• Gold attracts some follow-through selling on Wednesday amid a broadly firmer US Dollar.
• Geopolitical uncertainties and rising Fed rate hike bets keep the USD near a six-week top.
• Traders now look to FOMC Minutes for more cues about the US central bank’s policy path.

Gold (XAU/USD) drops to a fresh low since March 30 following an Asian session uptick to levels just above the $4,500 mark on Wednesday, and seems vulnerable to a further decline amid a bullish US Dollar (USD). Investors remain skeptical about a potential US-Iran peace deal, which, along with inflation fears and hawkish US Federal Reserve (Fed) expectations, assists the USD to stand firm near a six-week high and weighs on the commodity.

US President ?Donald Trump said on Tuesday that America may need to strike Iran again if a deal is not reached and that he had been an ?hour away from ordering an attack before postponing it following a request from three Gulf leaders. Meanwhile, Vice ?President JD Vance said the US and Iran have made a lot of progress in their talks, and neither side wants to see a resumption ?of the military campaign. However, doubts over a long-elusive diplomatic agreement to end the Iran conflict remain amid major disagreements over Tehran's nuclear program and the Strait of Hormuz. This continues to underpin the Greenback's reserve currency status, which is seen as a key factor acting as a headwind for the Gold price.

Meanwhile, the uncertainty fueled by the US-Iran stalemate keeps Crude Oil prices elevated near the monthly peak, fueling inflationary concerns and lifting Fed rate hike bets. According to the CME Group's FedWatch Tool, traders are now pricing in over a 55% chance that the US central bank will raise borrowing costs by at least 25 basis points (bps) in 2026. The outlook was reaffirmed by comments from Philadelphia Fed President Anna Paulson, who said that an appropriate rate increase is possible if growth exceeds potential or inflation threats arise. This led to the recent sharp increase in US Treasury bond yields, which further lends support to the buck and exerts some pressure on the non-yielding Gold price.

The USD bulls, however, seem hesitant and keenly await the release of FOMC Minutes, due later in the North American session, for more cues about the Fed's policy path. This, along with further developments surrounding the Middle East crisis, could provide some impetus to the precious metal. Nevertheless, the aforementioned fundamental backdrop seems tilted in favor of the USD bulls and suggests that the path of least resistance for the Gold price is to the downside. Hence, any recovery attempt is more likely to get sold into and runs the risk of fizzling out rather quickly.

XAU/USD daily chart

Gold seems poised to extend the breakdown momentum below $4,500

From a technical perspective, acceptance below the $4,500 psychological mark could be seen as a fresh trigger for bearish traders and backs the case for further losses. Moreover, momentum indicators are soft, with the Relative Strength Index (RSI) hovering in the mid-30s and the Moving Average Convergence Divergence (MACD) in negative territory.

This hints that upside traction is fading even as price remains underpinned by long-term trend support near the 200-day Simple Moving Average (SMA) at roughly $4,363.73. A decisive break below this moving average would expose a deeper correction, while holding above it would allow XAU/USD to consolidate its broader uptrend despite the presently weak momentum backdrop.

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

• WTI price drifts lower to near $103.20 in Wednesday's Asian session. 
• Trump said the US may need to strike Iran again. 
• The EIA crude oil stocks report is due later on Wednesday. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $103.20 during the Asian trading hours on Wednesday. The WTI price trades with mild losses as traders weigh mixed signals from US President Donald Trump on whether the United States (US) will resume the Iran war. 

Trump said on Tuesday that the US might have to give Iran “another big hit.” His renewed threat came after he said he called off an attack scheduled for Tuesday at the request of the leaders of Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

The US president further stated that Iran has a “limited period of time” to agree to a deal. Meanwhile, an Iranian official said that the US threat of a massive attack at any moment will be met "resolutely," and Tehran is “prepared to confront any military aggression." Traders remain wary about the outcome of peace talks amid continued disruptions to Middle East supply from the conflict.

Oil traders brace for the release of the Energy Information Administration (EIA) report, which will be published later on Wednesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.

• EUR/JPY may rebound toward the nine-day EMA of 184.71.
• The 14-day Relative Strength Index around 44 suggests subdued momentum for the currency cross.
• The currency cross may fall toward the three-month low of 181.87.

EUR/JPY loses ground for the second successive day, trading around 184.30 during the Asian hours on Wednesday. The technical analysis of the daily chart indicates the currency cross is remaining slightly below the upper boundary of an emerging descending wedge pattern. The pattern shows lower highs and lower lows; the narrowing price range indicates that selling momentum is losing steam.

The EUR/JPY cross is extending a corrective tone after slipping below the short-term trend markers. The currency cross now sits under both the nine-period Exponential Moving Average (EMA) and the 50-period EMA, keeping the near-term bias tilted lower while those averages act as nearby caps. The 14-day Relative Strength Index (RSI) around 44 suggests subdued momentum, hinting that sellers retain the upper hand but without extreme downside pressure.

The immediate resistance lies at the nine-day EMA of 184.71, followed by the 50-day EMA at 184.84 and the upper boundary of the descending wedge. A successful break above the wedge would support the EUR/JPY cross to explore the region around the all-time high of 187.95, which was recorded on April 17.

On the downside, the EUR/JPY cross may navigate the region around the three-month low of 181.87, recorded on March 16, followed by a five-month low of 180.81, which was reached on February 12.

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

• EUR/USD holds onto losses near two-month low of 1.1596 ahead of FOMC minutes.
• The US Dollar trades firmly due to multiple tailwinds.
• US Treasury Yields surge further as the Fed is unlikely to cut interest rates this year.

The EUR/USD pair trades vulnerably near the two-month low of 1.1596, posted on Tuesday, during the Asian trading session on Wednesday. The major currency pair faces selling pressure as the US Dollar (USD) trades firmly due to the combined efforts of the risk-aversion market theme and rising United States (US) Treasury Yields.

During the press time, S&P 500 futures extend their Tuesday losses to near 7,340, reflecting a risk-off market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to its six-week high at 99.43.

Market sentiment turns risk-off amid fears that the war in the Middle East could resume if Iran doesn’t reach a deal with the US. On Tuesday, US President Donald Trump threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, after he said he had just called off a US attack, Bloomberg reported.

Meanwhile, 10-year US Treasury Yields have posted a fresh over-a-year high at 4.91% as traders have priced out the possibility of interest rate cuts by the Federal Reserve (Fed) this year.

