Trading sentiment stays unclear early Thursday as mixed Iran news and caution before possible U.S.-Iran peace talks on Friday keep markets uncertain. A hawkish Federal Reserve (Fed) stance and Germany’s downgraded outlook support the U.S. Dollar and pressure EURUSD, while a heavy economic calendar keeps traders alert, especially ahead of EU/US Purchasing Managers’ Index releases.
The unconfirmed social media rumors of a fresh Iran attack briefly lifted energy prices and hit equities before stabilizing, showing how fast geopolitics can move markets. The U.S. equities later rose despite higher oil prices, as uncertainty remains over the ceasefire’s duration, but markets still expect a deal, possibly around Friday or the weekend. Donald Trump indicated Iran may get 3–5 days to respond, though the White House later said there is no fixed deadline.
The U.S. Dollar Index (DXY) rose to a 10-day high in a three-day uptrend, pushing EURUSD to its lowest since April 13 for a third straight daily fall. GBPUSD also declined for three days, USDJPY extended gains, AUDUSD reversed its rebound, and NZDUSD posted its first loss in four days, while UDCAD paused its recovery despite stronger crude oil prices. West Texas Intermediate (WTI) crude oil rose for a fourth straight day to the highest since April 14, gold reversed its prior bounce, and Bitcoin (BTC) and Ethereum (ETH) ended three-day winning streaks, while Asia-Pacific equities declined despite strong Wall Street closes.
EURUSD remains pressured
A firmer USD, weak German economic forecasts, and mixed Eurozone consumer confidence push EURUSD toward a third straight daily drop, revisiting its lowest level since April 13.
Eurozone April flash consumer confidence fell to -20.6 from -16.3, according to the European Commission. At the same time, Germany’s Bundesbank warned that the worst effects of the Middle East conflict are still ahead, raising stagflation risks. It now expects gross domestic product (GDP) growth at 0.5% in 2026 versus 1.0% earlier and 0.9% in 2027 versus 1.3%, with inflation projected at 2.7% in 2026 and 2.8% in 2027. Exports are seen flat this year and rising 1.3% in 2027, while recovery remains limited by external shocks. The outlook points to only modest expansion in Q2, increasing support from fiscal policy, and significantly elevated inflation. Q1 GDP is expected at +0.2% quarter-on-quarter (q/q), with the release due on April 30.
Like EURUSD, GBPUSD falls for a third straight day due to a stronger USD, despite ignoring the previous day’s strong United Kingdom (UK) inflation report, while Iran-related fears continue to pressure major currencies against the USD.
Meanwhile, USDJPY rises for a fourth consecutive day even as strong Japan data support hawkish Bank of Japan (BoJ) expectations. Japan’s private sector grew in April but lost momentum, as the Jibun Bank S&P Global Composite Purchasing Managers’ Index (PMI) eased to 52.4 from 53.0, above the expected 51.4 but marking the slowest growth in four months, while staying above the 50 expansion level for a 13th straight month. Manufacturing PMI surged to 54.9, while Services PMI slowed to 51.2, with strong factory output offsetting weak domestic demand, rising costs, and declining confidence.
A cautious market mood, a stronger USD, and mixed signals from Australia and New Zealand weigh on AUDUSD and NZDUSD. AUDUSD reverses the previous day’s gains, while NZDUSD records its first daily loss in four days. Meanwhile, USDCAD reflects Canadian Dollar (CAD) strength despite a firmer USD, posting a modest decline for the first time in three days, supported by higher crude oil prices, Canada’s key export.
Australian firms are increasing currency hedging due to Iran-related risks, according to the Commonwealth Bank of Australia (CommBank) Foreign Exchange (FX) Barometer. Australia’s preliminary April S&P Global Composite Purchasing Managers’ Index (PMI) rose to 50.1 from 46.6, returning to expansion. Manufacturing PMI improved to 51.0 from 49.8, and Services PMI rose to 50.3 from 46.3. However, new orders declined again, pointing to weak domestic demand, while cost inflation surged to its highest since August 2022 due to rising fuel and freight costs, signaling a fragile outlook.
New Zealand’s Finance Minister said that in a worst-case scenario, inflation could reach 7.4% in 2025–26, gross domestic product (GDP) growth could slow to 0.8%, and unemployment could rise to 5.7% if oil reaches 180 USD per barrel. The recovery is described as delayed but not derailed, with such extreme oil prices considered unlikely.
Fears of a continued energy supply crunch from the U.S.–Iran conflict and the lack of clear progress on a peace deal push West Texas Intermediate (WTI) crude oil to its highest level in over a week, rising for a fourth straight day. Although a weekly build in U.S. oil inventories briefly challenged prices, it was not enough to stop the upward momentum.
Gold price reverses the previous day’s gains and slips back toward the 21-day Simple Moving Average (SMA) support level, as a firmer USD and cautious positioning ahead of key data and events weigh on sentiment.
U.S. crude oil inventories rose by 1.9 million barrels versus an expected draw of 1.0 million barrels, according to the Energy Information Administration (EIA), driven by higher imports and lower exports. However, gasoline inventories fell by 4.6 million barrels, and distillates dropped by 3.4 million barrels, indicating strong demand and helping support overall oil prices.
Bitcoin (BTC) is supported by strong institutional demand, with a Coinbase survey showing 75% see it as undervalued, up from 71%. Exchange-traded fund (ETF) inflows reached $1.5 billion in a week, while about $200 million in short positions were liquidated.
Asia-Pacific markets were mostly quiet, edging lower of late, as markets fear no major progress on the U.S.-Iran peace deal. U.S. stock markets rose on Wednesday, led by heavily shorted stocks and strong technology optimism. The Standard & Poor’s 500 (S&P 500) gained 1.05% but stayed below record highs, the Nasdaq Composite rose 1.64% to a record high, and the Dow Jones Industrial Average (DJIA) gained 0.69%. Tesla reported a strong Q1 earnings per share (EPS) beat driven by auto gross margin ex-credits rising to 19.2% from 12.5% a year ago and 17.9% in Q4, despite a revenue miss.
Preliminary April Purchasing Managers’ Index (PMI) readings for Germany, the Eurozone, the UK, and the US, along with Canada price data, US Jobless Claims, Chicago Purchasing Managers’ Index (PMI) for March, and speeches from European Central Bank (ECB) officials, set a busy Thursday for traders. Market focus also remains on developments around the U.S.–Iran peace deal, as mixed signals from both sides keep traders on edge ahead of an alleged officials’ meeting on Friday.
With expectations of stronger US data, mixed Eurozone figures, and Germany’s downgraded growth outlook, the US Dollar (USD) may extend its three-day recovery and continue to pressure major currency pairs such as EURUSD, GBPUSD, AUDUSD, and NZDUSD. Any further weakening in U.S.–Iran peace prospects could also add to USD strength alongside upbeat US data.
Meanwhile, USDJPY may trade unevenly due to concerns around the Bank of Japan (BoJ), while Crude Oil could sustain recent gains. Gold may face additional downside pressure if it breaks the 21-day Simple Moving Average (SMA) support. Cryptocurrencies could extend their recent pullback, and equities may struggle to hold onto Wednesday’s recovery.
May the trading luck be with you!
