Chart of The Day – EUR/USD Higher, but Still a Game of Expectations, Not a Trend
In today’s session, EUR/USD is strengthening around the 1.17 area, but the move is not driven by a single dominant factor. Instead, it reflects a combination of several parallel impulses, including unchanged policy rates from both the Fed and the ECB, improving sentiment linked to potential de-escalation of tensions around Iran, and stronger-than-expected German industrial data. It is important to stress that the current appreciation looks more like a repricing of expectations than a durable shift in underlying fundamentals.
Source: xStation5
What is shaping EUR/USD price action? Fed on hold, but the market is already pricing rate cuts
The Federal Reserve kept interest rates unchanged, while signalling a gradual slowdown in economic momentum and increasing sensitivity in the labour market. At the same time, inflation in the US is still not fully under control, particularly in services and core inflation, where price pressures remain persistent. Despite this, markets are increasingly pricing in future rate cuts, not as a response to rapidly falling inflation, but rather as a reaction to a potential weakening in economic activity. This scenario reduces the attractiveness of the US dollar and gradually supports EUR/USD through expectations of a narrowing interest rate differential.
The ECB remains cautious, with no automatic path to hikes
The European Central Bank also left rates unchanged, maintaining a cautious and data-dependent communication stance. While some forecasts still allow for further tightening, the dominant view remains one of stabilisation and inflation-driven decisions rather than an aggressive hiking cycle. At the same time, improving real economy data, especially from Germany, is limiting earlier expectations of a deeper slowdown in the euro area, supporting the single currency through the activity channel rather than monetary policy expectations alone.
Geopolitics and hopes for an Iran agreement
Reports of potential de-escalation in tensions surrounding Iran are improving global risk sentiment. A decline in the geopolitical risk premium reduces demand for the US dollar as a traditional safe-haven currency, while benefiting risk-sensitive assets such as the euro. In addition, a potential easing of tensions in the Middle East lowers pressure on energy prices, which in the medium term could reduce inflationary pressures and strengthen expectations of a more accommodative Fed stance.
Germany surprises to the upside, lifting European sentiment
Stronger-than-expected German industrial data is an important element of today’s market picture. Against the backdrop of earlier concerns about stagnation in Europe, this release is helping stabilise perceptions of the euro area. As a result, the euro is increasingly seen not only through the lens of cyclical weakness, but also as a relatively stable alternative to the US dollar, particularly in an environment of shifting monetary policy expectations.
What else is influencing the market in the background
Beyond central bank decisions and macroeconomic data, the key driver remains the pace of change in market expectations regarding future Fed and ECB policy. The market is currently in a repricing phase rather than a full economic cycle shift. This makes EUR/USD particularly sensitive to incoming data and central bank communication that could either confirm or challenge the scenario of faster US easing combined with relatively stable policy in Europe. In such an environment, even moderately positive European data can support the euro in the short term, but the sustainability of the trend will ultimately depend on whether the Fed actually moves towards more decisive monetary easing.
Offshore Yuan Extends Rally to Over 3-Year High
The offshore yuan strengthened to around 6.80 per dollar on Thursday, extending its rally for a third straight session and reaching its strongest level since February 2023, as risk sentiment firmed amid growing optimism over a potential diplomatic breakthrough between Washington and Tehran.
Reports indicated that the US and Iran are close to finalizing a one-page memorandum designed to halt weeks of hostilities, paving the way for the reopening of the Strait of Hormuz, easing disruptions to oil flows, and improving global growth prospects. Investors are also watching a highly anticipated summit next week between Trump and Chinese President Xi Jinping, previously postponed amid heightened geopolitical tensions tied to the Middle East war. Meanwhile, China’s financial regulator reportedly told major lenders to suspend new financing to five refineries sanctioned by the US over alleged Iranian oil ties, contrasting with earlier guidance from Beijing urging firms to ignore US sanctions.
Japanese Yen consolidates as intervention fears, hawkish BoJ keep USD/JPY below mid-156.00s
- USD/JPY lacks firm intraday directional bias as investors reassess Iran-US peace prospects.
- The hawkish BoJ and intervention speculations underpin the JPY, keeping a lid on the pair.
- The divergent BoJ-Fed policy outlooks warrant some caution before initiating bullish bets.
The USD/JPY pair struggles to capitalize on the previous day’s goodish rebound from its lowest level since February 24, around the 155.00 psychological mark, and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade just below mid-156.00s, nearly unchanged for the day.
