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EUR/JPY falls to near 186.50 as risk aversion increases on Middle East uncertainty

  • EUR/JPY falls as the Euro weakens amid rising risk aversion from US-Iran truce uncertainty.
  • Iran fired on three ships in the Strait of Hormuz, escorting two into Iranian waters on Wednesday.
  • Traders expect BoJ to hold rates this month, but signal possible policy normalization as early as June.

EUR/JPY remains subdued for the third successive day, trading around 186.60 during the Asian hours on Thursday. The currency cross loses ground as the risk-sensitive Euro (EUR) faces challenges amid increased risk aversion due to ongoing Middle East uncertainty.

The Wall Street Journal reported that Iran fired on three ships in the Strait of Hormuz and escorted two of them into Iranian waters on Wednesday. Iranian media reported that the paramilitary Revolutionary Guard was moving the vessels to Iran, marking a further escalation, although White House press secretary Karoline Leavitt said the seizures did not breach the terms of the ceasefire.

Iran continues to assert control over the Strait of Hormuz, restricting transit and targeting vessels. Iranian parliament speaker and chief negotiator Mohammad Bagher Ghalibaf stated that reopening the strait would be “impossible” while the United States (US) and Israel persist with what he described as “flagrant” ceasefire violations, including the US naval blockade. Meanwhile, President Donald Trump said the current truce would remain in place indefinitely as Washington awaits a renewed peace proposal from Tehran.

The downside of the EUR/JPY cross could be restrained as the Japanese Yen (JPY) loses ground amid higher oil prices, reflecting Japan’s significant reliance on Middle East crude imports. West Texas Intermediate (WTI) rises for the third consecutive day, trading around $93.30 per barrel at the time of writing.

In Japan, focus has turned to next week’s Bank of Japan (BoJ) policy meeting as officials navigate uncertainty from the regional conflict. Traders expect the BoJ to leave interest rates unchanged this month, though it may hint at a potential shift back toward policy normalization as early as June.

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AUD/JPY Softens below 114.00, but uptrend holds above 100-day EMA

  • AUD/JPY weakens to near 113.95 in Thursday’s early European session. 
  • The positive outlook of the cross remains intact above the 100-day EMA, with bullish RSI momentum. 
  • The first upside barrier emerges at 115.60; the initial support level is seen at 113.09. 

The AUD/JPY cross attracts some sellers to around 113.95 during the early European session on Thursday. Uncertainty regarding Iran’s participation in further peace talks could provide some support to a safe-haven currency such as the Japanese Yen (JPY) against the Australian Dollar (AUD). 

Furthermore, intervention fears might cap the upside for the cross. Japanese authorities, including Finance Minister Satsuki Katayama, highlighted a “high sense of urgency” regarding speculative and weak-JPY moves driven by Middle East tensions. 

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds well above the Bollinger middle band and the 100-period exponential moving average (EMA), keeping the near-term bias clearly bullish despite the recent pause. Price is stretching toward the upper Bollinger band resistance at 115.58, while the Relative Strength Index (RSI) at 65.9 leans into overbought territory, hinting that upside momentum is strong but vulnerable to bouts of consolidation.

On the topside, a decisive break above the upper Bollinger band at 115.60 would open the door to further gains and extend the prevailing uptrend. On the downside, initial support emerges the April 20 low of 113.09. The next contention level is located at the Bollinger middle band around 112.12, with deeper protection from the 100-period EMA at 108.73 and the lower Bollinger band at 108.65, where buyers would be expected to reappear on any sharper corrective pullback.

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EUR/USD slips as Hormuz tensions persist despite Iran ceasefire extension

  • EUR/USD weakens as Strait of Hormuz tensions offset Iran ceasefire extension.
  • US naval blockade and stalled peace talks keep geopolitical risks elevated.
  • Elevated Oil prices and Fed outlook support the US Dollar, capping EUR/USD upside.

The Euro (EUR) weakens against the US Dollar (USD) on Wednesday, as ongoing tensions in the Strait of Hormuz offset the impact of the US-Iran ceasefire extension, keeping the Greenback supported.

At the time of writing, EUR/USD is trading around 1.1712, extending losses for the second straight day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.57, near a one-week high.

Iran’s Islamic Revolutionary Guard Corps (IRGC) said it has seized two ships in the Strait of Hormuz, according to Iranian media. The development follows earlier reports of two vessels and a third ship coming under attack in the strategic waterway, according to the UK Maritime Trade Operations (UKMTO).

