USD/JPY stages a modest rebound on Wednesday after coming under pressure earlier in the day amid another suspected intervention by Japanese authorities. At the time of writing, the pair is trading around 156.42 after recovering from an intraday low near 155.00.

GBP/USD rises by over 0.59% on Wednesday after an Axios report revealed that the US and Iran are closing in on a deal to end the war. The Greenback fell on the news, even though US jobs data crushed estimates, which could prompt the Federal Reserve to focus on inflation.

EUR/USD trades higher on Wednesday as renewed optimism surrounding a potential US-Iran peace deal pressures the US Dollar (USD) and lifts the Euro (EUR).

AUD/USD surges near the 0.7240 price region, supported by improving risk sentiment after Axios reported that the United States (US) and Iran are moving closer to a deal aimed at ending the conflict.

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that USD/SEK has fallen on broad Dollar weakness while Sweden’s April disinflation surprised to the downside, reducing Riksbank hike expectations.

EUR/JPY trades around 183.50 on Wednesday at the time of writing, down 0.61% on the day, as the Japanese Yen (JPY) benefits from stronger demand amid fears of intervention by Japanese authorities in the foreign exchange market.

EUR/GBP trades flat on Wednesday after trimming earlier gains as geopolitical headlines surrounding a potential US-Iran peace deal triggered fresh volatility across the FX market.

Scotiabank strategists Shaun Osborne and Eric Theoret highlights that USD/CAD is little changed as lower Oil offsets improved risk appetite, with the Canadian Dollar (CAD) having seen limited benefit from prior crude gains.

Societe Generale analysts argue that the Japanese Yen remains significantly undervalued versus the Dollar on a purchasing power parity basis, with USD/JPY far above fair value near 95.

USD/CHF declines around 0.7790 on Wednesday at the time of writing, down 0.50% on the day, as the US Dollar (USD) remains under pressure in a more risk-positive market environment.

Derek Halpenny at MUFG highlights that United Kingdom (UK) Gilt yields have jumped sharply, echoing past episodes of political and fiscal stress, with long-end Gilts still elevated versus pre‑2011 levels.

USD/CAD struggles for direction on Wednesday as renewed optimism surrounding a potential US-Iran peace deal pressures the US Dollar (USD), while falling Oil prices weigh on the commodity-linked Canadian Dollar (CAD).

Brown Brothers Harriman’s (BBH) Elias Haddad reports NZD/USD has rebounded toward 0.6000 on broad US Dollar (USD) weakness, nearly erasing war-related losses. New Zealand’s Q1 labour data were mixed, with softer employment but firm wage growth.

The New Zealand Dollar (NZD) appreciates more than 1.5% against the US Dollar (USD) on Wednesday, as rumours that Washington and Iran are close to a peace deal have boosted risk appetite.

ING’s Chris Turner calls Brazil one of his preferred emerging markets, citing strong terms of trade, buoyant equities and expectations of 100bp in rate cuts.

GBP/USD advances on Wednesday and trades around 1.3630 at the time of writing, up 0.65% on the day, benefiting from the broad weakness of the US Dollar (USD).

BNY’s Bob Savage highlights a sharp Japanese Yen (JPY) rally, with USD/JPY dropping as low as 155.04 before partially reversing, in a move widely seen as fresh official intervention. Authorities are viewed as defending the 160 level to curb speculative shorts.

The Australian Dollar (AUD) accelerated its uptrend against the US Dollar (USD) on Wednesday, breaching previous highs at the 0.7225 area and hitting levels near 0.7270 for the first time since August 2022.

USD/JPY drops sharply on Wednesday and trades around 155.80 at the time of writing, down 1.31% on the day, as the Japanese Yen (JPY) benefits from both suspected intervention by Japanese authorities and broad-based weakness in the US Dollar (USD).

The Euro (EUR) rallies more than 0.5% against the US Dollar (USD) on Wednesday, trading at 1.1760 at the time of writing, after hitting session highs at 1.1770.

MUFG’s Derek Halpenny argues that recent USD/JPY moves likely reflect renewed Japanese Ministry of Finance intervention, with the pair dropping nearly three big figures after testing the 158.00 area.

Rabobank’s FX Strategy team argues that current market pricing for up to three Bank of England hikes over the next year is excessive given a loosening UK labour market and lacklustre growth.

Eurozone Producer Price Index (MoM) above forecasts (3.3%) in March: Actual (3.4%)

Eurozone Producer Price Index (YoY) above expectations (1.8%) in March: Actual (2.1%)

Silver (XAG/USD) rallies on Wednesday to erase the previous two days' losses and reaches session highs above $76.00 at the time of writing, favoured by the US Dollar's weakness.

Here is what you need to know on Wednesday, May 6:

Commerzbank's Antje Praefcke expects the the central bank of Sweden, Riksbank to leave its policy rate unchanged at 1.75% while reiterating its readiness to hike if needed.

Eurozone HCOB Composite PMI climbed from previous 48.6 to 48.8 in April

Eurozone HCOB Services PMI above expectations (47.4) in April: Actual (47.6)

Germany HCOB Services PMI meets forecasts (46.9) in April