The Japanese Yen (JPY) continues to draw support from speculations that authorities will step in again to prop up the domestic currency and the Bank of Japan’s (BoJ) hawkish outlook. In fact, Japan’s Vice Finance Minister for International Affairs and top currency diplomat, Masato Mimura, delivered another round of verbal intervention and reiterated his close watch on foreign exchange markets. This comes on top of JPY intervention reports, which suggested that Japan may have spent as much as ¥5.48 trillion ($35 billion) buying the JPY after the USD/JPY pair surged past the 160.00 psychological mark last Friday.
Meanwhile, Minutes of the March 18-19 BoJ meeting showed board members reaffirmed that further rate hikes remained appropriate if the economic and price outlook was realised. The pace and timing will be determined meeting by meeting based on wages, prices, and the evolving Iran situation, the Minutes revealed further. This marks a significant divergence in comparison to diminishing odds for a rate hike by the US Federal Reserve (Fed), benefiting the lower-yielding JPY. The US Dollar (USD), on the other hand, remains depressed amid hopes for a US-Iran peace deal and also caps the USD/JPY pair.
In fact, US President Donald Trump struck an optimistic tone on Wednesday, saying that negotiations had made progress over the past 24 hours and that Iran wants to make a deal. Adding to this, Axios, citing two US officials, reported that the White House was nearing a deal with Iran on a one-page memorandum of understanding to end the war. The optimism, in turn, is seen undermining the USD’s reserve currency status. Investors, however, reassess the likelihood of a possible Iran-US deal amid major disagreements over Iran’s nuclear program, holding back traders from placing directional bets on the USD/JPY pair.
Japanese Yen Price Last 7 Days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 7 days. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.60% | -0.87% | -2.48% | -0.35% | -1.64% | -2.10% | -1.58% | |
| EUR | 0.60% | -0.23% | -1.97% | 0.27% | -1.04% | -1.48% | -0.96% | |
| GBP | 0.87% | 0.23% | -1.72% | 0.51% | -0.79% | -1.24% | -0.72% | |
| JPY | 2.48% | 1.97% | 1.72% | 2.27% | 0.91% | 0.41% | 1.11% | |
| CAD | 0.35% | -0.27% | -0.51% | -2.27% | -1.34% | -1.86% | -1.23% | |
| AUD | 1.64% | 1.04% | 0.79% | -0.91% | 1.34% | -0.39% | 0.07% | |
| NZD | 2.10% | 1.48% | 1.24% | -0.41% | 1.86% | 0.39% | 0.51% | |
| CHF | 1.58% | 0.96% | 0.72% | -1.11% | 1.23% | -0.07% | -0.51% |
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).
EUR/USD trades above mid-1.1700s, close to two-week top
- EUR/USD stalls the previous day’s late pullback from over a two-week high amid a weaker USD.
- US-Iran peace deal hopes and fading hawkish Fed expectations continue to undermine the buck.
- Traders look to second-tier macro data for some impetus ahead of the US NFP report on Friday.
The EUR/USD pair attracts some dip-buying during the Asian session on Thursday and stalls the previous day’s late pullback from the 1.1800 neighborhood, or over a two-week high. Spot prices currently trade just above mid-1.1700s, up nearly 0.10% for the day, and remain at the mercy of the US Dollar (USD) price dynamics.
The US Dollar (USD) struggles to capitalize on the previous day’s upbeat US employment data-inspired bounce from a nearly three-week low and remains depressed for the second straight day amid hopes for a US-Iran peace deal. In fact, the ADP report showed that private-sector employment grew by 109K in April, compared to a downwardly revised reading of 61K in the previous month. This, however, was offset by the optimism over a potential agreement to end the Iran war.
US President Donald Trump struck an optimistic tone on Wednesday, saying that negotiations had made progress over the past 24 hours and that Iran wants to make a deal. Adding to this, Axios, citing two US officials, reported that the White House was nearing a deal with Iran on a one-page memorandum of understanding to end the conflict. This, along with fading hawkish US Federal Reserve (Fed) expectations, undermines the USD’s reserve currency status and supports the EUR/USD pair.
However, according to the CME Group’s CME FedWatch Tool, traders are still pricing in the possibility of a Fed rate hike by the end of this year. Furthermore, investors reassess the likelihood of a possible Iran-US peace deal amid major disagreements over Iran’s nuclear program. This keeps investors on edge and could act as a tailwind for the Greenback, warranting caution before placing aggressive bullish bets around the EUR/USD pair and positioning for any further appreciating move.
Traders now look to the second-tier macro data – German Factory Orders, French Trade Balance, US Challenger Job Cuts, and Weekly Initial Jobless Claims – for some impetus. The focus, however, will remain glued to the US Nonfarm Payrolls (NFP) report on Friday. Apart from this, fresh developments surrounding the Middle East crisis might continue to infuse volatility, which, in turn, will drive the USD and produce trading opportunities around the EUR/USD pair.