The escalation comes as the US naval blockade remains in place after US President Donald Trump extended the ceasefire with Iran just hours before its expiry. The move reflects Washington’s strategy to maintain economic pressure on Tehran, while Iranian leaders have said the US must end the blockade if it wants to resume negotiations.

Trump said talks with Iran could take place as soon as Friday, according to the New York Post, while Iran’s Tasnim News Agency reported that Tehran has not yet decided whether to participate.

With key differences remaining over nuclear and missile issues, markets view the ceasefire as a temporary pause in military escalation, suggesting the conflict may not end anytime soon. This is limiting downside in the US Dollar and capping EUR/USD’s upside after a corrective rebound earlier this month.

Meanwhile, Oil prices remain elevated, keeping inflation risks in focus and shaping central bank expectations. Investors expect the Federal Reserve (Fed) to keep interest rates higher for longer, while markets are pricing in the possibility of European Central Bank (ECB) rate hikes.

On the data front, the US economic calendar is largely empty on Wednesday, leaving markets driven by geopolitical headlines. In the Eurozone, preliminary Consumer Confidence for April dropped to -20.6 from -16.3 previously, marking its lowest level in over three years and pointing to weakening household sentiment amid ongoing geopolitical tensions and higher energy prices.

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USD/CAD Price Forecast: Hovers near 1.3650 as RSI remains bearish

  • USD/CAD trades sideways as a bullish piercing pattern emerges on the chart.
  • RSI remains bearish, suggesting downside pressure still dominates the trend.
  • Break above 1.3709 targets 1.3727 and 1.3742 resistance levels.

USD/CAD continues to trade laterally on Wednesday during the North American session, flattish at around 1.3658, as the pair seems capped by Monday’s price action, in which the Loonie appreciated 0.34% against the US Dollar (USD).

USD/CAD Price Forecast: Technical outlook

On Monday, the USD/CAD pair reached a daily high of 1.3709 and closed near the lows at 1.3644, extending a six-day streak of bearish sessions. Nevertheless, bulls moved in, finishing Tuesday in the green, up 0.15%, and forming a ‘bullish piercing pattern,’ which requires clearing the current week’s high of 1.3709 for further upside.

Momentum remains shifted to the downside as depicted by the Relative Strength Index (RSI). Hence, if sellers move in and clear Tuesday’s swing low of 1.3631, a move towards the 1.3600 figure is on the cards. Below, the next area of interest is the March 9 daily low at 1.3525.

On the upside, buyers must clear the 1.3700 figure, with immediate resistance seen at the 50-day Simple Moving Average (SMA) at 1.3727. Up next is the 100-day SMA at 1.3742, with the next supply area at 1.3800.

USD/CAD Price Chart – Daily

USD/CAD daily chart
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Trade of The Day: EUR/USD

Key takeaways

  • How does the technical situation on EURUSD looks like?

Facts:

  • EURUSD is trading in an upward move from mid-March
  • The pair bounced off the horizontal support at 1.1725 USD
  • The pair is trading above the 100 – period moving average form H4 interval

Recommendation: Trade: Long position on EURUSD at market price Target: 1.1833, 1.1884 Stop: 1.1680

Opinion: Looking at EURUSD at the H4 interval, we can see that the main sentiment on the pair is bullish. However, a downward correction has occurred recently, which has brought the pair down to the key support at 1.1725 USD. The support is a result of previous reactions as well as a lower limit of 1:1 structure. According to the Overbalance strategy, as long as the price sits above 1.1725 support, the main trend remains upward. We recommend going long EURUSD at market price with two targets: 1.1833 and 1.1884. We also recommend placing a stop loss order at 1.1680. Source: xStation5

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EUR/CAD steadies below 1.6050 as improved oil prices lift Canadian Dollar

  • EUR/CAD holds losses as the Canadian Dollar gains on improved oil prices.
  • Maritime authorities said an IRGC-linked gunboat fired on a Liberia-flagged vessel and two other cargo ships.
  • ECB’s Lagarde warns Eurozone outlook is highly uncertain due to a significant energy supply shock.

EUR/CAD extends its losing streak for the sixth consecutive day, trading around 1.6040 during the European hours on Wednesday. The currency cross stays subdued as the Canadian Dollar (CAD) draws support from a stronger risk-on mood after US President Donald Trump extended the ceasefire despite the collapse of second-round US–Iran talks.

Moreover, the commodity-linked CAD is further supported by firmer oil prices amid renewed attacks on shipping near Iran. Maritime authorities reported that a Liberia-flagged container vessel was fired upon by a gunboat linked to Iran’s Islamic Revolutionary Guard Corps, while two additional outbound cargo ships were also targeted.