Going forward, investors will focus on the Federal Open Market Committee (FOMC) minutes of the April policy meeting and the Eurozone/US preliminary private sector PMI data for May.

EUR/USD technical analysis

EUR/USD trades lower at around 1.1596 as of writing. The pair demonstrates a bearish near-term tone as spot holds below the 20-day exponential moving average (EMA) at 1.1684. The pair’s failure to stay above this dynamic barrier suggests rallies are still being sold amid a Double Top breakdown below 1.1660.

The Relative Strength Index (RSI) near 40 hints at lingering downside momentum rather than an imminent reversal.

On the topside, the 20-day EMA at 1.1684 is the first resistance that bulls would need to reclaim to ease immediate selling pressure and open the door to a deeper corrective bounce towards the May 13 high at 1.1742.

Looking down, the pair could slide further toward 1.1500 if it fails to hold the immediate cushion at 1.1592

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

• US Dollar Index reached a six-week high of 99.43 on Tuesday.
• President Trump threatened to resume attacks on Iran within days to force a deal ending the conflict.
• The US 30-Year Treasury Yield slid to 5.189% after hitting a near 19-year high of 5.200% on Wednesday.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its gains for the second successive day and hovering around the six-week high of 99.43, reached on Tuesday, during the Asian hours on Wednesday.

The Greenback receives support from increased risk aversion stemming from the Middle East conflict. Bloomberg reported on Tuesday that US President Donald Trump recently threatened to resume attacks on Iran in two or three days as part of a push for a deal to end the war. This came after a brief pause in planned hostilities following a new proposal by Tehran to end the US-Israeli conflict. Meanwhile, an Iranian official stated that the US threat of a massive assault would be met resolutely, asserting that Iran is fully prepared to confront any military aggression.

War-driven energy price pressures have added to inflation risks, with earlier spikes in oil seen as reinforcing expectations that the Federal Reserve (Fed) may need to maintain higher interest rates for longer or even tighten policy further. Additionally, the sharp increase in yields reflects renewed concerns that inflation could remain elevated for longer than previously expected.

The US 30-Year Treasury Yield inched lower to 5.189% after reaching a nearly 19-year high of 5.200% on Wednesday. The 10-Year Treasury Yield remained stronger near its 16-month high of 4.687%, and the 2-year yield held near its 15-month high of 4.139%, with both of those peaks having been recorded on Tuesday.

Federal Reserve Bank of Philadelphia President Anna Paulson noted that current policy is mildly restrictive, which is helping to keep inflation pressures in check while maintaining a stable labor market. Paulson indicated that the current policy rate is suitable for applying downward pressure on inflation, though an appropriate rate increase remains possible if economic growth exceeds potential or if new inflation threats arise.

• The annual UK headline inflation is seen easing in April despite an uptick in monthly inflation.
• The UK CPI data might provide some leeway for the BoE to keep interest rates unchanged in June.
• Bearish pressure on the Pound Sterling persists, and a higher-than-expected inflation reading could intensify it.

The United Kingdom (UK) Office for National Statistics (ONS) will publish the high-impact Consumer Price Index (CPI) data for March at 06:00 GMT. 

With inflation pressure high on the agenda of the central banks, April’s CPI will be analysed by the market from a monetary policy perspective, providing further insight about the Bank of England’s (BoE) next steps. In that sense, any relevant deviation from the market consensus is likely to boost near-term volatility for the British Pound (GBP). 

What to expect from the next UK inflation report?

The UK Consumer Price Index is expected to show that inflation softened to 3% year-over-year (YoY) in April, from the 3.3% level seen in March, although the monthly CPI growth is seen ticking up to 0.9% from 0.7% in the previous month. 

The Ofgem energy price cap, which was lowered ahead of the Iran war, seems to have cushioned the impact of the energy shock, while the unwinding of the Easter effect in prices has contributed to taming inflationary pressures.

The Core CPI, which excludes energy, food, alcohol, and tobacco prices, is expected to show that price growth from all other goods slowed down to 2.6% YoY in April, the coolest rate since July 2021, contributing to the softer CPI numbers.

Together with consumer Inflation, the Office for National Statistics will also release April’s Producer Price Index (PPI) figures, which are expected to follow suit. The PPI Input is forecast to slow down to 1% from 4.4% in March, while the PPI Output is seen ticking up to a 1% yearly rate, from 0.9% in March.

The cooling inflation, if confirmed, is likely to ease pressures on the BoE to hike interest rates immediately, which will be good news considering the increasing unemployment figures released on Tuesday. The trend, however, is unlikely to be long-lasting. Ofgem will revise the energy price cap in July, triggering a significant increase in energy bills, which is likely to be reflected in the headline CPI. The Bank of England expects consumer inflation to peak at 4% later this year.

“Though temporarily comforting, the brunt of the energy price shock will then be felt in Q3 with a potential for second-round effects in the latter half of the year,” said analysts at TD Securities.

How will the UK Consumer Price Index report affect GBP/USD?

Inflation is a key issue for the BoE’s monetary policy and, in that sense, tends to have a significant impact on the British Pound. The GBP, however, is suffering from weaknesses of its own in May, amid the growing political uncertainty after the Labour Party’s debacle in the local elections, and is likely to act as a headwind for bulls.

Bearing that in mind, a soft inflation reading might provide some support to the Pound, as it would give the BoE more time to await domestic developments and to better assess the impact of the Middle East conflict before taking any decision on interest rates. BoE Deputy Governor for Financial Stability, Sarah Breeden, warned on Monday that “political uncertainty is hitting the business environment” and advised the bank against being “trigger happy” on rates.

An upside surprise on inflation, on the contrary, would put the BoE in a challenging situation, and might increase bearish pressure on the Pound in this case.

From a technical perspective, Guillermo Alcala, FX Analyst at FXStreet, sees the Pound on the defensive after last week’s sell-off: “The GBP’s near-term bias remains bearish even after Monday’s bullish engulfing candle in the daily chart has eased negative pressure.  Bulls, however, seem to need additional impulse to break a previous support level at 1.3450 and shift the focus towards the mid-May highs in the 1.3530-1.3540 area.”

“On the downside, key support is at Monday’s lows at around 1.3305. A confirmation below that level would expose late March and early April highs in the area of 1.3175,”  adds Alcalá.

• NZD/USD edges lower to near 0.5820 in Wednesday’s Asian session. 
• Traders reprice the chance that the Fed would have to tighten policy to contain inflation. 
• China left lending benchmarks unchanged in May. 

