Currency Hedger No Comments

The Australian Dollar looks for an excuse to break ranks

  • AUD/USD was knocked lower this week as a hawkish FOMC powered the US Dollar broadly higher.
  • The RBA held this month, with above-target inflation keeping a further hike on the table.
  • Wednesday’s Australian CPI is the Aussie’s best chance to trade on something other than the Dollar.

The Australian Dollar spent this week as a passenger in someone else’s trade. A hawkish Federal Open Market Committee (FOMC) and a surging US Dollar dragged the Aussie down to the 0.7000 handle, with the pair’s sharp mid-week drop owing more to events in Washington than to anything out of Canberra. Yet the Aussie is not quite the pure risk-proxy it tends to get treated as. It carries a domestic inflation problem of its own; next week hands it a rare chance to trade on that rather than on the Greenback’s momentum.

The RBA is not done being hawkish

The Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35% this month, yet struck a far-from-dovish tone. Policymakers flagged that inflation remains elevated and has picked up materially, driven in part by higher fuel and commodity prices tied to the Middle East conflict, with pass-through into goods and services already visible. Several desks still see scope for additional tightening before any easing cycle begins; the central bank’s own projections keep inflation above target into 2027. That is a meaningfully firmer footing than most of the Aussie’s peers can claim.

Why the carry can’t catch a bid

None of that has been enough to lift the currency, because the Aussie answers to more than its own rate story. It trades as a liquid proxy for both risk appetite and China, neither of which has helped: a stronger Dollar saps risk sentiment, while soft Chinese demand and a heavy Iron Ore market cap any rebound in Australia’s terms of trade. The result is a currency with real domestic inflation pressure that still cannot pull away from the 0.7000 handle. As long as the Dollar owns the tape, the Aussie’s better fundamentals stay academic.

Two home prints, then the Dollar

Next week finally gives the Aussie a domestic slate to trade. Australia’s monthly Consumer Price Index (CPI) for May lands on Wednesday at 01:30 GMT, with the annual rate seen ticking up to 4.3% and the trimmed mean, the RBA’s preferred core measure, in focus; a hot reading would revive hike bets and hand the currency a genuinely idiosyncratic reason to firm, even against a strong Dollar.

The May employment report follows on Thursday in the same early slot, after the prior month’s surprise contraction in jobs; a rebound would reinforce the hawkish case. The complication is timing: that jobs print lands the same day the US delivers its first-quarter Gross Domestic Product (GDP) third estimate and the May Personal Consumption Expenditures Price Index (PCE) at 12:30 GMT. A firm Australian double-header into a hot US PCE would leave the Aussie pulled in both directions; the Dollar leg usually wins that tug-of-war.

Resistance: The 0.7050 level is the first hurdle, with the 50-day Exponential Moving Average (EMA) near 0.7100 capping the broader pullback; the Aussie needs a close back above 0.7100 to argue the down-leg is over.

Support: The 0.7000 handle is the line that matters; it has so far held. A sustained break exposes 0.6950, then the 200-day EMA near 0.6900.

Bias: Neutral-to-bearish while price sits below 0.7100 and the Dollar dominates, but with a clear two-way risk next week. The daily Stochastic Relative Strength Index (Stoch RSI) near oversold leaves room for a bounce; a hot Australian CPI is the catalyst most likely to deliver one. A soft CPI into a firm US PCE points the pair back through 0.7000 toward 0.6950.

AUD/USD hourly chart

Currency Hedger No Comments

The Euro Falls on its own rate hike

  • EUR/USD broke to a fresh multi-week low this week before steadying near a tentative floor.
  • The slide came despite the ECB’s first rate hike since 2023, a move forced by the energy shock rather than by strength.
  • With the eurozone economy contracting, the Euro stays chained to broad Dollar direction into next week’s US data.

