Forex Today: US and Iran halt strikes, boosting mood to start Fed week
Here is what you need to know on Monday, July 27:
Markets turn risk-positive at the beginning of the new week as investors cheer the news of the United States (US) and Iran halting strikes. In the second half of the day, the US economic calendar will feature Durable Goods Orders and the Federal Reserve Bank of Dallas' Manufacturing Business Index.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.28% | -0.11% | -0.25% | 0.01% | -0.30% | -0.22% | -0.38% | |
| EUR | 0.28% | 0.13% | 0.00% | 0.27% | -0.05% | 0.07% | -0.12% | |
| GBP | 0.11% | -0.13% | -0.11% | 0.15% | -0.17% | -0.10% | -0.24% | |
| JPY | 0.25% | 0.00% | 0.11% | 0.22% | -0.07% | 0.00% | -0.13% | |
| CAD | -0.01% | -0.27% | -0.15% | -0.22% | -0.30% | -0.23% | -0.38% | |
| AUD | 0.30% | 0.05% | 0.17% | 0.07% | 0.30% | 0.11% | -0.08% | |
| NZD | 0.22% | -0.07% | 0.10% | -0.00% | 0.23% | -0.11% | -0.18% | |
| CHF | 0.38% | 0.12% | 0.24% | 0.13% | 0.38% | 0.08% | 0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US has decided to put military operations on hold, and the US ambassador to the United Nations noted that the US President Donald Trump is giving "some space" to talks with Iran, per CNN. In response, Iran has also paused its retaliatory strikes. While there were some reports claiming that the US was running low on ammunition, Trump dismissed them.
Crude Oil prices declined sharply following these developments and the barrel of West Texas Intermediate (WTI) was last seen trading below $64, losing more than 6% on the day. Reflecting the improving market sentiment, US stock index futures are up between 0.8% and 1.4% on the day, and the US Dollar (USD) Index is down more than 0.2% near 101.20. The Federal Reserve will hold its two-day policy meeting this week and announce its interest rate decision on Wednesday.
Oil market weighs fragile de-escalation as Hormuz traffic remains subdued
Analysts at ING caution that, although the recent pause in US–Iran strikes marks “the first tangible signal of de-escalation,” the underlying drivers are “less clear,” with “little explanation from the US.” They add that the easing in tensions has “not yet led to any meaningful pickup in vessel flows through the Strait of Hormuz,” underscoring that “we’re unlikely to see any recovery until there’s clarity on whether this de-escalation is more permanent and whether vessels can navigate the strait without fear of attack.”
After losing about 0.6% in the previous week, EUR/USD opened with a bullish gap and was last seen trading at around 1.1400.
Lane’s cautious optimism keeps Euro reaction contained
FXS Speechtracker scored European Central Bank (ECB) Chief Economist Philip Lane's remarks at 5.4/10 on Friday, below the historic 6.4/10, signaling a slightly less impactful and marginally more dovish tone than usual. The emphasis on meeting-by-meeting, data-dependent decisions and a “more reactive” stance suggests limited appetite for pre-committing to an aggressive tightening path, tempering immediate Euro upside.
Comments that the European economy “continues to grow” and that inflation will be guided back to target “in the next year or so” offer cautious optimism, but also imply room for patience rather than urgency.
GBP/USD holds its ground and trades slightly below 1.3350 after losing nearly 1% last week. The Bank of England (BoE) will announce its monetary policy decisions on Thursday.
Gold (XAU/USD) gains traction on Monday and rises about 1% on the day, trading near $4,100 in the European morning.
USD/JPY retreats from the four-decade high it set near 164.00 in the previous week and trades near 163.50 in the early European session on Monday.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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