The NZD/USD pair declines to around 0.5820 during the Asian trading hours on Wednesday. The US Dollar (USD) strengthens against the New Zealand Dollar (NZD) on rising tensions in the Middle East and a higher-for-longer Federal Reserve (Fed) interest rate stance. 

Reuters reported on Tuesday that US President Donald Trump said that Washington may need to strike Iran again and that he had been an hour away from ordering an attack before postponing it. Earlier on Monday, Trump stated that he had paused a planned resumption of hostilities following a new proposal by Tehran to end the US-Israeli war.

The hotter-than-expected US inflation report released last week has reinforced a "higher-for-longer" Fed rate stance, which provides some support to the Greenback. Traders are pricing in a 41.5% probability that the Fed will raise interest rates by 25 basis points (bps) by year-end, according to the CME FedWatch tool. 

The People’s Bank of China (PBOC) on Wednesday left Loan Prime Rates (LPRs) unchanged for the 12th consecutive month in May, in line with market expectations. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. PBOC's quarterly report suggested that policymakers are in no rush to cut rates, despite lingering softness in economic activity and lending.

• Silver struggles to capitalize on a modest Asian session move up back closer to the $75.00 mark.
• The overnight failure near the 200- EMA on H4 and ascending channel breakdown favor bears.
• Any attempted recovery might be seen as a selling opportunity and is likely to remain capped.

Silver (XAG/USD) attracts fresh sellers following a modest Asian session uptick to the $75.00 neighborhood and retreats to the lower end of the daily range in the last hour. The white metal currently trades around the $74.00 mark, close to a nearly two-week low set on Tuesday, and seems vulnerable to slide further.

The overnight failure near the 200-period Exponential Moving Average (EMA) on the 4-hour chart and the subsequent break below a nearly one-month-old ascending channel were seen as key triggers for the XAG/USD bears. Moreover, momentum indicators suggest that selling pressures persist even as conditions approach exhaustion.

In fact, the Relative Strength Index (RSI) hovers around 31 in oversold territory, while the Moving Average Convergence Divergence (MACD) remains below zero with a negative histogram. This, in turn, validates the near-term bearish outlook and backs the case for an extension of the XAG/USD's one-week-old downtrend.

On the topside, initial resistance aligns with the former channel floor at $76.33, with the 200-period EMA next at about $78.25, reinforcing a broader supply zone inside the broken channel. A sustained recovery above these hurdles would be needed to ease the current bearish pressure, while failure to reclaim them leaves XAG/USD vulnerable.

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

XAG/USD 4-hour chart

• GBP/USD depreciates as the safe-haven US Dollar strengthens amid escalating Middle East tensions.
• President Trump threatened to resume attacks on Iran within days to force a deal ending the conflict.
• The British Pound remains subdued as rising UK unemployment and slower wage growth give the BoE pausing room.

GBP/USD extends its losses for the second successive day, trading around 1.3390 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) receives support from increased risk aversion stemming from the Middle East conflict.

Bloomberg reported on Tuesday that US President Donald Trump recently threatened to resume attacks on Iran in two or three days as part of a push for a deal to end the war. This came after a brief pause in planned hostilities following a new proposal by Tehran to end the US-Israeli conflict. Meanwhile, an Iranian official stated that the US threat of a massive assault would be met resolutely, asserting that Iran is fully prepared to confront any military aggression.

Federal Reserve Bank of Philadelphia President Anna Paulson noted that current policy is mildly restrictive, which is helping to keep inflation pressures in check while maintaining a stable labor market. Paulson indicated that the current policy rate is suitable for applying downward pressure on inflation, though an appropriate rate increase remains possible if economic growth exceeds potential or if new inflation threats arise.

The UK unemployment rate rose slightly to 5% in the three months to March from 4.9% in the three months to February. Analysts noted that these figures show the first effects of the Middle East war on the jobs market, warning that demand for workers will likely continue to weaken the longer the conflict goes on.

The British Pound (GBP) remains subdued due to a rise in UK unemployment, combined with slowing wage growth, which will provide the Bank of England (BoE) with more time to assess the situation. Consequently, policymakers will have additional flexibility to decide whether interest rates need to rise to contain inflation.

In politics, fiscal concerns eased slightly after Andy Burnham, the frontrunner among potential leadership challengers to UK Prime Minister Keir Starmer, ruled out changing the government’s borrowing limits. His comments alleviated investor fears of looser fiscal policy. Meanwhile, Prime Minister Starmer insisted he would not step down even if Burnham wins the upcoming by-election, setting the stage for a potential leadership contest within the government.

European People’s Party lead trade negotiator Željana Zovko said that a deal between the United States (US) and the European Union (EU) was reached, Reuters reported on Wednesday. Zovko added that deal on US tariffs provides certainty for European firms

Key quotes

We have deal.

Europe avoided damaging escalation of transatlantic trade tensions.

Protected European companies, investments and jobs. 

On Wednesday, the People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead at 6.8397 compared to the previous day's fix of 6.8375 and 6.8072 Reuters estimate.

• AUD/USD softens to around 0.7095 in Wednesday’s early Asian session.
• Trump threatened to resume attacks on Iran in a few days if no deal is reached. 
• Members see a case for a rate hike as inflation expectations risk grows, RBA minutes showed. 

The AUD/USD pair loses momentum to near 0.7095 during the early Asian trading hours on Wednesday. Geopolitical uncertainties and elevated crude oil prices weigh on the Australian Dollar (AUD) against the US Dollar (USD). Traders will closely monitor the release of the Australian April employment report, which is due on Thursday. 

US President Donald Trump said on Tuesday that a new US attack would happen in the coming days if no agreement were reached. Trump on Monday stated that he had paused a planned resumption of hostilities following a new proposal by Iran to end the US-Israeli war.

Meanwhile, an Iranian official stated that the US threat of a massive assault at any moment will be met "resolutely," and Iran is “prepared to confront any military aggression”. Ongoing tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the pair in the near term. 

The People’s Bank of China (PBOC) on Wednesday decided to leave its Loan Prime Rates (LPRs) unchanged. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. 

The Reserve Bank of Australia (RBA) minutes showed on Tuesday that eight of nine board members backed the May rate hike to 4.35%, citing rising inflation risks from the Gulf conflict. One member preferred to await further data. 

“Members noted that inflation had been well above target in the months prior to the onset of the conflict in the Middle East,” the RBA minutes said. Members agreed that monetary policy could not prevent a near-term increase in the price level as higher fuel prices worked their way through to final prices.

