BoJ hike, oil relief and Fed waiting game steer FX | Daily Forex Market Update | IntelliTrade

Good morning traders from a mostly cloudy IntelliTrade desk, with Amsterdam near 13°C early on, showers clearing into a brighter and warmer afternoon near 23°C, so pour a smooth Tuesday coffee as central-bank week gets busy.

Overall Market Sentiment:

Market sentiment is cautiously constructive, but less excited than Monday. The U.S.-Iran agreement has kept the dollar near 10-day lows and supported risk appetite, but currency markets are moving more carefully as traders wait for the Fed, RBA, BoE, SNB and the next details around Strait of Hormuz shipping normalization.

The big shift is that oil has moved from inflation shock to relief story. Brent is near $83 after a sharp fall, but the market still needs proof that energy flows can normalize safely and predictably, so the inflation premium has cooled but not disappeared.

Geopolitics:

Geopolitics remains central because the U.S.-Iran deal is directly affecting oil, inflation expectations, shipping risk and safe-haven demand. The deal is expected to extend the ceasefire by 60 days and reopen the Strait of Hormuz, but details remain limited and the path back to normal energy flows is not straightforward.

This matters for FX because lower oil helps energy importers such as Japan and parts of Europe, cools inflation risk and reduces some defensive demand for USD, CHF, JPY and gold. Brent near $83 is the key reference area markets watch today. Assumption: today’s main market channel is energy supply and inflation expectations, not a broader credit shock.

Macro Calendar:

Today

• The Bank of Japan raised rates to a 31-year high, with USDJPY still around 160.23 after the decision. The key issue is not only the hike itself, but whether communication points to more tightening or stays cautious.
• The RBA decision is also in focus. Markets expect a hold after three consecutive hikes, with AUD sensitive to whether the statement highlights sticky inflation or growing growth risks.
• The Fed’s two-day meeting begins today and ends Wednesday. This meeting includes updated projections, so USD, yields, gold, equities and crypto are all sensitive to the tone.
• Oil headlines remain important because markets are still waiting for clearer details on safe shipping through Hormuz, insurance conditions and how quickly energy flows can normalize.

The rest of this week

• U.S. retail sales for May are due Wednesday at 8:30 a.m. ET. This will show whether households are still spending despite high prices and elevated borrowing costs.
• The Fed decision and press conference are due Wednesday, with the June meeting linked to a Summary of Economic Projections. Markets will focus on whether lower oil changes the inflation and rate outlook.
• UK CPI is due before the Bank of England decision, while the BoE is expected to keep rates on hold at 3.75% as it balances inflation risk against softer growth.
• The SNB monetary policy assessment is due Thursday, with economists expecting the policy rate to remain at 0%. Swiss inflation was 0.6% in May, keeping the SNB story very different from the ECB and Fed.
• New Zealand GDP is due Thursday, making NZD sensitive to whether domestic growth supports earlier rate expectations.

⚖️ USD - Dollar softer, but Fed projections keep a floor

The dollar is near 99.66 on DXY, close to 10-day lows after the U.S.-Iran deal reduced the immediate oil and safe-haven premium. Fed expectations remain the main driver because strong U.S. data and still-high inflation have not fully disappeared from the story. The curve matters because front-end yield support would help USD more clearly than defensive demand alone. Retail sales and the Fed projections can either rebuild the dollar’s floor or weaken it if growth and inflation risks look more balanced. The current bias would turn weaker if oil stays low, Fed guidance sounds patient and equities continue to recover.

⚖️ EUR - Euro steadier as oil relief helps Europe

EURUSD is near 1.159, just below Monday’s 10-day high near 1.1622, keeping 1.15 and 1.16 as the main zones markets watch. The euro is helped by lower oil because Europe is sensitive to imported energy costs. ECB expectations still offer some support after last week’s hike, but the dollar side remains important because the Fed decision is still ahead. If the Fed sounds patient and oil stays lower, EUR can hold a steadier tone. If U.S. yields rise again after the Fed, EURUSD may struggle to extend above the recent high zone.

⚖️ GBP - Sterling stable before UK CPI and the BoE

Sterling is near 1.3413, with 1.33 and 1.35 still the main GBPUSD reference areas markets watch. GBP is helped by softer dollar conditions, but the local UK inflation and wage debate returns this week. The BoE is expected to keep Bank Rate at 3.75%, while officials still need to balance inflation pressure against weaker growth. Lower oil helps households and inflation expectations, but services inflation remains the key domestic risk. GBP risks are mixed until UK CPI and the BoE message give a cleaner signal.