The Euro did something this week that ought to be impossible: it fell in the same fortnight the European Central Bank (ECB) delivered its first interest rate hike since 2023. EUR/USD slid to a fresh multi-week low near 1.1400 before clawing back to a tentative floor around 1.1450; the lesson is that not every rate hike is a vote of confidence. The ECB tightened because an energy shock forced its hand, not because the eurozone economy is firing. That distinction is why the single currency cannot turn a hawkish central bank into a rally.

A hike that smells like surrender

Look at what the ECB actually did and the bind becomes obvious. It raised the deposit rate for the first time in nearly three years while simultaneously cutting its growth forecasts and lifting its inflation projections, an unambiguous stagflation signal. Euro-area inflation has climbed to its highest in nearly three years on surging energy costs tied to disruptions through the Strait of Hormuz, even as the bloc’s economy contracted in the first quarter. Tightening into that mix is a defensive move; currency markets know the difference between a central bank hiking from strength and one hiking because it has no choice.

Out-hawked across the Atlantic

Even on the narrow question of rate differentials, the Euro is losing. The ECB paired its hike with no-preset-path guidance, which markets read as a one-and-watch rather than the start of a campaign; German Bund yields barely budged. The Federal Reserve (Fed), by contrast, held at 3.75% but revised its dot plot higher, pricing toward a hike of its own from a position of relative economic strength, with the US Dollar Index parked at a 13-month high. When both sides lean hawkish, the currency attached to the stronger economy and the firmer conviction wins; right now that is unambiguously the Greenback.

A bounce on a short leash

The near-term picture is the one part of the Euro story that favours the bulls, and only just. Price has carved out a tentative floor near 1.1450, with the hourly Stochastic Relative Strength Index (Stoch RSI) pushing into overbought after the bounce off the lows, a sign the immediate move is stretched. There is room for a corrective rally toward the 1.1500 area, though it stays on a short leash: the daily chart sits below both the 50-day and 200-day Exponential Moving Average (EMA), clustered near 1.1600, with the broader trend still pointing lower.

A wall of ECB speakers and Tuesday’s still-contractionary flash Purchasing Managers Index (PMI) prints will not change that calculus; whatever bounce the Euro manages is unlikely to survive a hot reading from next Thursday’s US data, when the third estimate of first-quarter Gross Domestic Product (GDP) and the May Personal Consumption Expenditures Price Index (PCE) land together at 12:30 GMT.

Resistance: The 1.1500 area is the first test, then 1.1550; the heavier barrier is the 1.1600 zone, where the 50-day and 200-day EMA converge and any recovery would have to prove itself.

Support: The tentative floor near 1.1450 is the level bulls must defend. Below it sit the 1.1400 handle and this week’s low; a clean break there reopens the downtrend.

Bias: Tactically neutral with scope for a short-term bounce toward 1.1500 while 1.1450 holds, but bearish on any longer horizon. The Euro remains a hostage to the Dollar; a hot US PCE next week is the most likely trigger to drag it back to 1.1400 and beyond. Only a soft US inflation print gives the bounce real legs.

EUR/USD hourly chart

Currency Hedger No Comments

The Canadian Dollar ditches Crude Oil for Gold

  • USD/CAD pushed to a fresh 14-month high this week, dragging the Loonie to its weakest against the Greenback since early 2025.
  • The slide defies firm Crude Oil prices; the Loonie’s traditional link to Crude Oil has broken down and even turned negative.
  • The real drivers are a widening Canada-US rate gap and a six-week slide in Gold.

The textbook calls the Canadian Dollar a petro-currency, which means that with a Middle East war keeping Crude Oil bid, the Loonie should be holding its own. Instead it spent this week sliding to a fresh 14-month low against the Greenback, capping a run in which the US Dollar has closed higher in six of the last seven weeks. The textbook is wrong, at least for now: the Loonie has quietly stopped trading like a Crude Oil proxy, with its weakness driven by two forces that have nothing to do with the price of a barrel.