• USD/CAD regains positive traction following the overnight pullback from over a one-month high.
• Geopolitical uncertainties, rising Fed rate hike bets, and elevated US bond yields underpin the USD.
• Bullish Crude Oil prices could limit losses for the Loonie and cap the pair ahead of FOMC Minutes.

The USD/CAD pair attracts some dip-buyers during the Asian session on Wednesday, stalling the previous day's late pullback from the 1.3775 region or the highest since mid-April. Spot prices currently trade just above mid-1.3700s and continue to draw support from a bullish US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, shot to a fresh high since April 7 on Tuesday amid persistent geopolitical uncertainties and hawkish US Federal Reserve (Fed) expectations. US President Donald Trump delayed a planned attack on Iran following a request from three Gulf leaders, though he said that the US may need to strike Iran again.

Moreover, peace talks remain stalled amid major disagreements over Tehran's nuclear program and the critical Strait of Hormuz. This keeps geopolitical risks in play and continues to benefit the safe-haven USD. Meanwhile, the US-Iran standoff keeps Crude Oil prices close to the monthly peak, fueling inflationary concerns and reaffirming bets for an interest rate hike by the US central bank.

According to the CME Group's FedWatch Tool, traders are now pricing in over a 55% chance that the Fed will raise borrowing costs by at least 25 basis points (bps) in 2026. The outlook remains supportive of elevated US Treasury bond yields, which turns out to be another factor supporting the buck and the USD/CAD pair. The USD bulls, however, seem hesitant ahead of FOMC Minutes.

In the meantime, bullish Crude Oil prices counter Tuesday's softer-than-expected Canadian consumer inflation figures and could limit deeper losses for the commodity-linked Loonie. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the USD is to the upside, suggesting that any corrective fall in the USD/CAD pair is more likely to be bought into.

• EUR/USD may depreciate as the safe-haven US Dollar gains ground amid escalating Middle East tensions.
• President Trump threatened to resume attacks on Iran within days to force a deal ending the conflict.
• The Euro may gain ground, supported by hawkish commentary from ECB policymakers.

EUR/USD moves little after posting modest losses in the previous day, hovering around 1.1600 during the Asian hours on Wednesday. The currency pair may experience further depreciation as the US Dollar (USD) gains ground due to increased risk aversion stemming from the Middle East conflict.

US President Donald Trump recently threatened to resume attacks on Iran in two or three days as part of a push for a deal to end the war. This came after a brief pause in planned hostilities following a new proposal by Tehran to end the US-Israeli conflict, per Bloomberg. Meanwhile, an Iranian official stated that the US threat of a massive assault would be met resolutely, asserting that Iran is fully prepared to confront any military aggression.

On the monetary policy front, Federal Reserve Bank of Philadelphia President Anna Paulson noted that current policy is mildly restrictive, which is helping to keep inflation pressures in check while maintaining a stable labor market. Paulson indicated that the current policy rate is suitable for applying downward pressure on inflation, though an appropriate rate increase remains possible if economic growth exceeds potential or if new inflation threats arise.

Meanwhile, the Euro (EUR) may gain ground against the US Dollar, supported by hawkish commentary from European Central Bank (ECB) policymakers. ECB Governing Council member Martin Kocher warned that a June rate hike is unavoidable if the Hormuz Strait remains closed, noting that a prolonged conflict will push eurozone inflation materially higher. Bundesbank President Joachim Nagel echoed this sentiment, stating that the ECB is moving away from its baseline scenario and hinting that action may be required in June.

Reflecting these central bank signals, a significant majority of economists polled by Reuters, around 85%, now expect the ECB to raise its deposit rate by 25 basis points to 2.25% in June. This marks a sharp increase in expectations compared to just before the April meeting, when only a little over half of the polled economists anticipated such a move.

The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Wednesday. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. 

• USD/JPY holds steady near 159.05 in Wednesday’s early Asian session. 
• Trump said a new US attack would happen in the coming days if no agreement were reached.
• Traders largely ignored the stronger Japanese GDP growth data, but concerns about intervention could still underpin the Japanese Yen. 

The USD/JPY pair trades on a flat note around 159.05 during the early Asian session on Wednesday. The potential upside for the pair might be limited amid intervention fears from Japanese authorities. Traders continue to digest the latest headlines on US talks with Iran to end the war. Japan’s April National Consumer Price Index (CPI) inflation report will be in the spotlight later on Friday. 

US President Donald Trump on Tuesday threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, per Bloomberg. On Monday, Trump said that he had paused a planned resumption of hostilities following a new proposal by Tehran to end the US-Israeli war. 

Meanwhile, an Iranian official stated that the US threat of a massive assault at any moment will be met "resolutely," and Iran is “prepared to confront any military aggression.” Signs of a prolonged war between the US and Iran could lift the US Dollar (USD) against the Japanese Yen (JPY) in the near term. 

On the JPY’s front, traders shrugged off Japan's stronger-than-expected Gross Domestic Product (GDP) growth data for the first quarter (Q1). “Though Japan’s GDP grew healthily by 0.5% in Q1, we think the Q1 GDP is already in the rear-view mirror and expect the economy to feel the strains from high energy costs ahead,” said Norihiro Yamaguchi, lead Japan economist at Oxford Economics. 

Japanese officials are on high alert for another round of currency intervention, which might provide some support to the JPY and act as a headwind for the pair. Finance Minister Satsuki Katayama said on Monday that Japan stands ready to act against excessive foreign exchange volatility at any time, while ensuring that any intervention is conducted in a way ?that avoids pushing up U.S. Treasury yields. 

US President Donald Trump threatened to resume attacks on Iran in “two or three days” as part of the push for a deal to end the war, after he said he had just called off a US attack, Bloomberg reported on Tuesday.

“I hope we don’t have to do the war, but we may have to give them another big hit,” Trump told reporters on Tuesday. When asked how long he would wait, he said: “Well, I mean, I’m saying two or three days, maybe Friday, Saturday, Sunday. Something maybe early next week — a limited period of time,” said Trump.

An Iranian official stated that the US threat of a massive assault at any moment will be met “resolutely” and Iran is “prepared to confront any military aggression”.

Market reaction

At the time of writing, the West Texas Intermediate (WTI) is up 1.30% on the day at $103.35.

Federal Reserve (Fed) Bank of Philadelphia President Anna Paulson said that she favored leaving interest rates unchanged and conditioned lower borrowing costs on making sustained progress on inflation, Bloomberg reported on Tuesday.

