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Currency Talk – USDCAD, AUDUSD, EURNZD

Key takeaways

  • What is the technical outlook for USDCAD, AUDUSD and EURNZD?

This analysis from the Overbalance series aims to identify three financial instruments, analysed primarily on the daily/four-hour (D1/H4) timeframe. The analysis utilises only the Overbalance methodology, which helps to identify points where a trend may continue or where a reversal may occur. Today’s analysis covers three instruments, assessed solely in terms of 1:1 correction structures. USDCAD USDCAD prices remained in a downtrend throughout April, but in recent days the 1:1 downtrend pattern has been negated at the 1.3630 level, which, according to the Overbalance methodology, may signal a significant upward correction or even a trend reversal. Currently, the key support level remains at 1.3655, where the lower boundary of the local 1:1 pattern is located. As long as the price remains above this level, the bullish scenario remains in place. Conversely, a return below 1.3630, i.e. below the polarity of the previously negated pattern, could once again open the way for further declines.

USDCAD – H4 timeframe. Source: xStation AUDUSD The AUDUSD exchange rate has been on an upward trend since the beginning of April. The key support level for the exchange rate is currently 0.7170. According to the Overbalance methodology, as long as the price remains above this level, the upward trend remains in place.

AUDUSD – H4 chart. Source: xStation EURNZD Since 7 April, the EURNZD has been trading in a downtrend. Should the upward correction extend, the key resistance level remains at 1.9872. As long as the price stays below this level, the bearish scenario remains in place. Conversely, for a return to the uptrend to be considered, the price would need to rise above the 1.9969 level, where the polarity of the previously negated 1:1 upward geometry is located.

EURNZD – H4 timeframe. Source: xStation

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Euro recovers early losses amid waning hopes of peace in Iran, higher Crude prices

  • EUR/USD picks up to the 1.1775 area but remains within previous ranges below 1.1800.
  • The Euro faltered at Monday’s opening after Trump dismissed Iran’s peace plan.
  • The recent jump in Oil prices is likely to keep Euro bulls in check.

The Euro (EUR) is trading moderately higher against the Dollar (USD), yet moving within previous ranges on Monday. The pair has returned to the upper side of the 1.1700s range, and is trading at 1.1775 at the time of writing after a negative opening, following US President Donald Trump’s rejection of Iran’s peace plan.

Trump posted on social media that Tehran’s latest peace proposal was “totally unacceptable”, crushing market hopes of a swift end to the war in the Middle East and the reopening of the Strait of Hormuz. Oil prices jumped after the news, with the barrel of Brent returning above $100, which puts the Eurozone’s Crude-importing economies under pressure and undermines the Euro’s upside attempts.

On the macroeconomic front, US Nonfarm Payrolls beat expectations on Friday, showing a 115K increase, almost twice the 62K expected. These figures strengthen the case for Federal Reserve (Fed) hawks and ease pressure on the bank to cut interest rates, which provides support to the Greenback.

The economic calendar is thin in the US and Europe on Monday. Later this week, US Consumer Prices Index (CPI) data, due on Tuesday, and US Retail Sales on Thursday, together with Fed speakers throughout the week, will provide the fundamental guidance for the USD. In Europe, Germany’s final consumer inflation data on Tuesday, but above all, Wednesday’s Eurozone Gross Domestic Product (GDP) and European Central Bank (ECB) President Lagarde’s speech, will be the highlights of the week.

Technical Analysis: Bulls to be tested at 1.1800

EUR/USD CHART ANALYSIS

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EUR/USD shows a modest bullish bias with momentum readings backing this constructive tone. The 4-hour Relative Strength Index is near 60, and the Moving Average Convergence Divergence (MACD) remains in positive territory, hinting that buyers retain control.

Bulls, however, are likely to meet significant resistance at the area between 1.1790 and 1.1800 (around April 20, May 6, 8 highs), which, so far, is closing the path to April’s high, in the 1.1850 area. Further up, February’s top, at the 1.1930 area, would come into focus.

On the downside, session lows at the 1.1750 area and Friday’s lows, near 1.1725, are likely to provide some support to a potential bearish reversal, although the key support is at the area between 1.1645 and 1.1675, which contained downside attempts in April.

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Euro: Vulnerable against US dollar ahead of US CPI – Deutsche Bank

Deutsche Bank’s Jim Reid and team say markets are digesting a firm US payrolls report that reinforced views of a resilient labour market and persistent inflation risks. They highlight a dense United States (US) data calendar, led by April Consumer Price Index (CPI), Producer Price Index (PPI), retail sales and industrial production, which will shape expectations for the US Dollar (USD) and US yields over coming days.

US data and inflation in focus

“Before that, the new week arrives with markets still processing last Friday’s US payrolls report, which came in broadly firm and reinforced the view that labour market conditions remain resilient.”

“While not strong enough to decisively alter the policy outlook, the release did little to ease concerns that underlying inflation pressures could persist, especially given still-solid wage dynamics.”

