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Australian Dollar holds losses following RBA decision

  • AUD/USD remains subdued as the RBA held its Official Cash Rate steady at 4.35%, matching market expectations.
  • China’s Retail Sales fell 0.6% year-on-year in May, missing expectations of a flat reading.
  • Traders price in the odds of the Fed holding interest rates steady at 3.50% to 3.75% this Wednesday.

AUD/USD pares its recent gains from the previous day, trading around 0.7050 during the Asian hours. The pair remains subdued as the Australian Dollar (AUD) struggles to shake off losses following the Reserve Bank of Australia’s (RBA) latest monetary policy update.

As widely anticipated by the market, the RBA decided to keep its Official Cash Rate (OCR) unchanged at 4.35% during its Tuesday meeting. The decision offered few surprises and lacked the hawkish spark needed to lift the currency, leaving the Australian Dollar highly sensitive to outside economic pressures.

Compounding the pressure on the AUD is a wave of weak economic data out of China. Because Australia’s economy relies heavily on commodity exports to Beijing, negative developments in China routinely drag down the antipodean currency.

China’s domestic demand slumped sharply in May, with Retail Sales contracting by 0.6% year-on-year against expectations of a flat reading. Additionally, Fixed Asset Investment dropped at a faster pace of -4.1%, failing to meet the projected -2%. While Industrial Production offered a minor bright spot by coming in stronger-than-expected at 4.5%, the overall data packet highlighted an uneven recovery that is weighing heavily on Aussie trader sentiment.

Meanwhile, the US Dollar (USD) is holding steady as broad market caution keeps investors on the defensive. Geopolitical anxieties persist around Iran’s unresolved nuclear program, keeping risk appetite low. Even though US President Donald Trump announced that a memorandum of understanding has been signed to end the regional conflict and reopen the blockaded Strait of Hormuz, market participants remain deeply skeptical because neither Washington nor Tehran has released the official text of the agreement. This ongoing uncertainty has driven defensive flows into the safe-haven greenback.

Looking ahead, the Federal Reserve (Fed) is universally expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% on Wednesday. Elevated energy prices stemming from the Middle East tensions have kept US inflation sticky, giving the central bank reason to hold steady. Market participants will be intensely focused on the upcoming press conference for crucial clues on how the new Fed Chair, Kevin Warsh, intends to guide the central bank and shape monetary policy in this new era.

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Swiss Franc declines as market caution lifts US Dollar

  • USD/CHF appreciates as the US Dollar remains stronger amid market caution ahead of further US-Iran peace talk updates.
  • Traders price in the odds of the Fed holding interest rates steady at 3.50% to 3.75% this Wednesday.
  • Money markets expect the Swiss National Bank to keep interest rates unchanged through the end of the year.

USD/CHF gains ground after registering modest losses in the previous day, trading around 0.7950 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) holds steady amid broad market caution. Investors remain on the defensive as they await further updates regarding Iran’s unresolved nuclear program.

Both Washington and Tehran have not released the official text of the agreement; major shipping lines are delaying vessel rerouting through the strategic waterway until full transparency is established.

Even though US President Donald Trump announced that a memorandum of understanding (MoU) has been signed to end the conflict and reopen the blockaded Strait of Hormuz, market participants remain deeply cautious. According to Iran’s semi-official Mehr news agency, the current draft calls for the strait to reopen within 30 days under Iranian arrangements.

The Federal Reserve (Fed) is widely expected to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% on Wednesday, which could be attributed to the higher US inflation due to elevated energy prices linked to Middle East tensions. Traders will be closely monitoring the press conference for cues on how new Fed Chair Kevin Warsh intends to lead the central bank into its next era.

Sharp declines in oil prices have helped alleviate inflationary pressures, reducing expectations for further monetary tightening. Consequently, money markets are now pricing in no additional interest rate changes from the Swiss National Bank (SNB) for the remainder of the year.

This aligns with the latest data showing Swiss Producer and Import Prices fell 1.8% year-on-year in May. While this marks the softest pace of deflation in five months, easing from April’s 2.0% decline due to slower drops in import prices, the monthly figures caught markets off guard. On a month-over-month basis, the price index fell 0.4%, missing forecasts for a 0.4% increase and reversing April’s 0.8% gain.