Key quotes

Policy is mildly restrictive and that restrictiveness is helping to keep inflation pressures in check while the labor market remains stable. 

Current policy rate is suitable and keeps applying downward pressure on inflation. 

Healthy markets start weighing scenarios of rates holding or increasing. 

Some families struggle with rising prices, but overall resilience prevails. 

If job market stays balanced, rate reductions suitable only with new inflation progress. 

Market reaction

At the time of writing, the US Dollar Index (DXY) is trading around 99.31, up 0.33% on the day. 

• Gold price tumbles to around $4,480 in Wednesday’s early Asian session. 
• Increase bets that global central banks may hike interest rates, which weighs on the Gold price. 
• Trump threatened to resume strikes on Iran in the coming days. 

Gold price (XAU/USD) faces some selling pressure near $4,480 during the early Asian session on Wednesday. The precious metal drops to its lowest since March 30 as persistent inflation fears keep interest rate hike expectations and Treasury yields high.

The US 30-year Treasury yields rose as much as seven basis points to 5.20% on Tuesday, a level last seen on the eve of the 2007 global financial crisis. Meanwhile, US 10-year Treasury yields climbed as much as 10 basis points to 4.69%, the highest since early 2025, before the move pared to around 4.66%.

"We are seeing a multi-country rise in real rates around the world, and that is really weighing mostly on gold. The dollar is also stronger, that's a negative," said Edward Meir, an analyst at Marex.

A lack of progress in reopening the Strait of Hormuz continued to raise fears of inflation and increase bets that global central banks may hike interest rates. Bloomberg reported on Tuesday that US President Donald Trump threatened to resume attacks on Iran in the coming days as part of the push for a deal to end the war, after he said he had just called off a US attack.

• WTI rallied through Tuesday's session to settle above $103, recouping all of the ground lost after Trump called off a planned Iran strike at the request of Saudi Arabia, Qatar, and the UAE.
• Trump spent Tuesday walking back the Monday pause, signaling a 2-3 day timeline and warning the US "may have to give Iran another hit," while Iran's Deputy Foreign Minister talked of triumph or martyrs and NATO floated a Hormuz deployment if the strait is not open by July.
• API reported a 9.1M barrel US crude stock draw for the week ended May 15, well above the 3.4M barrel consensus and more than four times the prior week's 2.188M print.

The Crude Oil market spent Tuesday teaching the headline writers a lesson. West Texas Intermediate (WTI) gapped lower into the GMT session after President Trump announced he had called off a Tuesday strike on Iran at the request of Persian Gulf allies, with the front-month contract briefly trading near $101. The bid then reasserted almost immediately as Tuesday's wires brought a more bellicose Trump, a defiant Iran, and the prospect of NATO action on Hormuz by July. A late-session American Petroleum Institute (API) inventory print, showing a 9.1 million barrel crude stock draw against a 3.4 million barrel consensus, then poured fuel on the rally. By the New York close the contract was changing hands above $103, leaving the daily candle as a clear bullish rejection of the session lows and a 1.30% gain on the day.

Trump and Tehran walk back the de-escalation

The Monday strike cancellation framing did not survive contact with Tuesday morning. Trump used a string of public appearances through the European session to reframe the pause as a tactical delay rather than a strategic shift. He told reporters the US is "not leaving Iran yet," that "we may have to give Iran another hit," and that "Middle East countries asked for a few more days before the attack." He put a 2-3 day timeline on the next decision and dismissed the idea of being close to a deal with the line "I've heard this before." Iran's Deputy Foreign Minister responded with the framing that the country is "prepared to confront any military aggression" and will "either triumph or become martyrs." That is not the language of a regime preparing to fold, and the Strait of Hormuz remains effectively closed more than two weeks after the operational phase of the conflict wound down on May 5. Tanker traffic through the strait is still running in single digits per day against a pre-war baseline above 120.

NATO puts a July deadline on Hormuz

The harder geopolitical development arrived from Brussels. NATO indicated it would consider a Hormuz deployment if the strait is not open by July. That changes the structure of the trade in two ways. First, it multilateralises a conflict that has been functionally a US-Israel-Iran triangle, with the prospect of allied involvement raising the cost of continued obstruction for Tehran and the cost of unilateral escalation for Washington. Second, it puts a hard supply-side calendar in place. A forced reopening would be unambiguously bearish for crude, but the runway to July is long enough for the war premium to compound, and the escalation risk in the meantime points the other way.

API confirms what the IEA was warning

Tuesday's API release didn't leave much room for interpretation. A 9.1 million barrel crude stock draw against a 3.4 million barrel consensus is the kind of miss that doesn't get explained away by storage logistics or refinery turnarounds, and the prior week's reading of -2.188 million was already pointing in the same direction. The print lands directly into the macro framing the International Energy Agency (IEA) had been pushing earlier in the week, when it warned that global oil inventories are drawing down rapidly across crude and key refined product categories. The aggregate cushion still reads above emergency thresholds in barrel-day terms, but the rate of drawdown matters more than the level, and producers have not been able to fully reroute the roughly 10 to 12 million barrels a day choked off from world markets by the Hormuz disruption.

The chart still wants higher

WTI is trading well above both the 50-day and 200-day Exponential Moving Averages (EMAs), with the 50-day sitting near $90 and acting as the line that has caught every dip since April. Price has been grinding higher off the early-May lows around $93 and is now back in the $103 to $104 area, leaving the April and early-May peaks around $108 as the next overhead reference and the year's March peak above $113 as the broader ceiling. The daily Stochastic Relative Strength Index (RSI) has rolled out of the mid-range and is heading higher, which leaves room for another leg up before the move gets stretched.

Setup into the rest of the week

The reaction function is mechanical from here. A confirmed Iranian acknowledgement of talks, or a credible reopening of even partial Hormuz traffic, would let the market fade the war premium back toward the $90 area where the 50-day EMA sits. A continuation of the standoff, particularly if Wednesday's Energy Information Administration (EIA) inventory report confirms the API read, keeps the bid intact and opens up the $108 area. Trump's own 2-3 day timeline puts a binary on the calendar before the end of the week. Either talks materialise and the war premium starts to bleed, or the pause expires and the chart prints higher. The downside catalyst is a political signal that does not yet exist. The upside catalyst is data that has already started arriving.

Crude traders have spent the year learning that the Strait does the talking, not the State Department.

