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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: A collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
On April 2, 2026, the core drivers of the global foreign exchange market focused on the four main themes of the deepening of dovish expectations of the Federal Reserve, the easing of geopolitical tensions between the United States and Iran, the differentiation of inflation in Europe and the United Kingdom, and the intensive release of US data. Good and bad factors intertwined during the day. The U.S. dollar index continued to be weak. Non-U.S. currencies were clearly differentiated. Geographical risk premiums faded and monetary policy expectations became the core variables of trading. The following is a panoramic summary of the key good and bad news throughout the day.
1. Good news: Supporting the strength of Africa and the United States, suppressing the weakness of the US dollar
The Federal Reserve is collectively dovish, and expectations of interest rate cuts are rising (bad for the US dollar, good for Africa and the United States). From April 1 to the early morning of April 2, many Federal Reserve officials intensively released dovish sentiments Signal: Board members Bowman and Logan both stated that "the trend of slowing inflation is clear and there is no need to maintain high interest rates for too long" and supported 1-2 interest rate cuts during the year, which may start as early as June; Chairman Powell reiterated that "policy will not be tightened due to short-term oil price fluctuations", downplaying concerns about inflation. The market has xmaccount.completely revised its hawkish expectations, with the 2-year U.S. bond yield falling to 3.81% and the U.S. dollar index falling below the 99.5 mark, providing strong appreciation support for non-U.S. currencies such as the euro, pound, and yen.
The U.S.-Iran ceasefire was confirmed, and geopolitical risks have xmaccount.completely subsided (good for risk currencies, bad for the safe-haven dollar). At 9:00 on April 2, Beijing time, Trump delivered a national speech, officially announcing that the "military objectives" of the U.S.-Iran conflict were achieved, promising to xmaccount.complete the withdrawal of troops from the Middle East within 2-3 weeks, and promoting ceasefire negotiations. Iran responded simultaneously and was willing to accept security guarantees, and shipping in the Strait of Hormuz gradually resumed. The easing of tensions in the Middle East has significantly boosted market risk appetite. U.S. stocks and European stocks have collectively risen. Safe-haven funds have withdrawn from the U.S. dollar and Japanese yen and flowed into high-yield risk currencies. xmaccount.commodity currencies such as the British pound, Australian dollar, and Canadian dollar have benefited significantly.
Eurozone inflation exceeds expectations, expectations of an interest rate hike by the European Central Bank have strengthened (good for the euro). The CPI in the Eurozone rose sharply to 2.5% year-on-year in March, and the core CPI reached 2.2%, both far exceeding market expectations, the largest increase since 2022. ECB officials urgently stated that they were "wary of a second rebound in inflation and will not rule out an interest rate hike at the April meeting." Policy tightening expectations were sharply different from the dovish Fed. The EURUSD stood firm at the 1.16 mark, setting a new stage high and becoming the strongest main line in Africa and the United States.
China's economy is recovering, and the attractiveness of RMB assets has increased (good for the Australian and New Zealand dollars). China's manufacturing PMI rebounded to 51.2 in March, returning to the expansion range, and expectations for economic recovery have increased. As China's major trading partners, the Australian dollar and the New Zealand dollar directly benefited from the expected recovery in Chinese demand. They fluctuated and strengthened during the day. The Australian dollar against the US dollar stabilized at the 0.66 mark, and the New Zealand dollar against the US dollar rebounded above 0.61.
2. Bad news: Suppressing the non-US rebound and limiting the decline of the US dollar
The British economy is weak, and the Bank of England is increasing pressure to cut interest rates (bad for the pound). The British GDP only increased by 0.1% month-on-month in February, and the manufacturing industry continues to shrink. Although inflation is high, economic growth is weak. Disagreements within the Bank of England have intensified, with many members supporting an interest rate cut in May to stabilize growth. Expectations of policy easing have suppressed the pound's rebound, with gains far weaker than those of the euro. GBP/USD encountered resistance at the 1.33 mark.
Initial jobless claims in the United States improved, and the US dollar received short-term support (good for the US dollar). The number of initial jobless claims in the United States fell to 198,000 in the week to March 28, lower than expected, and the labor market resilience remains. The data eased market concerns about economic recession, and U.S. bond yields rebounded slightly, limiting the downside of the U.S. dollar index and preventing a unilateral plunge in the U.S. dollar.
Japan’s inflation is weak, and expectations for a yen interest rate hike have cooled (bad for the yen). Japan’s core CPI in March was only 1.2% year-on-year, far below the 2% target. Bank of Japan officials stated that “there is no need to raise interest rates in April.” Expectations for the interest rate differential between the United States and Japan to narrow have weakened. Although the U.S. dollar has pulled back against the yen, it has held on to the 158 support, and the Japanese yen's rebound has been limited.
OPEC+ increased production, putting xmaccount.commodity currencies under pressure (bad for the Canadian dollar and Australian dollar). From April 1, OPEC+ officially increased production by 206,000 barrels per day. Superimposed on the Middle East easing the sharp drop in oil prices, crude oil, iron ore and other xmaccount.commodity prices have corrected. The rebound of xmaccount.commodity currencies was hindered, with the Canadian dollar encountering resistance at 1.3550 against the US dollar, while the Australian dollar was relatively resilient due to the positive support from China.
3. Core summary of trading
The foreign exchange market during the day is dominated by positive and negative disturbances. The weakness of the US dollar is difficult to change. Non-US differentiation operations: the euro is the strongest and can be long on dips; the pound and xmaccount.commodity currencies fluctuate upward; the Japanese yen is weak. In the evening, the focus will be on the U.S. trade balance in February and March non-agricultural outlook data. If expectations of a Fed interest rate cut are strengthened, the dollar will further fall to 99.0, and the euro will hit 1.1650. If the data exceeds expectations, the dollar may rebound in the short term, but it will be difficult to change its mid-term weakness.
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