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Offshore Yuan Retreats from Multi-Year High

The offshore yuan slipped to around 6.76 per dollar on Tuesday, retreating from a more than three-year high reached in the previous session as investors weighed a mixed set of economic data from China. New home prices across 70 cities marked the 35th consecutive month of contraction and remaining at their steepest pace since May 2025, while fixed-asset investment declined more than market expectations in the January–May period. Moreover, retail sales unexpectedly fell in May, marking the first annual decline since December 2022. Providing some support, industrial output exceeded market expectations in May, accelerating from April’s near three-year low. In addition, the surveyed urban unemployment rate eased to a five-month low in May. Adding to the currency’s pullback, Allianz Global Investors scaled back some of its bullish yuan positions and shifted to a neutral stance, locking in gains after a rally that propelled the yuan to become Asia’s best-performing major currency this year.

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Swiss Franc edges higher on US–Iran peace deal

  • USD/CHF falls to around 0.7930 in Monday’s early European session. 
  • US and Iran confirmed a ‘peace deal’ was reached, signing in Switzerland on Friday. 
  • The Fed is widely anticipated to keep its interest rate steady as it remains in “wait-and-see” mode.

The USD/CHF pair slumps to near 0.7930, the lowest since June 5, during the early European trading hours on Monday. The US Dollar (USD) weakens against the Swiss Franc (CHF) after the US and Iran announced a framework deal for peace. Traders brace for the US Federal Reserve (Fed) interest rate decision later on Wednesday. 

US President Donald Trump on Sunday announced a “great deal” to end the war with Iran. Iran’s National Security Council stated that the US naval blockade will be lifted immediately and the war will end on all fronts, including Lebanon. Pakistan’s Prime Minister Shehbaz Sharif said that the official signing ceremony for the “peace deal” will take place on Friday in Switzerland. Signs of progress in the US-Iran peace agreement boost the CHF and create a headwind for the pair. 

The US central bank is set to keep its benchmark interest rate unchanged at a target range of 3.50% to 3.75% at its upcoming policy meeting on Wednesday. Traders will closely monitor the press conference and take more cues about how new Fed chair Kevin Warsh will lead the US central bank into its next era. Any hawkish remarks from Fed officials could lift the Greenback and act as a headwind for the major pair. 

Markets have priced in nearly a 64% chance of a Fed interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.

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New Zealand Dollar gains on easing risk aversion

  • NZD/USD holds strong despite New Zealand’s services sector contracting for a fourth straight month as May’s PSI dropped to 47.5.
  • The US Dollar declines as a US-Iran peace deal eases geopolitical tensions, lowering global inflation and interest rate concerns.
  • Iran stated final talks depend on US compliance, demanding an immediate and complete end to the maritime blockade.

NZD/USD gains ground after registering minor losses in the previous day, trading around 0.5850 during the Asian hours on Monday. The pair remains stronger as the New Zealand Dollar (NZD) holds ground following the release of domestic economic data.

New Zealand’s services sector continues to struggle, as the BusinessNZ Performance of Services Index (PSI) fell to 47.5 in May, down from a revised 48.7 in April. This marks the fourth consecutive month of contraction for the sector.

Concurrently, the broader economy is showing signs of a deeper slowdown. The Performance of Composite Index dropped from a revised 49.2 to 48.4, signaling its third straight month of contraction and its steepest decline since June 2025.

The NZD/USD pair appreciates as the US Dollar (USD) declines after the United States (US) and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.

Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.

The United Kingdom (UK), France, Germany ‌and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.

Iran’s National Security Council confirmed a ceasefire agreement with the US, adding that final deal talks will start after the other party fulfills commitments under the memorandum of understanding. Iranian officials said the maritime blockade against Iran should end immediately and entirely.

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United States Dollar Index drops as safe-haven demand fades

  • US Dollar Index declines on fading safe-haven demand as a US-Iran deal eases inflation and interest rate concerns.
  • Washington and Tehran announced Sunday they have reached a peace agreement, which will officially take effect this coming Friday.
  • The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground and trading around 99.50 during the Asian hours on Monday. The Greenback declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.

Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.

The United Kingdom (UK), France, Germany ‌and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.

Iran’s National Security Council confirmed a ceasefire agreement with the US, adding that final deal talks will start after the other party fulfills commitments under the memorandum of understanding. Iranian officials said the maritime blockade against Iran should end immediately and entirely.