A petro-currency in name only

For years the Loonie moved with the price of a barrel; that relationship has quietly inverted. The rolling correlation between daily moves in the currency and Crude Oil has turned negative in recent months, a clean break from the historical norm. In its place, a less obvious driver has taken over: Gold. Canada is a major bullion producer; with Gold down for six straight weeks and well off its recent record, that slide has become a genuine weight on the currency. The market has swapped one commodity anchor for another; traders still watching only the barrel have missed it.

Two central banks moving apart

The second force is the one doing most of the damage: a widening gap between the Federal Reserve (Fed) and the Bank of Canada (BoC). The Fed held at 3.75% this month and revised its dot plot higher, with markets pricing a possible 2026 hike; the BoC, at 2.25%, is going nowhere. It held again this month, caught in a two-way bind between a soft domestic economy and fresh, energy-driven inflation, and has signalled no intention of moving. When one central bank is leaning toward hikes and the other is frozen, the rate spread does the talking; right now it points squarely against the Loonie. Speculative short positions on the currency have climbed to their highest in months as a result.

Outgunned, but not without a say

What makes the move striking is that this is not simply a story about Canada falling apart. The domestic picture is mixed rather than broken: a strong May jobs report sits alongside Friday’s soft retail sales; the Loonie’s slide owes more to relative positioning than to outright collapse. That also means the currency has a busier week ahead than the bears might like.

Canada’s own May Consumer Price Index (CPI) lands Monday at 12:30 GMT. With inflation already running near 3% on elevated energy costs, a hot print would feed the BoC’s inflation side and could lend the Loonie a rare bid; Governor Macklem then speaks Tuesday. The dominant event still sits south of the border: on Thursday at 12:30 GMT the US delivers its first-quarter Gross Domestic Product (GDP) third estimate alongside the May Personal Consumption Expenditures Price Index (PCE), with core PCE seen accelerating to 0.3% MoM. A hot US PCE widens the rate gap further and points USD/CAD higher still; only a genuinely hot Canadian CPI on Monday gives the Loonie much to fight back with.

Resistance: USD/CAD is pressing the 1.4200 handle after this week’s run; a clean break opens 1.4250 and then 1.4300, levels last seen well over a year ago.

Support: Initial support sits near 1.4100, then 1.4050; only a move back below 1.4000 would suggest the Loonie has found real footing.

Bias: Higher for USD/CAD while the Fed-BoC gap widens and Gold stays heavy, meaning further Loonie weakness is the base case. The one caution is positioning: the daily Stochastic Relative Strength Index (Stoch RSI) is deep in overbought after a near-vertical climb; a sharp but shallow pullback toward 1.4100 would not surprise. A hot US PCE next week is the catalyst most likely to push the pair on toward 1.4250.

USD/CAD hourly chart

Currency Hedger No Comments

Trade of The Day – NOK/SEK

  • The NOKSEK closing price has remained below the 23.6% Fibonacci retracement level (measured from January 13 to May 15) for the last five consecutive sessions.
  • The exchange rate failed to return above the middle Bollinger Band on the 14-day timeframe, despite yesterday’s declaration from Norges Bank indicating its intention to hike interest rates in the coming months.
  • Crude oil futures (OIL) have lost approximately 7.5% since the beginning of the week.

Recommendation

  • Position: Short (SELL) on NOKSEK at market price
  • Target Price (Take Profit; TP): 0.9740 (TP1), 0.9620 (TP2)
  • Stop Loss (SL): 0.9970

Source: xStation5

Opinion

NOKSEK broke its upward trend alongside the de-escalation of the Middle East conflict due to its tight correlation with oil prices (Norway remains one of the key net exporters of the commodity). The cross also failed to react significantly to the hawkish rhetoric from Norges Bank, which announced interest rate hikes in the coming months in the face of elevated CPI inflation (3.1% in May 2026). The rate remains in a downward trend (consistently trading between the middle and lower Bollinger Bands on the 14-day interval) despite the recent widening of the yield spread between 2-year Norwegian and Swedish government bonds.