WTI 5-minute chart

Technical Analysis

In the five-minute chart, WTI US Oil trades at $103.42. Price holds comfortably above the day’s opening level at $101.68, keeping the near-term bias constructive despite the latest pullback from the intraday highs. The Stochastic RSI has retreated toward the low-20s, hinting at easing upside momentum but not yet flagging outright oversold conditions, which suggests the move is more of a consolidation within the prevailing intraday advance than a trend reversal.

On the downside, immediate support is seen at the psychological $103.00 area ahead of the day’s open near $101.68, where buyers could look to defend the broader intraday uptrend. As long as WTI holds above that opening pivot, dips are likely to attract demand, while a sustained break back below $101.68 would weaken the bullish tone and expose deeper corrective pressure.

In the daily chart, WTI US Oil trades at $103.35, maintaining a constructive bullish bias as it holds well above both the 50-day exponential moving average (EMA) at roughly $92.12 and the 200-day EMA near $76.07. The wide separation between these EMAs, with price extended on the upside, suggests a firmly established uptrend, while the Stochastic RSI easing back toward mid-range around 43 hints that upside momentum is cooling without yet signaling an outright reversal.

On the downside, immediate support is seen around the prior close zone at $103.35, with the 50-day EMA at $92.12 offering a deeper trend-aligned floor before the longer-term 200-day EMA near $76.07. As long as WTI holds above the $92 area, pullbacks are likely to be viewed as corrective within the broader advance, while a daily close below that level would risk exposing the more strategic support band anchored around the 200-day EMA.

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

• GBP/USD held the 200-day exponential moving average into Tuesday's close, but only just, after a soft UK labour market print did not stop the slide through the prior session's range.
• Average weekly earnings including bonuses came in hot at 4.1% versus 3.8% consensus, while the Unemployment Rate ticked up to 5% and the Claimant Count rose by 26.5K.
• Wednesday's Consumer Price Index (CPI) print is now the catalyst that resolves it, with headline inflation seen falling sharply from 3.3% to 3%.

Tuesday handed the Pound a labour market reading that was mixed enough to satisfy nobody. UK payroll data showed Average Earnings excluding bonuses cooling to 3.4% on the three-month-on-year measure, in line with consensus, while the Including Bonus figure ran hot at 4.1% against a 3.8% expectation. The Employment Change print was a chunky 148K, but the headline ILO Unemployment Rate ticked up to 5% versus the 4.9% reading both expected and prior, and the Claimant Count Change came in north of 26K.

The Bank of England (BoE) had wanted a clean signal. Instead it got a labour market that is still adding jobs faster than the population is willing to absorb them, with wages mostly cooling but a stubborn bonus-driven tail, and unemployment quietly drifting higher. Sterling slid through Tuesday's London session, eventually probing below 1.34 in late trade before clawing back toward the handle into the close.

The chart tells the harder story

GBP/USD's daily chart broke through the 50-day exponential moving average (EMA) last week and spent Tuesday testing the 200-day EMA, which sits just below current levels. That is the line that has held every meaningful pullback since the spring lows. A clean daily close below it would put 1.32 back in scope, with very little structural support in between. The Stochastic RSI on the daily is rolling over from the mid-range, which suggests there is room for the move to extend before it gets oversold.

The CPI test that sets the tone

Wednesday's CPI is the print that decides whether Tuesday's bounce off the 200-day EMA was meaningful or just noise. Consensus is for headline CPI to drop from 3.3% to 3% YoY, with Core CPI easing from 3.1% to 2.6%. A clean cooling print, particularly in the Services CPI component the BoE has been pointing at, gives the doves on the Monetary Policy Committee (MPC) the cover they need to argue for another cut sooner rather than later. The rates strip is already nudging in that direction.

A hot print would be the worst possible outcome for Sterling. It would not be enough to revive a hike narrative, but it would force the BoE to keep holding for longer, which is precisely the kind of stagflation-lite signal that has pressured the Pound through gilt yields all year. The fiscal noise around UK debt servicing has not gone away either, and a sticky core read would bring it straight back to the front of the conversation.

Setup into the rest of the week

A daily close back above the 50-day EMA puts Tuesday's break in the rearview. A daily close below the 200-day EMA, particularly on a cool CPI that is read as accelerating the cutting path, opens the door toward the 1.32 handle. Thursday's S&P Global Composite PMI, expected to soften toward 51.7 from 52.6, and Friday's Retail Sales print, where consensus is for a 0.6% month-on-month contraction, fill out the week's catalysts. Both lean in the same direction.

The Pound goes into Wednesday morning with everything to lose and very little ready to support it.

GPB/USD 5-minute chart

Technical Analysis

In the five-minute chart, GBP/USD trades at 1.3400. The pair holds a bearish intraday bias as it remains below the day’s open at 1.3434, keeping the short-term tone pressured despite the absence of nearby structural supports on the chart. The Stochastic RSI has retreated from earlier overbought readings toward lower ground, suggesting waning upside momentum and leaving the path of least resistance tilted to the downside while price stays capped beneath the daily opening level.

On the topside, initial resistance is located at the day open around 1.3434, and a sustained break above this hurdle would be needed to ease immediate selling pressure and allow a corrective rebound. Until then, the lack of clearly defined intraday support levels below current price implies that any further declines could unfold into relatively thin air, with short-term sellers likely to remain in control while momentum oscillators stay soft.

In the daily chart, GBP/USD trades at 1.3395, holding a bearish near-term bias as it sits just under the 200-day exponential moving average (EMA) at 1.3401 and well below the 50-day EMA at 1.3470. This configuration suggests rallies remain capped by overhead trend resistance, while the Stochastic RSI near 28 hints that downside momentum is stretched but not yet decisively reversed.

On the topside, immediate resistance arises at the 200-day EMA around 1.3401, with a stronger barrier aligned at the 50-day EMA near 1.3470, and the pair would need to reclaim both to ease the current bearish tone. On the downside, the absence of nearby structural support levels in this dataset leaves the pair vulnerable to further slippage, with any fresh lows likely guided by how long price can remain suppressed beneath the 200-day EMA as the oversold Stochastic RSI tries to stabilize.

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

• AUD/USD spent Tuesday's session under steady pressure, sliding through 50-day exponential moving average support on the daily chart and testing the 0.71 region intraday.
• Westpac Consumer Confidence rebounded sharply in May, but the print barely moved the needle with bigger catalysts lined up later in the week.
• Wednesday's People's Bank of China rate decision, Australian flash PMIs, and Thursday's jobs print sit between current levels and any directional resolution for the Aussie.

