s global reserve currency status and suggests that the path of least resistance for the USD/JPY pair is to the upside. However, intervention fears hold back the JPY bears from placing fresh bets and cap the upside for spot prices.

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USD/CAD extends rally to near 1.3830 amid uncertainty over Middle East conflicts

  • USD/CAD rallies further to near 1.3830 as investors remain on edge amid Middle East conflicts.
  • The Fed is unlikely to deliver any dovish monetary policy adjustment this year.
  • Higher oil prices are expected to keep the Canadian Dollar broadly on the front foot.

The USD/CAD pair extends its winning streak for the fourth trading day on Thursday and jumps to near 1.3830 during the Asian trading session, the highest level seen in two months.

The Loonie pair trades firmly as the US Dollar (USD) rises amid uncertainty surrounding the war in the Middle East, which involves the United States (US), Israel, and Iran. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto Wednesday’s gains around 99.65.

The safe-haven demand of the US Dollar remains firm as Iran continues to push back hopes of de-escalation in Middle East conflicts, stating that it is not directly involved in negotiations with the US.

Regarding the month-long ceasefire proposal and 15-point settlement plan, Iran said that the Pakistan-delivered proposal was excessive and demanded sovereignty over the Strait of Hormuz. A senior Iranian official said talks could be held in Pakistan or Turkey if they proceed, Reuters reports.

On the domestic front, traders remain confident that the Federal Reserve (Fed) will not cut interest rates this year, as surging energy prices have de-anchored inflation expectations.

Meanwhile, the Canadian Dollar (CAD) underperforms its major currency peers, except antipodeans, as investors remain on edge amid the Middle East war. However, the broader outlook of the Loonie remains firm amid higher oil prices.

Given that Canada is a net oil exporter, higher oil prices due to an energy supply shock is a favorable situation for the Canadian Dollar.

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NZD/USD trades with caution near 0.5800 as Iran rejects US ceasefire proposal

  • NZD/USD remains on the edge around 0.5800 as Iran wants the US to fulfil its demands before ceasefire talks.
  • Major demands from Iran include the guarantee of a total end to the war, and the closure of US bases in the Middle East.
  • RBNZ’s Breman said that monetary policy adjustments could be done on either side.

The NZD/USD pair trades cautiously near 0.5800 during the Asian trading session on Thursday. The Kiwi is under pressure as Iran’s rejection to ceasefire proposal and 15-point settlement plan by United States (US) President Donald Trump has raised concerns over hopes of de-escalation in Middle East conflicts.

On Wednesday, Iran’s Fars news agency reported that Tehran doesn’t see the truce and talks as viable in current conditions. Also, Iran demands completion of its key demand before involving in direct talks with Washington, Wall Street Journal (WSJ) reported, which includes the closure of all US bases in the Gulf, reparations for attacks, lifting all sanctions, allowing Iran to retain its missile program without restrictions, and the recognition of Iran’s authority over the Strait of Hormuz.

Uncertainty surrounding the outlook of the war in the Middle East has improved the demand for safe-haven assets, such as the US Dollar (USD). As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, clings to Wednesday’s gains around 99.65.

In addition to heightened geopolitical tensions, firm expectations that the Federal Reserve (Fed) will not commit any dovish monetary policy adjustment this year are also keeping the US Dollar on the front foot.

In New Zealand (NZ), the central bank has warned of high inflation and has kept the likelihood of monetary policy adjustment on either side. “We don’t want to react too soon to inflationary pressures that we can do little about, but we don’t want to wait too long in case we see those inflationary pressures becoming more-long lasting, Reserve Bank of New Zealand Governor Anna Breman said earlier this week, Reuters reports, and added, “I will not rule out either rate hikes or rate cuts because of the uncertainty in the global environment.”

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AUD moves little following RBA’s Kent cautious remarks

  • AUD/USD remains silent after RBA’s Christopher Kent warned of inflation risks from rising energy prices.
  • The Australian Dollar struggled after softer domestic inflation data on Wednesday.
  • The US Dollar holds firm as markets track Middle East developments, with uncertainty over efforts to resolve the Iran conflict.

AUD/USD steadies after two days of losses, trading around 0.6950 during the Asian hours on Thursday. The pair trades flat as the Australian Dollar (AUD) stays steady. This follows Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent’s warning that policymakers may need to contain inflation amid rising energy prices. Kent also noted the board will target low, stable inflation and full employment. This may lift short-run neutral rates and require tighter policy.

However, the Australian Dollar weakened after softer domestic inflation data on Wednesday. Australia’s annual CPI slowed to 3.7% in February from 3.8% in January. The trimmed mean CPI came in at 3.3%, below the 3.4% forecast and in line with January’s revised figure.

Meanwhile, the AUD/USD pair remains subdued as the US Dollar (USD) holds firm. Markets are watching Middle East developments closely, with uncertainty surrounding efforts to end the Iran conflict.

The White House said talks are ongoing, with the Trump administration reportedly sending a 15-point proposal to Iran via Pakistan. Senior Iranian officials are reviewing the proposal but show little willingness to engage with Washington. Tehran is also expected to reject a US ceasefire offer, instead proposing a five-point plan that includes sovereign control over the Strait of Hormuz.

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GBP/JPY holds above 213.00, eyes monthly high amid bearish JPY sentiment

  • GBP/JPY bulls move to the sidelines as intervention fears offer some support to the JPY.
  • Economic concerns stemming from the Iran war might cap any meaningful JPY move up.
  • The BoE’s hawkish outlook underpins the GBP and backs the case for some upside for the pair.