This suggests that the exchange rate’s correlation with oil prices and the fading geopolitical risk premium remain the dominant drivers. Upside for the NOK may also be capped by the broader macroeconomic outlook—Norges Bank projects elevated inflation above target until 2029, alongside the risk of unemployment rising to pre-pandemic levels. Conversely, forecasts for Sweden point to accelerating GDP growth (1.8% in 2026 and 2.2% in 2027; source: Eurostat) combined with falling inflation below 2% (1.5% in 2026 and 1.8% in 2027; source: Eurostat).

Methodology

This recommendation was prepared based on a technical analysis of the NOKSEK chart, a fundamental analysis of the respective economies (monetary policy in Norway and Sweden), and the exchange rate’s correlation with crude oil prices. The directional bias of the recommendation was determined using Bollinger Bands. Take Profit and Stop Loss levels were established using Fibonacci retracements and price action (TP1 and TP2 at the 38.2% and 50.0% Fibo levels of the latest upward wave; SL placed at the resistance of the last rebound prior to the trend reversal).

Currency Hedger No Comments

Chart of the day: GBP/CHF snaps back on retail sales recovery

The British pound is regaining momentum at the end of the week, driven by a stronger-than-expected batch of UK economic data.

This surprise surge in retail sales successfully halted sterling’s broad decline against most G10 currencies. Leading the recovery is the GBP/CHF pair, which broke cleanly above key moving averages to cement the pound’s robust positioning across Europe this Friday.

GBPCHF is exhibiting a bullish outlook, rebounding firmly to 1.0651 after finding support near the 38.2% Fibonacci level. The pair trades cleanly above its 10, 30, and 100-day EMAs, saving the upward trend. With the RSI at 56.7, there is plenty of room for further gains toward recent local highs. Source: xStation5

What’s Driving GBPCHF Today?

  • Sales Surprise on the Upside: Driven by the joint-third warmest May on record and retail promotions, UK retail sales volumes jumped 1.2% in May 2026, bouncing back from a 1.0% decline in April. This growth significantly outperformed economists’ forecasts, with annual sales rising 3.2%. Department and online stores performed particularly well, boosting the online sales share to 28.8%, though overall volumes still remain 0.4% below their pre-pandemic February 2020 levels.
  • Fragile Trend Sustainability: Over the three months to May 2026, sales volumes edged up 0.4%, supported by strong demand for tech products and outdoor items. However, long-term consumer confidence remains fragile. Shoppers are showing caution regarding big-ticket purchases due to cost-of-living pressures and geopolitical uncertainty surrounding the conflict in Iran. Major supermarket groups like Tesco and Morrisons have already noted a distinct slowdown in sales growth since this conflict began.
  • Burnham’s Turning Point: Greater Manchester Mayor Andy Burnham’s decisive parliamentary victory in Makerfield has cleared the way for a potential challenge against the deeply unpopular Prime Minister Keir Starmer, threatening fresh political instability in the UK. Positioned as a prime minister-in-waiting and heavily favored by party members, Burnham’s win severely weakens Starmer—who already faces resignation calls from a quarter of his lawmakers—and sets the stage for a high-stakes battle over the future direction of the Labour government.
Currency Hedger No Comments

EUR/USD Price Forecast: Weakens below 1.1450 amid oversold RSI momentum

  • EUR/USD softens to near 1.1425 in Friday’s early European session.
  • The pair keeps a bearish vibe; downside pressure persists with an oversold RSI.
  • The first upside barrier emerges at 1.1450; the initial support level to watch is 1.1411.

The EUR/USD pair trades in negative territory around 1.1425 during the early European trading hours on Friday. The uncertainty surrounding the US-Iran peace deal provides some support to a safe-haven currency such as the US Dollar (USD) and acts as a headwind for the major pair.

Reuters reported on Friday that the Swiss Foreign Ministry announced that US-Iran talks at Bürgenstock will not take place as planned on Friday. US Vice President JD Vance canceled his trip to talks with Iran in Switzerland.

