Forex Today: US Dollar falls as markets assess Fed transition and US-Iran negotiations
Here is what you need to know for Tuesday, May 19:
The US Dollar Index (DXY) falls toward the 99.10 region on Monday as traders assess fresh geopolitical headlines and the upcoming leadership transition at the Federal Reserve (Fed).
A White House official stated that United States (US) President Donald Trump will swear in Kevin Warsh as the next Fed Chairman on Friday, after the Senate voted to approve him for a four-year term, replacing Jerome Powell. Investors remain cautious as markets evaluate how the Fed’s policy direction could evolve under the new leadership.
At the same time, traders monitored new developments surrounding the US-Iran negotiations. Axios reported that Iran’s latest proposal was viewed by the White House as “insufficient for a deal,” according to a senior US official. Meanwhile, US President Donald Trump said he has ordered a pause on a planned US military attack scheduled for Tuesday after appeals from Qatar, Saudi Arabia and UAE leaders.
Iranian news agency Tasnim stated that the US accepted a temporary lifting of Iran’s Oil sanctions during negotiations, while Tehran continues demanding the full removal of sanctions as part of any agreement. The mixed headlines improved risk appetite slightly and reduced some safe-haven demand for the Greenback.
EUR/USD rebounds toward the 1.1640 region, benefiting from a softer US Dollar (USD) amid ongoing geopolitical developments and hawkish Fed expectations.
GBP/USD advances near the 1.3420 area amid easing safe-haven demand, pressuring the USD. Sterling also finds some support despite persistent concerns surrounding the United Kingdom (UK) fiscal outlook and political uncertainty.
USD/JPY climbs toward the 158.90 zone as the Japanese Yen (JPY) weakens ahead of Japan’s preliminary Q1 flash Gross Domestic Product (GDP) release. Japan Chief Cabinet Secretary Yoshimasa Kihara stated that authorities are watching financial-market developments, including long-term rates, with a “very high sense of urgency,” as elevated Japanese bond yields continue to fuel speculation about future Bank of Japan (BoJ) policy normalization.
AUD/USD rises toward the 0.7160 region as improving market sentiment and the softer Greenback support demand for risk-sensitive currencies.
West Texas Intermediate (WTI) Oil trades flat near $102.30 per barrel, after conflicting headlines surrounding US-Iran negotiations and the potential temporary easing of sanctions on Iranian Oil exports.
Gold (XAU/USD) trades neutral near the $4,559 area as the softer USD supports demand for the precious metal, while ongoing geopolitical uncertainty surrounding the Middle East continues to underpin safe-haven flows.
What’s next in the docket:
Tuesday, May 19:
- Australia May Westpac Consumer Confidence, RBA Meeting Minutes
- UK March Labor Market Data (Average Earnings, Employment Change, Unemployment Rate)
- UK April Claimant Count Data
- US ADP Employment Change 4-week average
- Canada April Inflation Data (BoC Core CPI, CPI)
- US April Pending Home Sales
Wednesday, May 20:
- China PBoC Interest Rate Decision
- UK April Inflation Data (CPI, Core CPI, PPI, RPI)
- Germany April Harmonized Index of Consumer Prices
- NZ April Trade Data (Exports, Imports, Trade Balance)
- Australia May Preliminary S&P Global PMIs
- Japan April Trade Data (Exports, Imports, Trade Balance)
Thursday, May 21:
- Australia May Consumer Inflation Expectations
- Australia April Labor Market Data (Employment Change, Participation Rate, Unemployment Rate)
- Germany April Producer Price Index
- Switzerland Q1 Industrial Production
- France May Preliminary HCOB PMIs
- Germany May Preliminary HCOB PMIs
- EU May Preliminary HCOB PMIs
- UK May Preliminary S&P Global PMIs
- US April Housing Data (Building Permits, Housing Starts)
- US Initial Jobless Claims, May Philadelphia Fed Manufacturing Survey
- US May Preliminary S&P Global PMIs
- EU May Preliminary Consumer Confidence
- NZ Q1 Retail Sales
- UK May GfK Consumer Confidence
- Japan April CPI
Friday, May 22:
- Germany Q1 Gross Domestic Product
- UK April Retail Sales
- Germany May IFO Survey (Business Climate, Current Assessment, Expectations)
- Canada March Retail Sales
- US May Michigan Consumer Sentiment and Inflation Expectations
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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