The Aussie's Tuesday slide had little to do with anything domestic. Westpac Consumer Confidence printed a +3.5% rebound for May, a swing that should normally count as a meaningful signal after April's -12.5% slump, and the Reserve Bank of Australia's (RBA) latest Meeting Minutes did little to disturb pricing for the next move. Yet AUD/USD still drifted through the 50-day exponential moving average (EMA) on the daily chart, the line that has cushioned every dip since April's reversal, with sellers leaning into broader US Dollar firmness rather than fading the Aussie itself.

That distinction matters. The week's heavy lifting on the Aussie side starts Wednesday with the People's Bank of China (PBoC) rate decision, where consensus is for the one-year Loan Prime Rate to be left at 3% for another month. A pass-through hold barely registers, but any hint of further easing would put fresh strain on the CNH leg of the cross and drag AUD/USD lower regardless of what the RBA minutes implied. Worth noting that the local PMI batch lands the same session, with the prior reads sitting just above the expansion line on all three measures.

Domestic catalysts coming into view

Thursday brings the heavyweight: Australian employment data alongside the May Consumer Inflation Expectations print. The market is looking for Employment Change near 17.5K with the Unemployment Rate steady at 4.3%, in line with the prior month. Even a modest miss would let the doves in the RBA debate argue that the next move is more clearly down, and that is the read the rates strip seems to want.

Why the technical break matters

The 50-day EMA had been holding AUD/USD inside a clean uptrend since April's low near 0.69. Tuesday's daily close on the wrong side of that line, with the move briefly testing below 0.71 intraday, leaves the chart open to a deeper drift toward the 0.70 handle. There is very little structural support between current levels and that round figure on the daily, and momentum has flipped. The 200-day EMA, which has been an irrelevance for most of the year, suddenly looks like a level worth circling for the medium-term picture.

Setup into Thursday's jobs print

For the rest of the week the setup is fairly mechanical. A reclaim of the 50-day EMA on a daily close would mean Tuesday's break is a fade and the broader uptrend remains intact. A second daily close below it, particularly if jobs data confirms the loosening picture, opens up the 0.70 handle as the next target. Anything in between, and AUD/USD probably wastes time chopping near current levels while traders wait for the Federal Open Market Committee (FOMC) Minutes on Wednesday and the US flash PMIs on Thursday to do the work the RBA minutes refused to.

The risk for bulls is that Tuesday's break was the easy part. Two cracks in one tape, on a day when the only domestic data point was outright positive for the Aussie, does not read like a market that wants to be long here.

AUD/USD 5-minute chart

Technical Analysis

In the five-minute chart, AUD/USD trades at 0.7108. The pair remains under clear intraday pressure, holding well below the day’s open at 0.7171, which keeps the near-term bias bearish despite a mild intraday stabilization. The Stochastic RSI has turned higher from deeply oversold territory, hinting at scope for a corrective bounce, but this momentum improvement has yet to challenge the prevailing downside structure.

On the topside, initial resistance is located at the day’s open level near 0.7171, where sellers are likely to defend the short-term downtrend. A sustained break above this hurdle would be needed to ease immediate bearish pressure and open the way for a more meaningful recovery; until then, rallies are likely to be viewed as corrective within a broader intraday decline.

In the daily chart, AUD/USD trades at 0.7108, hovering just under the 50-day exponential moving average (EMA) at 0.7111 while holding well above the 200-day EMA at 0.6856, which keeps the broader backdrop constructive but caps immediate upside. The Stochastic RSI around 52 suggests only modest bullish momentum, hinting that bulls lack the conviction to force a clear break above the near-term average for now.

On the topside, initial resistance is located at the 50-day EMA around 0.7111, and a sustained move above this barrier would be needed to reopen a more decisive advance. On the downside, the 200-day EMA at 0.6856 remains a key structural support level, and as long as price holds well above this longer-term floor, pullbacks are likely to be treated as corrective within a medium-term upward bias.

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

• NZD/USD falls as strong US ADP employment data supports the Greenback.
• US President Trump warns the US “may have to give Iran another hit,” boosting safe-haven demand for the USD.
• Investors await upcoming New Zealand Retail Sales and PMI data.

The NZD/USD pair falls toward the 0.5830 region on Wednesday as the United States (US) Dollar (USD) strengthens following upbeat labor-market data and renewed tensions linked to Iran.

The latest ADP employment report showed that US private employers added 42,250 jobs in the first week of May, marking the strongest reading since October 2025. The stronger labor-market data reinforced expectations that the Federal Reserve (Fed) could maintain a cautious stance on interest-rate cuts, supporting US Treasury yields and boosting the Greenback.

Additional pressure on the New Zealand Dollar (NZD) emerged after United States President Donald Trump stated that “we may have to give Iran another hit” and added that “Iran is begging to make a deal.” The comments revived fears of a broader escalation in the Middle East, increasing safe-haven demand for the US Dollar, and weighing on risk-sensitive currencies such as the NZD.

Looking ahead, traders will closely monitor upcoming New Zealand data releases, including Retail Sales and Purchasing Managers Index (PMI).

Short-term technical analysis:

On the four-hour chart, NZD/USD trades at 0.5836, maintaining a bearish near-term tone as the pair holds below both the 20-period Simple Moving Average (SMA) at 0.5857 and the 100-period SMA at 0.5905. The Relative Strength Index (RSI) hovers near 33, reflecting persistent downside pressure, though the sub-40 reading also hints that sellers may be stretching the move as price stabilizes just above nearby support.

On the topside, initial resistance emerges at 0.5842, followed by a closer cap at 0.5849; a sustained break above these levels would be needed to challenge the 20-period SMA at 0.5857 and, later, the 100-period SMA at 0.5905. On the downside, immediate support is aligned at 0.5826, with a further floor at 0.5817; a drop through this band would reinforce the bearish bias and open the way to fresh lows on the four-hour horizon.

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

• US Dollar strengthens as Treasury yields rise on inflation concerns.
• ECB officials flag June hike if energy shock persists.
• Fed minutes loom as markets price year-end hike risk.   

EUR/USD drops near 1.1600 on Tuesday as the Greenback recovers some ground, supported by soaring US Treasury yields, even though ECB officials opened the door to rate hikes at the June meeting. The pair trades with losses of 0.48% at the time of writing.

EUR/USD falls as rising yields revive Fed hike fears

Financial markets are driven by geopolitics. Mixed headlines from the Middle East keep investors anxious, even though US President Donald Trump decided to halt strikes on Iran scheduled for Tuesday, due to Gulf allies' requests. Recently, he said that the US may need to attack Iran again, but that Tehran is begging for a deal.