On Thursday, Iran’s Tasnim news agency quoted informed sources as saying that the Iranian delegation’s trip to Switzerland had not been finalized. Meanwhile, Lebanon’s Al Mayadeen TV also quoted sources as saying that, due to the ongoing Israeli attacks in southern Lebanon, the Iranian negotiation team has postponed its trip to Switzerland.

Chart Analysis EUR/USD

Technical Analysis:

In the daily chart, EUR/USD extends a bearish near-term bias as spot holds below the 20-day Bollinger middle band and well under the 100-day simple moving average. The pair is pressing the lower end of the Bollinger envelope, with price lodged beneath the latest lower band, while the Relative Strength Index (RSI) at 30.6 is edging into oversold territory, hinting that downside pressure persists but could be nearing exhaustion.

On the topside, initial resistance is aligned with the lower Bollinger band at 1.1450, followed by the 20-day Bollinger SMA around 1.1577, where a recovery would start to ease immediate selling pressure. Above that, the 100-day SMA at 1.1665 and the upper Bollinger band near 1.1705 form a broader supply zone that is likely to cap rebounds unless buyers can reclaim it decisively. On the downside, the first contention level is seen at the March 13 low of 1.1411. Any follow-through selling below this level could pave the way to the April 23, 2025 low of 1.1308.

Currency Hedger No Comments

Swiss franc weakens after SNB keeps rates unchanged

The Swiss National Bank (SNB) decided to keep its main interest rate unchanged during its June meeting. The interest rate has remained unchanged exactly since June last year. It is worth emphasizing that interest rate decisions in Switzerland are made quarterly. The interest rate remains at 0% and currently, due to slightly elevated inflation, we should not expect any pressure for cuts, but at the same time, it is still far from the upper limit of the inflation target.

Despite the fact that the war in Iran caused a temporary increase in imported energy prices and pushed the May inflation reading to 0.6%, the Swiss CPI index still sits comfortably in the lower range of the 0-2% inflation target. Switzerland shows significantly less dependence on energy commodities from the Middle East thanks to developed hydropower and nuclear energy, which protects the local economy from global price shocks more strongly than the Eurozone. The main focus for policymakers remains the exchange rate of the Swiss franc and the risk of its excessive appreciation in the face of geopolitical uncertainty.

Macroeconomic forecasts The SNB made a slight upward revision to its inflation forecasts in the short and medium term:

  • Inflation: The Bank now forecasts average inflation at 0.6% in 2026 (up from 0.5% in the March forecast) and 0.6% in 2027 (also up from 0.5%). In 2028, inflation is expected to be 0.7% (compared to 0.6% previously), and a reading of 0.8% is expected in the first quarter of 2029.
  • GDP Growth: Economic forecasts remained unchanged. The SNB expects the Swiss economy to grow by about 1.0% in 2026 and 1.5% in 2027.

Statements from bankers at the SNB conference

Key members of the SNB Governing Board sent clear signals during today’s conference:

  • Martin Schlegel (Chairman of the SNB):”If necessary, we show an increased readiness to intervene in the foreign exchange market. In this way, we counteract a rapid and excessive strengthening of the Swiss franc, which would threaten price stability in Switzerland”.”Inflation has risen in recent months as a result of higher energy prices. However, medium-term inflationary pressure is virtually unchanged compared to the last monetary policy assessment”.”Everything between 0 and 2% is fine regarding inflation” and “no preference as to where in the range inflation is located”.He also indicated that monetary conditions are weaker than in March, and the bank does not currently see second-round effects in Switzerland.
  • “If necessary, we show an increased readiness to intervene in the foreign exchange market. In this way, we counteract a rapid and excessive strengthening of the Swiss franc, which would threaten price stability in Switzerland”.
  • “Inflation has risen in recent months as a result of higher energy prices. However, medium-term inflationary pressure is virtually unchanged compared to the last monetary policy assessment”.
  • “Everything between 0 and 2% is fine regarding inflation” and “no preference as to where in the range inflation is located”.
  • He also indicated that monetary conditions are weaker than in March, and the bank does not currently see second-round effects in Switzerland.
  • Antoine Martin (Member of the SNB Governing Board):He pointed out that the situation in the Middle East remains fragile, adding that global inflation should be expected to remain at an elevated level.
  • He pointed out that the situation in the Middle East remains fragile, adding that global inflation should be expected to remain at an elevated level.
  • Attilio Tschudin (Member of the SNB Governing Board):He noted that domestic indicators show a solid economic recovery, but the main risk for Swiss prospects is the condition of the global economy.
  • He noted that domestic indicators show a solid economic recovery, but the main risk for Swiss prospects is the condition of the global economy.