“Against this backdrop, outside of the Iran War developments which will of course take centre stage, the coming week will remain centred on the US, with a dense run of data and policy developments.”

“The focal point will be tomorrow’s April CPI report.”

“Our economists expect headline inflation to rise by +0.58% month-on-month, moderating from March’s +0.9%, but still relatively firm.”

“In contrast, the core measure is projected to accelerate to +0.39% MoM from +0.2%, suggesting underlying price pressures remain sticky even as energy-related effects fade.”

“The YoY rates would move from 3.3% to 3.8% for the former and from 2.6% to 2.8% for the latter.”

“Producer price data follows on Wednesday and then the remainder of the week shifts towards activity indicators.”

“Our economists expect retail sales to decline by -0.3% MoM after March’s strong +1.7% increase, pointing to some payback in consumer spending.”

“Meanwhile, industrial production is forecast to rise modestly by +0.2% MoM following a -0.5% drop previously, suggesting a tentative stabilisation in manufacturing output.”

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British Pound recovers further vs USD; GBP/USD holds near daily peak, above 1.3600

  • GBP/USD attracts fresh buyers following a modest bearish gap down opening to mid-1.3500s.
  • Easing UK political risks and the BoE’s hawkish signal underpin the GBP, supporting spot prices.
  • Iran tensions and reviving Fed rate hike bets benefit the safe-haven USD and might cap the pair.

The GBP/USD pair fills a major part of its weekly bearish gap opening on Monday and is now looking to extend the momentum further beyond the 1.3600 mark. Spot prices, however, remain below the 1.3635 horizontal resistance and the highest level since February 16, touched earlier this month, warranting caution for bullish traders amid a modest US Dollar (USD) strength.

Against the backdrop of renewed hostilities in the Strait of Hormuz, disagreements over Tehran’s nuclear program dampen bets for a US-Iran peace deal. US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz. This keeps geopolitical risks in play, which, along with hawkish US Federal Reserve (Fed) expectations, turn out to be key factors underpinning the safe-haven USD.

The US-Iran standoff triggers a fresh leg up in Crude Oil prices, fueling inflationary concerns and keeping hopes alive for at least one 25-basis-point (bps) rate hike by the US central bank in 2026. In fact, the CME Group’s FedWatch Tool indicates a nearly 20% chance that the Fed will raise borrowing costs by the end of this year. That said, easing UK political uncertainty underpins the British Pound (GBP) and might continue to act as a tailwind for the GBP/USD pair.

In fact, UK Prime Minister Keir Starmer said he ​would not resign after ‌local election results in Britain confirmed expectations of ‌significant losses for the ruling Labour Party. Furthermore, the Bank of England’s (BoE) signal last week that rate hikes could be appropriate if inflation remains persistent turns out to be another factor lending some support to the GBP and contributes to the GBP/USD pair’s goodish intraday move up from the 1.3550 horizontal support zone.

The BoE’s MPC member Megan Greene said earlier today that the central bank needs to wait to see how Middle East conflicts will flare before making any monetary policy adjustments, and that Inflation risks are skewed entirely to the upside. This, in turn, backs the case for a further appreciating move for the GBP/USD pair, though traders might opt to wait for the release of the latest US consumer inflation figures on Tuesday and the Trump-Xi summit later this week.

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Offshore Yuan Remains Strong

The offshore yuan steadied around 6.79 per dollar on Monday, remaining at its strongest level since February 2023, supported by robust trade data ahead of a highly anticipated meeting between Presidents Donald Trump and Xi Jinping. Exports surged 14.1% year-on-year to a record USD 359.44 billion in April 2026, beating expectations and sharply accelerating from March, supported by investment tied to the global AI boom despite shipping disruptions caused by the closure of the Strait of Hormuz.

Imports also jumped 25.3% from a year earlier to a fresh all-time high of USD 274.62 billion, signaling resilient domestic demand. Meanwhile, annual CPI came in above expectations at 1.2% in April, while PPI recorded its second straight month of increases at 2.8%. Investors are now focused on the closely watched Trump–Xi meeting in Beijing later this week, where the two leaders are expected to discuss the Middle East conflict, Taiwan, and a new framework for trade negotiations.

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JPY – lower vs firmer USD on Iran tensions; intervention risks limit losses

  • USD/JPY attracts some dip-buyers as Iran tensions and hawkish Fed bets revive the USD demand.
  • Reviving inflationary concerns act as a tailwind for the US bond yields, also underpinning the USD.
  • Intervention fears and expectations for a BoJ rate hike in June should help limit deeper JPY losses.

The USD/JPY pair reverses a modest Asian session dip to the 156.50-156.45 area on Monday as the safe-haven US Dollar (USD) draws support from persistent geopolitical uncertainties. Spot prices reclaim the 157.00 mark, though any meaningful upside still seems elusive in the wake of speculations that Japanese authorities might step in to prop up the domestic currency.