Regarding talks between the US and Iran, the US Vice President JD Vance said both countries have made significant progress and that neither is eyeing a resumption of hostilities.

High energy prices had increased speculation that major central banks would need to hike rates. Traders had priced in a 50% chance that the Federal Reserve would lift borrowing costs towards the end of the year, via the CME FedWatch Tool.

The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.35% at 99.30.

Money markets had priced a 50% chance that the Federal Reserve would increase borrowing costs once, towards the end of the year, according to Prime Terminal data.

On Wednesday, investors will look to the minutes from the Fed’s latest policy meeting for insight into how strongly policymakers support shifting from an easing bias toward a neutral stance.

Across the pond, the Eurozone schedule was absent, except for speeches by European Central Bank (ECB) officials. Kocher said that a June rate hike is possible if there’s “no improvement in the Iran war.”

Echoing his comments was Joachim Nagel of the Bundesbank, who stated that the ECB is moving away from a baseline scenario, and that “maybe we have to do something in June.”

Francois Villeroy of the Banque de France said that the central bank “will be ready to act as needed” and that the Iran conflict created risks to growth and inflation.

EUR/USD Price Forecast: Technical outlook

In the daily chart, EUR/USD trades at 1.1606, keeping a bearish near-term tone as spot holds below the cluster of simple moving averages grouped around 1.1648. The pair also trades under the broader descending resistance line traced from the 1.1929 area, while the upward sloping support line that previously underpinned the advance now sits overhead, reinforcing a capped configuration. The Relative Strength Index (14) at roughly 40 remains in negative territory but above oversold, hinting at persistent downside pressure rather than exhaustion.

On the topside, initial resistance is located around the 50/100/200-day simple moving average band near 1.1648, where a daily close above would be needed to ease immediate selling pressure. Further ahead, the former rising support line turned barrier comes in around 1.1759, followed by the recent trend-line-related highs near 1.1796, which together define a broader supply zone limiting recovery attempts while price holds below them.

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

• USD/JPY pushed up through the 159.00 area on Tuesday, posting an intraday high just above that level before settling on the figure into the close, with the Japanese Yen leaking lower against a firm US Dollar.
• Japan's national Consumer Price Index (CPI) is due Thursday, with headline inflation seen at 1.5% year-on-year and core measures still printing softer than the prior month.
• Federal Open Market Committee (FOMC) Minutes Wednesday and US flash Purchasing Managers Index (PMI) data Thursday provide the Dollar-side test that decides whether 160 gets retaken this week.

The Yen's slow drift back toward 160.00 has the feel of a market that has stopped waiting. USD/JPY climbed through Tuesday's London and New York sessions, posting a session peak just above 159.00 before settling near that figure into the close, with the move running on US Dollar strength rather than anything new on the Yen side. The Bank of Japan (BoJ) remains the silent presence in the room, with policy frozen and the official line still that price pressures are easing back to target on their own.

The data due Thursday does little to argue against the BoJ holding. Japan's national CPI is forecast at 1.5% year-on-year (YoY) for April, with the ex-Fresh Food gauge at 1.7% versus 1.8% prior and the ex-Food and Energy measure softening to 2.4%. The direction of travel is genuinely down, and even a modest beat on the ex-Fresh Food print would not be enough on its own to force the BoJ's hand. The market knows this, which is why USD/JPY trades like a pair where the rate differential is the only story that still moves it.

Why 160.00 keeps catching the eye

The 160.00 handle has been the line in the sand for Tokyo since the intervention episodes earlier in the cycle. USD/JPY printed a year-to-date high just above 160.00 earlier in May before being slapped back toward 156.00, and the recovery off that low has been almost a straight line. With price now back near 159.00 and momentum still running, the question is whether traders test the Ministry of Finance's patience a second time inside a single quarter. The Stochastic RSI on the daily chart is reading lower than it has been at any recent peak, which leaves room for the move to extend before it gets stretched.

The Fed side of the trade

The bigger swing factor this week is on the Dollar leg. FOMC Minutes land Wednesday at 18:00 GMT, and the market will read them for any sign that the recent run of speeches from regional Fed presidents reflects a broader committee shift rather than the usual policy-spread theatre. Thursday's US flash PMIs, with Manufacturing seen at 54 and Services holding around 51, are both marked high-impact. A firm set on either side keeps the Dollar bid and effectively forces the Yen lower regardless of what the Tokyo CPI does that same evening.

Setup into the end of the week

A daily close above 160.00 is the technical trigger that matters, and at current levels it is well within a session's range. The pattern of higher lows since the early May washout is intact, and the 50-day EMA on the daily sits just below price as the support line for any pullback. The path of least resistance is up unless the Fed Minutes deliver a meaningfully dovish surprise.

Friday's Fed Chair swearing-in is the wildcard. The new Fed leadership starts the week with an open inflation question, no signal yet on how the dot plot shifts, and a Dollar that wants to keep going. The Yen, as usual, gets caught in the middle.

USD/JPY 5-minute chart

Technical Analysis

In the five-minute chart, USD/JPY trades at 159.06. The pair holds a bullish intraday bias as price trades above the day’s opening level at 158.77, indicating buyers remain in control on dips. Momentum is stretched on the Stochastic RSI, which sits in overbought territory near 76.8, hinting that upside progress could slow even as the short-term tone stays constructive while above the intraday pivot around the current price zone.

On the downside, immediate support is seen at the day’s open near 158.77, where a break would signal fading intraday demand and expose deeper pullbacks. As long as USD/JPY remains above that floor, the path of least resistance stays higher in the near term, though overbought momentum readings warn that new highs may attract profit-taking rather than fuel an aggressive continuation.

In the daily chart, USD/JPY trades at 159.06. The pair holds a constructive bullish bias as spot remains above both the 50-day Exponential Moving Average (EMA) at 158.17 and the 200-day EMA at 155.29, suggesting the broader uptrend stays intact despite recent volatility. The Stochastic RSI around 54 leans slightly positive, hinting that upside momentum is stabilizing rather than overextended at current levels.

On the downside, immediate support is seen near the 50-day EMA at 158.17, with a deeper cushion at the 200-day EMA around 155.29 if selling pressure accelerates. As long as buyers defend these moving average supports, the technical structure favors further consolidation with a modest topside bias, even though clearly defined resistance levels are not yet visible in the immediate vicinity of the current price.

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