🔻 CAD - Lower oil reduces the loonie’s support

CAD risks lean weaker because Brent near $83 reduces Canada’s terms-of-trade support compared with the high-oil stress period. USDCAD remains focused around the 1.39 to 1.40 area, where oil weakness and Fed-BoC rate spreads both matter. Lower oil is positive for global inflation, but it is not automatically positive for CAD. The BoC has already taken a patient stance, so CAD needs either steadier oil or a softer dollar to improve its tone. The loonie would look more balanced if oil stabilizes and the Fed avoids a strongly hawkish message.

🔻 CHF - Franc demand cools while risk appetite holds

CHF risks lean weaker in the near term as lower oil and firmer equities reduce the urgency of safe-haven demand. The franc still has a defensive role if the peace process disappoints, but today’s market tone is less supportive for protection currencies. The SNB decision on Thursday matters because markets expect the policy rate to stay at 0%, with low Swiss inflation giving policy makers more patience. USDCHF remains mainly driven by the balance between softer USD conditions and lower CHF demand. EURCHF is useful for tracking whether oil relief is reducing Europe-specific stress.

⚖️ JPY - BoJ hike helps, but yen pressure remains

USDJPY is near 160.23 after the BoJ raised rates to a 31-year high, keeping the pair close to the area that markets treat as intervention-sensitive. The yen has support from tighter BoJ policy and lower oil, since Japan benefits when energy import costs fall. The problem is that the U.S.-Japan yield gap is still large, so one BoJ move may not be enough to shift the whole story. Intervention risk can slow sharp currency moves, but softer U.S. yields would help JPY more durably. JPY risks are mixed because policy support is building, while yield spreads still work against the currency.

⚖️ AUD - Aussie waits for the RBA tone

AUDUSD is near 0.7061 ahead of the RBA decision, with 0.70 and 0.71 as the main reference zones markets watch. AUD is getting some help from softer USD conditions and better global risk appetite, but the domestic story is less clean. The RBA is expected to hold after three hikes, while inflation remains elevated and growth risks have become more visible. AUD is behaving more like a risk proxy than a pure rates currency today. Risks are mixed, with a firmer tone if the RBA stays inflation-focused, but pressure if the statement leans harder into growth caution.

⚖️ NZD - Kiwi steadier, with GDP next

NZD is stabilizing as lower oil and softer USD conditions support risk appetite, but conviction remains limited before New Zealand GDP. NZDUSD remains focused around the 0.58 to 0.59 area, where rate spreads and global risk sentiment both matter. GDP is due Thursday, and it will show whether domestic growth supports the earlier rate-support story. EURNZD remains useful as a lens for comparing Europe’s policy support with New Zealand’s risk sensitivity. NZD risks are mixed unless GDP or Fed guidance creates a clearer rate-spread story.

Cross-Asset Wrap:

• 🪙 Gold: Gold is near $4,310 to $4,325 per ounce, slightly firmer today but still below earlier protection highs. USD and real yields remain the first drivers, while lower oil reduces part of the inflation-protection bid even though geopolitical uncertainty has not fully disappeared. Watch next: Fed guidance will decide whether gold holds its rebound or returns to yield pressure. [USD] [REAL YIELDS] [RISK]
• 🥈 Silver: Silver is near $69.8 to $69.9 per ounce, slightly softer today and still down around 10% over the past month. USD, yields and industrial demand are the main drivers, with silver more sensitive than gold to growth and China-linked demand. Watch next: U.S. retail sales and global risk appetite will shape whether silver behaves more like a precious metal or an industrial metal. [USD] [YIELDS] [INDUSTRIAL]
• 🛢 Oil, Brent: Brent is near $83 per barrel, close to a three-month low after the U.S.-Iran deal helped price out part of the supply-risk premium. Supply expectations, Hormuz reopening hopes and shipping normalization are the main drivers, while uncertainty around timing and insurance keeps volatility alive. Watch next: clearer details on safe passage through Hormuz would cool inflation fears further, while delays would rebuild some risk premium. [SUPPLY] [DEMAND] [GEOPOLITICS]
• 📈 Stocks: SPY is near $754.83 and QQQ is near $744.00, both above prior-session levels and close to their intraday highs. Lower oil, softer dollar pressure and technology strength are supporting equities, but Fed projections keep valuations rate-sensitive. Watch next: the Fed message will test whether the rebound broadens or stays dependent on rate relief.[RATES] [TECH] [RISK]
• ₿ Crypto: Bitcoin is near $65,831, holding above today’s low near $65,495 but below the intraday high near $67,230. Liquidity, real yields and risk appetite remain the main drivers, with lower oil and firmer equities helping sentiment at the margin. Watch next: crypto will likely follow the next move in USD liquidity around the Fed meeting.[LIQUIDITY] [YIELDS] [RISK]

This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.

Need help decoding this article? Get our free Macro Decoder ebook when signing up to our newsletter using the sign up button below! No spam, just value.