Forex Today: Markets take a breather before action continues

Eren Sengezer FXStreet

Here is what you need to know on Monday, February 20:

Stock and bond markets in the US will be closed on Monday in observance of the Presidents' Day holiday and the trading action is expected to remain subdued, especially in the second half of the day. The Bundesbank will release its monthly report and the European Commission will publish the preliminary Consumer Confidence Index for February.

Developments over the weekend seem to have caused the geopolitical tensions to escalate but the impact on risk sentiment remains muted in the European morning.

Reports claim that the US and Taiwan may sign a bilateral trade agreement earlier than expected this year following the 'not very encouraging' meeting between China’s Director of the Office of the Central Foreign Affairs Commission Wang Yi and US Secretary of State Antony Blinken in Germany. Meanwhile, Japan's Defense Ministry of Defense said North Korea fired two ballistic missiles and Japan's Prime Minister Fumio Kishida requested a meeting of the United Nations Security Council.

During the Asian trading hours, New Zealand (NZ) Deputy Prime Minister and Finance Minister Grant Robertson reiterated that the Reserve Bank of New Zealand (RBNZ) has a responsibility to address inflation. The RBNZ will announce its policy decisions on Wednesday and is expected to raise its policy rate by 50 basis points to 4.75%. Meanwhile, NZD/USD trades in a tight range at around 0.6250 early Monday after having registered losses for the third straight week last week.

USD/JPY, which gained nearly 300 pips last week, stays in a consolidation phase near 134.00 in the European morning.

Following the decline witnessed last week, AUD/USD trades modestly higher on the day at around 0.6900. In the early Asian session on Tuesday, S&P Global Manufacturing and Services PMI data will be featured in the Australian economic docket and the Reserve Bank of Australia will release the Meeting Minutes.

EUR/USD staged a rebound late Friday and ended up closing the previous week virtually unchanged. The pair fluctuates in a tight range early Monday and trades within a touching distance of 1.0700.

GBP/USD managed to end the week slightly above the key 1.2000 level. The pair holds steady at around 1.2050 at the beginning of the week. In the absence of high-impact data releases, markets will keep a close eye on Brexit-related headlines.

Gold price lost more than 1% last week pressured by rising US Treasury bond yields. XAU/USD stays quiet early Monday and trades above $1,840.

Bitcoin failed to make a decisive move in either direction over the weekend but registered its highest weekly close since June above $24,000. BTC/USD edges higher early Monday and was last seen trading near $24,500, where it was up 1% on the day. Ethereum closed in negative territory on Saturday and Sunday but managed to regain its traction to start the week. At the time of press, ETH/USD was up 1% on the day, trading withing a touching distance of $1,700.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD climbs above 1.1600 on US–Iran peace breakthrough

The EUR/USD pair stays firm above 1.1600 in the European session on Monday. The US and Iran have reached a deal to reopen the Strait of Hormuz on Sunday, which underpins risk sentiment, supporting the Euro against the US Dollar. Now, the main focus this week remains on the Fed policy decision due on Wednesday.

GBP/USD: US-Iran reaches deal supporting advance beyond 20-day EMA

The GBP/USD pair trades 0.35% higher to near 1.3460 during the late Asian trading session. The Cable extends its week-long advance as market sentiment improves further, following the announcement that the United States and Iran have reached a deal.

Gold gains momentum as US, Iran announce a peace deal

Gold price rises to a weekly high during the early European trading hours on Monday. The precious metal rebounds after the United States and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.

Bitcoin consolidates gains, Ethereum defends support, XRP nears breakout trigger

Bitcoin, Ethereum and Ripple begin the week on a constructive note as the top three cryptocurrencies attempt to extend rebounds after recovering nearly 4%, 2% and 2.6%, respectively. BTC steadies around $65,600, ETH continues to hold firmly above the key $1,700 support, while XRP nears the upper boundary of the falling channel pattern.

President Trump announced that the deal with Iran is complete

President Trump announced that the deal with Iran is complete and he authorises the toll-free opening of the Strait of Hormuz and removal of the US Naval blockade. While the agreement is made, it is expected to be signed on Friday to take effect. The Forex market looks stable and could react slowly to the positivity around the news as Iran still expresses its mistrust on the US.

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.