Forex Roundup: US Holiday Thins Markets as Iran Talks Stall, IMF Warns EU on Debt, UK Eyes Customs Union

Today is a public holiday in the United States, with financial institutions closed and investor activity reduced. Forex traders are nonetheless monitoring the Middle East situation: over the weekend President Donald Trump stated that peace negotiations with Iran are proceeding constructively and that an agreement on opening the Strait of Hormuz has largely been reached — but Iranian officials noted that the waterway will remain under Tehran's control, and Trump himself clarified that despite positive signals he is not rushing toward a hasty deal.

Secretary of State Marco Rubio stated today that either an agreement will be reached or Washington will resume strikes on Iranian territory. On Thursday at 14:30 (GMT+2), the April core Personal Consumption Expenditures price index will be released: if the inflation increase is confirmed, the probability of the Fed holding rates through year-end will increase substantially — though most officials are already hawkishly positioned. On Friday, Fed Governor Christopher Waller stated that rate cuts should not be expected in the near term as the CPI remains above target and the labor market stays stable.

Eurozone

The euro is weakening against the pound but strengthening against the yen and the US dollar.

IMF specialists published recommendations for the EU over the weekend warning that member states will face significantly higher defense, energy, and pension spending over the next 15 years — potentially pushing public debt to 130% of GDP by 2040, double current levels. To avoid this scenario, the Fund recommends that Brussels increase incentives for labor mobility across the EU, simplify the cross-border transfer of consumer savings to boost investment attractiveness through legislative harmonization, and raise the retirement age.

United Kingdom

The pound is strengthening against the euro, the yen, and the US dollar.

According to media reports, the United Kingdom proposed the creation of a single goods market with the EU — a move that would represent a reset of post-Brexit relations with the European bloc — but the initiative was rejected. In response, Brussels reportedly offered the UK membership in the EU Customs Union. The British government has increasingly acknowledged the economic costs of Brexit, and Chancellor Rachel Reeves stated that the country is prepared to align its business regulations with eurozone rules in order to reduce trade barriers.

Japan

The yen is weakening against the euro and the pound, while showing mixed dynamics against the US dollar.

Prime Minister Sanae Takaichi announced that the government will add ¥3.0 trillion in reserves to subsidize fuel prices and address rising living costs — pledging not to resort to government borrowing in order to reassure bondholders. Analysts note that elements of this support are already being implemented, rapidly draining the budget as oil remains expensive. The measures are expected to be financed through the issuance of special-purpose securities.

Australia

The Australian dollar is strengthening against the euro, the yen, and the US dollar, but weakening against the pound.

Inflation data will be released on Wednesday at 03:30 (GMT+2) and could significantly influence Reserve Bank of Australia rate decisions. If the Q1 trimmed mean CPI holds at 4.6% or rises further, the case for monetary tightening remains intact. However, if the reading eases from 4.6% to 4.4% as forecasts suggest — combined with April's labor market cooling, where unemployment rose from 4.3% to 4.5%, total employment fell by 18,600, and full-time employment dropped by 10,700 — a pause in rate adjustments becomes the more likely outcome.

Oil

Oil prices are correcting lower today under pressure from signals of progress toward a US-Iran peace agreement.

Over the weekend President Trump indicated the Strait of Hormuz could be unblocked soon, but politicians on both sides subsequently tempered investor optimism, noting that negotiations are far from concluded and that key issues — including Iran's nuclear program and control of the waterway — remain unresolved. Analysts note that the fundamental supply deficit stands at 10.0–11.0 million barrels per day and will not disappear quickly even if a deal between Washington and Tehran is eventually reached.