Oil, Geopolitics and Central Banks Keep FX Markets on Edge.

USD – Remains relatively firm, supported by rising oil prices and geopolitical tension, though sentiment resilience is limiting a stronger breakout.

EUR – Continues to trade in a balanced but choppy range, largely driven by dollar dynamics and awaiting key data and central bank signals.

GBP – Slightly softer tone, with political developments and upcoming policy expectations shaping a cautious outlook.

---

USD:

The dollar is trading with a modestly stronger tone, helped by the continued rise in oil prices as geopolitical tensions around the Strait of Hormuz persist. Iran’s proposal regarding the strait has failed to generate lasting optimism, and the steady grind higher in crude—particularly Brent Crude near $110/bbl—has lifted the dollar index by around 0.5% since yesterday afternoon.

However, broader market sentiment remains relatively constructive, with EUR/USD still trading notably above levels seen during previous oil spikes. Focus today turns to the April US consumer confidence release from the Conference Board, where expectations point to a slight deterioration amid ongoing geopolitical uncertainty. Beyond that, attention shifts firmly to tomorrow’s decision from the Federal Reserve, alongside earnings from major US tech firms, which could set the near-term direction.

---

GBP:

Sterling is trading slightly lower this morning, with geopolitical and diplomatic developments adding to the cautious tone. King Charles III has begun a four-day visit to the United States aimed at reinforcing relations, including an address to Congress. This comes at a sensitive time, with tensions linked to Iran and reported frustration from Donald Trump over the UK’s stance on military cooperation in the region.

From a macro perspective, markets are now focused on Thursday’s decision from the Bank of England. Expectations are building that policymakers may begin to signal a potential summer rate hike. Until then, sterling is likely to remain range-bound, with limited upside absent a clear positive catalyst.

---

EUR:

The euro remains somewhat volatile and largely driven by external factors, particularly movements in the dollar and oil markets. With crude prices elevated and geopolitical uncertainty ongoing, the single currency continues to react more to global sentiment than domestic drivers.

The coming days are expected to be particularly eventful, with the European Central Bank policy decision alongside key GDP and inflation data releases scheduled for Thursday. In the near term, EUR is likely to take its cue from developments in US-Iran relations and incoming US data, keeping price action choppy but broadly contained.

Economic Calendar