US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz amid major disagreements over Iran’s nuclear program. In fact, the Wall Street Journal reported that Iran has rejected US demands to dismantle its nuclear facilities and suspend uranium enrichment for 20 years. US President Donald Trump quickly lashed out at the Iranian response, calling it “totally unacceptable.” This comes on top of renewed hostilities in the Strait of Hormuz and keeps geopolitical risks in play, underpinning the USD’s reserve currency status and offering some support to the USD/JPY pair.

Meanwhile, the US-Iran standoff triggers a fresh leg up in Crude Oil prices and revives inflationary concerns. Apart from this, the upbeat US Nonfarm Payrolls (NFP) report released on Friday reaffirms hawkish US Federal Reserve (Fed) expectations and acts as a tailwind for the US Treasury bond yields. This turns out to be another factor benefiting the USD and contributing to the bid tone surrounding the USD/JPY pair. Meanwhile, reports last week that officials intervened in the FX market during holidays in early May might hold back traders from placing aggressive bearish bets around the Japanese Yen (JPY) and cap further gains for the currency pair.

Moreover, Japan’s top currency diplomat, Atsushi Mimura, had said on Thursday that Japan faces no constraints on how often it can intervene on currency markets and is in daily contact with US authorities. This reinforces that Japan remains committed to stemming speculative JPY moves. Adding to this, the Bank of Japan’s (BoJ) upward revision of inflation forecasts and the 6-3 hawkish vote split lifted bets for a potential rate increase as soon as June. This favors the JPY bulls, warranting caution before positioning for further USD/JPY gains

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NZD weakens to near 0.5950 despite hotter Chinese CPI inflation data

  • NZD/USD softens to around 0.5950 in Monday’s early Asian session. 
  • China’s April CPI and PPI came in hotter than expected as the Iran war drives energy costs higher. 
  • China and the US will hold trade talks later this week. 

The NZD/USD pair trades in negative territory near 0.5950 during the early Asian trading hours on Monday. The New Zealand Dollar (NZD) remains weak against the US Dollar (USD) after the release of the Chinese inflation report. The US Existing Home Sales data for April is due later on Monday. 

Data released by the National Bureau of Statistics of China on Monday showed that the country’s Consumer Price Index (CPI) climbed 1.2% in April, compared to a rise of 1.0% in March. This figure came in hotter than the expectations of 0.8%. On a monthly basis, Chinese CPI inflation arrived at 0.3% MoM in April, versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline.

Furthermore, the Producer Price Index (PPI) jumped 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise. However, the Chinese inflation data have little to no impact on the China-proxy Kiwi. 

Chinese President Xi Jinping is set to host US President Donald Trump later this week, as both countries seek to stabilize a relationship strained by tensions over trade, export controls, Taiwan, and the Iran war.

Trump on Sunday dismissed Iran’s response to US proposals to end the war as “totally unacceptable.” The Tasnim news agency said that Iran’s proposal included an immediate end to the war on all fronts, a halt to a US naval blockade, and guarantees of no further attacks on Iran. Signs of prolonged war in the Middle East could boost the Greenback as a safe-haven currency in the near term. 

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AUD holds losses following China’s CPI inflation data

  • AUD/USD weakened as the US Dollar strengthened amid rising market risk aversion.
  • China’s CPI rose 1.2% YoY in April, above March’s 1.0% increase and the 0.8% forecast.
  • US Nonfarm Payrolls rose by 115K in April, beating forecasts despite slowing from March’s 185K increase.

AUD/USD gains ground after opening at a bearish gap but still remains in the negative territory, trading around 0.7240 during the Asian hours on Monday. The pair moves little despite stronger-than-expected China’s Consumer Price Index (CPI) data. Any change in the Chinese economy could impact the Australian Dollar (AUD) as China and Australia are close trading partners.

China’s Consumer Price Index (CPI) rose 1.2% YoY in April, accelerating from March’s 1.0% increase and beating the 0.8% forecast. CPI inflation arrived at 0.3% MoM in April, versus a fall of 0.7% prior, hotter than the expectation of a 0.1% decline. Producer Price Index (PPI) rose 2.8% YoY in April, following a 0.5% increase in March. The data came in above the market consensus of a 1.5% rise.

The AUD/USD pair came under pressure as the US Dollar (USD) strengthened amid growing risk aversion after US President Donald Trump and Iran dismissed each other’s latest peace initiatives aimed at ending the Middle East conflict.

According to Bloomberg on Sunday, Trump turned down Iran’s latest peace proposal, describing it as “totally unacceptable.” Iranian state television reported that an Iranian official said Tehran’s response emphasized ending the conflict across all fronts, particularly in Lebanon, while also addressing the security of shipping routes through the strait, though no details were provided regarding how or when the key waterway could reopen.

An extended Middle East conflict and the fragile ceasefire between the US and Iran may continue to support safe-haven demand for the Greenback, potentially weighing on the major currency pair in the near term.

The US Bureau of Labor Statistics released data on Friday indicating that Nonfarm Payrolls (NFP) increased by 115K in April, down from March’s 185K reading but still exceeding the market forecast of 62K. At the same time, the Unemployment Rate remained unchanged at 4.3% in April, matching analysts’ expectations.