However, a Bloomberg headline, citing Tasnim News Agency affiliated with the IRGC, noted that Iran has received “some sign” the United States (US) may be willing to ease its naval blockade.

The Canadian Dollar may continue to gain as rising energy prices could boost foreign exchange inflows into Canada’s financial system, reflecting the country’s status as the largest crude exporter to the United States. Higher energy costs could also lift inflation, potentially prompting the Bank of Canada (BoC) to signal a firm stance against persistent price pressures, further underpinning the currency.

European Central Bank (ECB) President Christine Lagarde warned that the Eurozone outlook remains highly uncertain due to a significant energy supply shock tied to Middle East tensions and the Strait of Hormuz blockade. While energy prices have yet to reach worst-case levels, she stressed that the outlook remains fragile.

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EUR/GBP remains depressed below 0.8700 after hot UK CPI figures

  • EUR/GBP extends losses for the second consecutive day and trades below 0.8700.
  • UK consumer price figures confirm the inflationary impact of the US-Iran war.
  • In the Eurozone, ECB speakers, including President Lagarde, will grab some attention later in the day.

The Euro (EUR) is heading south for the second consecutive day against the British Pound (GBP) on Wednesday, trading near session lows below 0.8700, as UK inflation figures put pressure on the Bank of England to bring the possibility of an interest rate hike back to the table.

Data released by the Office for National Statistics earlier on Wednesday showed that the UK Consumer Prices Index (CPI) accelerated to a 3.3% year-on-year (YoY) rate in March. These figures follow two consecutive months of prices growing steadily by 3% YoY, and highlight the inflationary impact of the Middle East war.

The monthly CPI accelerated by 0.7%, its highest level in almost one year, beating expectations of a 0.6% increase, and following a 0.4% gain in February.

Likewise, producer and retail prices have increased beyond forecasts. The Input Producer Prices Index (PPI) surged 4.4% in March and 5.4% year on year. Retail prices rose 0.8% from February and 4.1% over the last 12 months, both above market expectations of 0.7% and 3.9%, respectively.

The Bank of England (BoE) meets on April 30 and is widely expected to keep interest rates unchanged. The upside risks to inflation, however, are likely to give hawkish committee members grounds to call for some monetary tightening down the road.

In the Eurozone, the focus on Wednesday will be on a slew of European Central Bank (ECB) speakers, including President Christine Lagarde, later in the day. The ECB is also expected to keep its monetary policy on hold at its April meeting, and therefore, they are likely to stick to the mantra of waiting for further economic data.

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USD/JPY Price Flirts with 100-hour EMA support, above 159.00 amid softer USD

  • USD/JPY attracts some sellers and erodes a part of Tuesday’s gains to over a one-week top.
  • The US-Iran ceasefire extension undermines the USD and exerts some pressure on the pair.
  • Hormuz risks and delayed BoJ rate hike bets cap gains for the JPY and support spot prices.

The USD/JPY pair adds to its modest intraday losses and moves further away from over a one-week high, around the 159.70 region, touched the previous day. Spot prices drop to the 159.00 neighborhood, or a fresh daily low, during the early European session, though the downside potential seems limited.

A temporary extension of the US-Iran ceasefire prompts some selling around the US Dollar (USD) and exerts some downward pressure on the USD/JPY pair. However, economic concerns stemming from a standoff over the Strait of Hormuz, along with bets for a delayed Bank of Japan (BoJ) rate hike, might continue to undermine the Japanese Yen (JPY) and help limit losses for the currency pair.

The USD/JPY pair shows some resilience below the 23.6% Fibonacci retracement level of the recent move up from last week’s swing low, around the 157.60 region, and bounced off the 100-period Exponential Moving Average (EMA) on the 1-hour chart. That said, the Moving Average Convergence Divergence (MACD) has slipped marginally below zero, and the Relative Strength Index (RSI) near 48 signals neutral to slightly soft momentum.

Momentum indicators, in turn, hint that the upside impetus is fading but not yet undermining the broader intraday support near the 23.6% Fibo. retracement at 159.15, reinforced by the 100-period EMA at 159.07 just beneath.  A deeper pullback would expose the 38.2% retracement at 158.85, followed by layered Fibonacci supports at 158.60, 158.36, and 158.01, with the 157.57 swing low acting as a more distant structural floor if selling pressure accelerates.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY 1-hour chart

Chart Analysis USD/JPY