The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.

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Australian Dollar strengthens on risk-on mood

  • AUD/USD advances despite the fact that markets are ruling out any interest rate action on Tuesday.
  • US Dollar declines as a US-Iran peace deal faded safe-haven demand, easing fears of inflation and higher interest rates.
  • The CME FedWatch tool shows December Fed rate hike odds falling to nearly 27% after the peace deal.

AUD/USD gains around 0.5% after registering minor losses in the previous day, trading around 0.7080 during the Asian hours on Monday. However, the Australian Dollar (AUD) could struggle against the US Dollar (USD) as markets are ruling out a Reserve Bank of Australia (RBA) rate move at Tuesday’s June meeting and have lowered bets for an August hike. All eyes now turn to the May CPI data on June 24, which will be critical for policymakers looking for signs of persistent inflation to justify future policy tightening.

The AUD/USD pair appreciates as the US Dollar (USD) declines on fading safe-haven demand following reports that the United States (US) and Iran reached a deal to end their conflict, easing concerns about inflation and higher interest rates.

Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.

The United Kingdom (UK), France, Germany ‌and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war.

The CME FedWatch tool indicates that the markets are pricing in nearly a 27% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 40% a week ago.

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Indian Rupee surges as oil prices nosedive on US-Iran MoU finalization

  • The Indian Rupee soars against the US Dollar on the finalization of the US-Iran deal.
  • Plunging oil prices due to the reopening of the Strait of Hormuz, as per the post from US President Trump.
  • The selling pressure by overseas investors has slowed down in the last two trading days.

The Indian Rupee (INR) opens strongly against the US Dollar (USD) at the start of the week. The USD/INR pair plunges to near 94.60 as oil prices have nosedived, following the announcement that the United States (US) and Iran have reached a permanent peace deal.

In India’s opening trading hours, the MCX Crude Oil contract expiring on June 18 is down 5.5% to near 7,630, the lowest level seen in almost two weeks.

The appeal of currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, improves significantly when oil prices fall like a house of cards.

US-Iran reaches peace deal

On Sunday, both the US and Iran confirmed that they have finalized a Memorandum of Understanding (MoU).

Iran’s Supreme National Security Council confirmed Sunday that Tehran had finalized an MoU, saying all military operations on all fronts, including Lebanon, would cease “immediately and permanently”, CNBC reported.

US President Donald Trump also said in a post on Truth Social, “I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade.”

Meanwhile, Pakistan Prime Minister (PM) Shehbaz Sharif has stated in a post on X, formerly known as Twitter, that the finalized MoU between the US and Iran will be signed on June 19 in Switzerland.

FIIs selling pressure cool down

Although Foreign Institutional Investors (FIIs) have remained net sellers in all trading days so far in June, a slowdown in the pace of selling pressure is observed in the last two trading days. So far this month, FIIs have offloaded their stake worth Rs. 46,430.42 crore, an average selling of Rs. 4,643 crore in 10 trading days. In the last two trading days, the average selling by overseas investors was Rs. 1,534.63 crore.

India’s WPI Inflation data awaited

On the domestic front, investors await India’s Wholesale Price Index (WPI) Inflation data for May, which will be published at 12:00 PM IST (06:30 GMT). Inflation at the wholesale level is expected to arrive higher at 9.1% from 8.3% in April.

Theoretically, higher inflation at the factory level boosts expectations for the Reserve Bank of India’s (RBI) interest rate hikes in the near-term. However, the impact is expected to be limited as oil prices have started declining, a scenario that would anchor inflation expectations.

Technical Analysis: USD/INR slides to near 94.60

USD/INR tumbles to near 94.60 in the opening trade. The near-term bias of the pair turns bearish as it extends distance with the 20-day exponential moving average (EMA), which is at 95.33, on the downside.

The pair’s slide away from that dynamic barrier keeps the short-term trend under pressure, while the Relative Strength Index (RSI) near 42 leans lower, suggesting sellers retain control despite not yet reaching oversold territory.

On the topside, initial resistance is defined by the 20-day EMA at 95.33, where a sustained break higher would be needed to ease the current downside pressure and open the way for a deeper corrective bounce towards 96.00. Looking down, the pair could slide to the May 7 low at 94.03 if it drops below the May 29 low at 94.46.