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.11% | -0.19% | -0.02% | -0.15% | -0.16% | -0.10% | |
| EUR | 0.12% | 0.01% | -0.06% | 0.11% | -0.04% | -0.04% | 0.02% | |
| GBP | 0.11% | -0.01% | -0.08% | 0.08% | -0.05% | -0.06% | 0.00% | |
| JPY | 0.19% | 0.06% | 0.08% | 0.16% | 0.03% | -0.02% | 0.10% | |
| CAD | 0.02% | -0.11% | -0.08% | -0.16% | -0.13% | -0.14% | -0.08% | |
| AUD | 0.15% | 0.04% | 0.05% | -0.03% | 0.13% | -0.00% | 0.05% | |
| NZD | 0.16% | 0.04% | 0.06% | 0.02% | 0.14% | 0.00% | 0.06% | |
| CHF | 0.10% | -0.02% | -0.00% | -0.10% | 0.08% | -0.05% | -0.06% |
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).
Australian Dollar recovers latest losses following Trade Balance data
- AUD/USD may rebound as easing US-Iran tensions weaken safe-haven demand for the US Dollar.
- Iran said a US proposal to end the war remains under consideration after reports of a possible agreement.
- The US Dollar may weaken as easing inflation pressures strengthen expectations for Fed interest rate cuts.
AUD/USD gains ground for the third successive day, trading around 0.7240 during the Asian hours on Thursday. The Australian Dollar (AUD) recovers its daily losses against the US Dollar (USD) following the release of Australia’s Trade Balance data.
The Australian Bureau of Statistics reported on Thursday that Australia posted a Trade Deficit of $1,841M in March, compared with a revised $5,026M surplus in February (previously $5,686M). Markets had expected a $4,250M surplus. Meanwhile, Exports fell 2.7% month-over-month (MoM) after rising 4.2% previously, while monthly imports surged 14.1% following a prior 2.7% decline.
The Australian Dollar may further receive support from hopes that the US and Iran are moving closer to an agreement to end the war. The BBC reported on Wednesday that Iran said a US proposal to end the war is “still being considered” after reports that the two countries could be close to an agreement. The US has presented a one-page memorandum of understanding to Iran that would gradually reopen the Strait of Hormuz and lift the American blockade on Iranian ports. Detailed talks on Iran’s nuclear program would come later in the process, the person said, adding that nothing has been agreed upon yet.
CNBC reported on Wednesday that US President Donald Trump said that Iran will be bombed “at a much higher level” if it doesn’t agree to a peace deal. Trump, in a Truth Social post, said the US military offensive known as Operation Epic Fury “will be at an end” if Iran “agrees to give what has been agreed to, which is, perhaps, a big assumption.”
The US Dollar could face challenges as easing concerns over price pressures could convince the US Federal Reserve (Fed) to cut the interest rate rather than keep policy restrictive for longer.
USDJPY: another intervention by Japanese authorities, yen gains 1.00%
USDJPY was hit again today by a strong wave of yen buying, with the pair falling from the upper 157.700 area to 155.030. The move is being interpreted as another intervention by Japanese authorities. The timing fits the recent pattern: low liquidity around Japanese holidays and the transition from the Asian to the European session, when official flows can have a greater market impact. At the peak of the move, the yen strengthened by nearly 2%, toward the 155 area — the strongest level since February 24, 2026 — after Finance Minister Satsuki Katayama warned against speculative movements in the FX market.
This is another such intervention following last week’s large-scale operation. At that time, Bank of Japan money market data suggested that Tokyo may have spent around 5.48 trillion yen, or roughly 35 billion USD, to support the yen after USDJPY broke above the 160 level. The key signal for investors is that Japan’s Ministry of Finance is no longer limited to verbal warnings, but is actively attempting to cap USDJPY gains, particularly in the 158–160 zone. At the same time, rapid rebounds following earlier interventions show that these actions are buying time rather than changing the broader trend itself. Levels above 160 were also a critical point during the July 2024 intervention.
The fundamental backdrop remains difficult for the yen: the wide interest rate differential between the US and Japan, Japan’s dependence on energy imports, and geopolitical pressure related to the Strait of Hormuz continue to support the dollar and weaken the yen. The recent improvement in sentiment surrounding a potential US–Iran agreement has helped Tokyo through lower oil prices and a weaker USD, but if this pressure does not continue to ease — or if the Bank of Japan does not adopt a more hawkish stance — investors may continue to support the current weakening trend in JPY.