What to expect for EURCHF and USDCHF? EURCHF

Immediately after the decision was announced, the franc weakened slightly against the euro, falling by 0.2%-0.3% to a level of around 0.9215 per euro. Since the sudden strengthening of the franc at the turn of February and March (outbreak of war in Iran), clear communication from the SNB about its readiness to intervene has systematically pushed the CHF rate down. A strong supply zone for the pair is around 0.9220 to 0.9250.

USDCHF

Wednesday’s signing of a peace agreement in Versailles between the US and Iran by President Trump and the Iranian President is a strong factor mitigating tensions in energy commodity markets. This means a drop in demand for the franc as a “safe haven,” which should favor a rebound and stabilization of EURCHF and USDCHF rates. Nevertheless, due to Martin Schlegel’s declared “increased readiness to intervene” in the event of any turmoil, investors must take into account that the SNB is artificially limiting the franc’s potential for further strengthening. Any sudden attempts at CHF appreciation will likely be met with a decisive sell-off of the currency by the Swiss central bank, which sets a solid long-term floor for EURCHF and USDCHF quotes.

Currency Hedger No Comments

EUR/USD Price Forecast: Recovers further from March low, climbs to 1.1525 on weaker USD

  • EUR/USD gains positive traction as the USD drifts lower in reaction to the US-Iran peace deal.
  • The ECB’s rate hike signal supports the Euro, while hawkish Fed bets should limit USD losses.
  • The bearish technical setup warrants caution before positioning for any further appreciation.

The EUR/USD pair attracts some buyers during the Asian session on Thursday and moves away from its lowest level since late March, around the 1.1480-1.1475 region touched the previous day. The intraday move up is sponsored by a broadly weaker US Dollar (USD) and lifts spot prices to a fresh daily high, around the 1.1525 area in the last hour.

The US-Iran deal, aimed at ending hostilities and reopening the Strait of Hormuz, boosts investors’ confidence and prompts some USD profit-taking following Wednesday’s strong move up to a fresh high since late March. Furthermore, the European Central Bank’s (ECB) hawkish signal lends some support to the shared currency and the EUR/USD pair. However, rising bets for a rate hike by the US Federal Reserve (Fed) in December could limit USD losses and cap the currency pair.

From a technical perspective, spot prices hold well below the 200-period Simple Moving Average (SMA) on the 4-hour chart and keep a bearish near-term tone. Adding to this, the Moving Average Convergence Divergence (MACD) indicator is in negative territory, while the Relative Strength Index (RSI) hovers around 38. Momentum indicators together suggest that downside pressure persists even as the EUR/USD pair attempts to stabilize above the recent swing lows.

Hence, any subsequent move up is more likely to confront a hurdle near the 1.1575-1.1580 horizontal support breakpoint ahead of the 1.1600 round figure. Meanwhile, the 200-period SMA at 1.1638 should act as a strong barrier that bulls would need to reclaim to ease the current bearish bias and open the door to a more sustained recovery.  On the downside, acceptance below the 1.1500 mark would expose the EUR/USD pair to further weakness as momentum remains skewed to the downside.

EUR/USD 4-hour chart

Chart Analysis EUR/USD