The Japanese Yen (JPY) strengthens against the US Dollar (USD) on Thursday, with USD/JPY snapping a five-day winning streak as the Greenback loses traction following reports that the US and Iran had reached a preliminary agreement to extend the current truce.

The Greenback resumed its decline on Thursday, coming under sudden selling pressure in the wake of news citing the US and Iran have clinched a deal that could eventually end the conflict in the Middle East.

The Australian Dollar advances some 0.25% on Thursday on reports that Iran and the US reached a deal, as economic data in the US revealed that the economy grew at a slower pace than projected. At the time of writing, the AUD/USD trades at 0.7158, after bouncing off daily lows of 0.7097.

The British Pound pares some of its earlier losses and edges up by 0.08% amid reports that the US and Iran reached a deal, pending confirmation from US President Donald Trump, according to Axios. At the time of writing, the GBP/USD trades at 1.3437 after bouncing off daily lows of 1.3367.

EUR/USD trims earlier losses on Thursday as traders digest a slew of US economic data that eases demand for the US Dollar (USD) despite heightened geopolitical tensions in the Middle East. At the time of writing, the pair is trading around 1.1627, rebounding from an intraday low of 1.1586.

ING’s Francesco Pesole argues that the Pound has largely priced out recent UK political risk, with the EUR/GBP political risk premium, estimated at about 1% in mid-May, now back to zero.

Scotiabank strategists Shaun Osborne and Eric Theoret notes that the Canadian Dollar (CAD) is soft against the US Dollar (USD), with USD/CAD trading near fresh local highs in an environment of mild risk aversion linked to renewed US/Iran tensions.

Brown Brothers Harriman’s (BBH) Elias Haddad reports that USD/KRW has eased back toward 1500 after briefly trading above 1510, as the Bank of Korea (BoK) delivered a hawkish hold and signaled its next move is likely a hike.

Silver (XAG/USD) recovers on Thursday as the US Dollar (USD) eases following the latest US Personal Consumption Expenditures (PCE) data. At the time of writing, XAG/USD is trading around $734.11, rebounding after hitting a one-month low near $71.79 earlier in the day.

BNY’s Bob Savage reports that European Union (EU) exports, especially to the United States (US), have weakened sharply and sentiment indicators remain below long‑run averages, underscoring subdued Eurozone momentum.

The GBP/USD pair trades 0.2% lower to near 1.3400 during the European trading session on Thursday. The pair is broadly under pressure due to fears of a resumption of the Middle East war after the exchange of attacks between the United States (US) and Iran.

The Japanese Yen (JPY) trims losses against the US Dollar (USD) during Thursday’s European trading session, although it remains dangerously close to levels that allegedly triggered an intervention in April.

Societe Generale technical analysts observe that the USD/ZAR downtrend has stalled after an interim low in January, with the pair capped by its 200-day moving average.

The New Zealand Dollar (NZD) holds minor losses against the US Dollar (USD) on Thursday, as it has retraced most of the daily losses during the London trading session.

ABN AMRO analysts note EUR/USD has been volatile within a range, driven by shifting expectations on reopening the Strait of Hormuz.

Eurozone Industrial Confidence in line with forecasts (-8) in May

Eurozone Business Climate rose from previous -0.28 to -0.26 in May

Eurozone Services Sentiment came in at 2.2, above forecasts (0.1) in May

Eurozone Economic Sentiment Indicator came in at 93.5, above forecasts (92.8) in May

Societe Generale analysts note USD/JPY grinding towards 160 as widening 2-year UST/JGB spreads dominate over Oil moves for the Japanese Yen (JPY). The pair trades within 1% of the late-April intervention level, with markets assuming a 25 bp Bank of Japan (BoJ) hike in June.

The Euro (EUR) is picking up from weekly lows but holds moderate losses against the US Dollar (USD) on Thursday.

The AUD/USD pair shows some resilience below the 0.7100 mark and recovers a few pips following an intraday slide to a one-week low, touched earlier this Thursday. Spot prices trade around the 0.7120 region during the first half of the European session, still down for the second straight day.

The Swiss Franc (CHF) holds moderate losses against the US Dollar (USD) on Thursday, but it has retraced most of the earlier decline, despite higher Oil prices and uninspiring Swiss employment data.

Here is what you need to know on Thursday, May 28:

Danske Research Team notes that risk sentiment has deteriorated after fresh United States (US) strikes on Iran, pushing EUR/USD below 1.16. The team highlights that higher Oil prices and yields are weighing on broader risk assets.

The AUD/JPY cross extends the previous day's retracement slide from the 114.35 area, or a nearly two-week high, and attracts some follow-through selling for the second consecutive day on Thursday.

The British Pound (GBP) remains on the back foot against the Japanese Yen (JPY) on Thursday, although the pair has regained most of the ground lost during the Asian session, returning to the 213.80 area at the time of writing, from weekly lows at 213.33.

UOB’s Quek Ser Leang and Lee Sue Ann report USD/JPY closed at 159.51, its second straight daily gain, and see scope for further upside. Intraday, they expect a test above 159.70, though 159.95 is unlikely to be reached yet.

The NZD/USD pair attracts some sellers to around 0.5885 during the early European trading hours on Thursday. The New Zealand Dollar (NZD) softens against the US Dollar (USD) as a fresh exchange of airstrikes between the United States (US) and Iran dented hopes for a peace deal. 

France Producer Prices (MoM) fell from previous 2% to -2.1% in April