The GBP/JPY cross holds steady above the 213.00 mark during the Asian session on Thursday and remains close to a one-month peak, retested earlier this week. Moreover, the fundamental backdrop seems tilted in favor of bullish traders and suggests that the path of least resistance for spot prices is to the upside.

Investors remain worried that the war-driven surge in energy prices would weigh on Japan’s economic outlook and drive up inflationary pressures. This increases the risk of a “stagflationary” environment and might complicate the Bank of Japan’s (BoJ) normalization efforts. The outlook, in turn, has been a key factor behind the Japanese Yen’s (JPY) recent underperformance and continues to act as a tailwind for the GBP/JPY cross.

Meanwhile, BoJ Governor Kazuo Ueda said on Tuesday that he expects underlying inflation to accelerate moderately and added that he will guide monetary policy appropriately to stably achieve the inflation target, accompanied by wage gains. The JPY fails to gain any respite from Ueda’s hawkish comments amid economic concerns stemming from the Middle East conflict, though bears seem hesitant on the back of rising intervention fears.

In fact, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, Atsushi Mimura, said earlier this week that the government might consider taking measures on all fronts in foreign exchange (FX) volatility. Apart from this, the lack of any meaningful buying interest around the British Pound (GBP), amid a bullish US Dollar (USD), contributes to keeping a lid on any meaningful upside for the GBP/JPY cross.

That said, the UK Consumer Price Index (CPI) released on Wednesday reaffirmed the Bank of England’s (BoE) hawkish tilt and could act as a tailwind for the GBP. In fact, the BoE signaled last week a potential interest rate hike as early as April amid inflation fears. This, along with the underlying bearish sentiment surrounding the JPY, validates the near-term positive outlook and backs the case for an extension of over a one-month-old uptrend.

Japanese Yen Price This Month

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this month. Japanese Yen was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD2.00%0.94%2.09%1.02%2.29%3.09%2.29%
EUR-2.00%-1.04%0.07%-0.94%0.28%1.05%0.29%
GBP-0.94%1.04%1.15%0.09%1.34%2.12%1.33%
JPY-2.09%-0.07%-1.15%-1.05%0.19%0.97%0.19%
CAD-1.02%0.94%-0.09%1.05%1.25%2.04%1.25%
AUD-2.29%-0.28%-1.34%-0.19%-1.25%0.79%0.00%
NZD-3.09%-1.05%-2.12%-0.97%-2.04%-0.79%-0.78%
CHF-2.29%-0.29%-1.33%-0.19%-1.25%-0.01%0.78%

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

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USD/JPY climbs as US Dollar strength outweighs hawkish BoJ, geopolitical risks

  • USD/JPY edges higher, supported by the resilience of the US Dollar amid geopolitical tensions.
  • The Japanese Yen remains under pressure despite a hawkish tone from the Bank of Japan.
  • Markets stay focused on Middle East tensions and their impact on energy prices and safe-haven flows.

USD/JPY trades around 159.00 on Wednesday at the time of writing, up 0.18% on the day. The pair continues to draw support from sustained demand for the US Dollar (USD) in an environment marked by persistent geopolitical uncertainty.

The Japanese Yen (JPY) struggles to attract buyers despite the release of the Bank of Japan (BoJ) meeting minutes, which indicate that policymakers see room for further rate hikes if the economic outlook evolves as expected. This relatively hawkish stance is offset by concerns over the impact of rising energy prices on Japan’s economy, which is heavily reliant on imports. The surge in Oil prices, driven by the Middle East war, is worsening Japan’s terms of trade and adding further pressure on the currency.

At the same time, the US Dollar remains firm, supported by its safe-haven status. Investors remain cautious as they monitor developments in discussions between Washington and Tehran, with ceasefire proposals circulating but no confirmed breakthrough. Recent military developments in the region continue to fuel risk aversion and reinforce flows into the Greenback.

On the monetary policy front, comments from Federal Reserve (Fed) officials, including Michael Barr, suggest that interest rates may need to remain steady for some time due to inflation still running above target. This outlook helps maintain yield differentials in favor of the US Dollar against the Japanese Yen.

Analysts at BNY also highlight that Japanese activity data show signs of improvement, with a rebound in industrial production and exports. However, these positive signals have not been sufficient to support the JPY, as markets remain focused on yield spreads and global risk dynamics.

Meanwhile, Societe Generale economists note that the pair is testing the upper bound of its multi-year range, with the risk of a bullish breakout if levels near 160 are cleared. They point to the potential for a move toward the highs seen in 2024, as the US Dollar continues to hold the upper hand.

Finally, OCBC Bank emphasizes the key role of energy prices in the JPY’s current weakness, while warning that Japanese authorities could intervene in the foreign exchange market if USD/JPY moves sustainably above the 160 threshold. This could limit further upside in the short term, without necessarily altering the broader bullish trend.

US Dollar Price Today

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

USDEURGBPJPYCADAUDNZDCHF
USD0.21%0.17%0.19%0.14%0.50%0.32%0.34%
EUR-0.21%-0.04%0.02%-0.08%0.29%0.10%0.12%
GBP-0.17%0.04%0.04%-0.02%0.33%0.14%0.17%
JPY-0.19%-0.02%-0.04%-0.06%0.30%0.10%0.13%
CAD-0.14%0.08%0.02%0.06%0.37%0.19%0.20%
AUD-0.50%-0.29%-0.33%-0.30%-0.37%-0.18%-0.17%
NZD-0.32%-0.10%-0.14%-0.10%-0.19%0.18%0.01%
CHF-0.34%-0.12%-0.17%-0.13%-0.20%0.17%-0.01%

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