The below key drivers are likely to impact investor risk sentiment and FX markets in April:
- Geopolitical tensions from the US/Iran conflict are lifting demand for the US dollar, as a safe haven currency.
- The conflict is also driving energy prices higher, which is adding to inflation pressures, slowing growth, and weighing on commodity currencies.
- Ongoing uncertainty from the conflict is creating an uneven global outlook, leading central banks to take different policy paths and shifting interest rate expectations across major economies.
EUR | Euro
The euro weakened against the US dollar as rising energy costs and global tensions hurt confidence. Its direction now depends on whether the situation improves or drags on, keeping pressure on Europe’s economy.
At the start of March, EURUSD was trading around 1.18. However, the US attacks on Iran sent the currency pair into a sharp downturn as the month went on, dropping close to 1.14 on March 13. Like many other economies, the rising cost of energy has caused concern that growth could grind to a halt in the Eurozone, and the European Central Bank (ECB) could be forced to raise interest rates should the conflict continue.
For much of March and early April the price of Brent Crude has driven volatility for the EURUSD pair. As oil prices rise, the euro strength falls, and vice versa. Market sentiment suggests that if a lasting peace between US and Iran can be found quickly, EURUSD may increase towards US$1.20 again. Unfortunately, if the conflict continues for several months and energy prices are pushed even higher, a move towards $US1.10 is more likely.
At time of writing, the European Central Bank is unlikely to hike rates at its April 30 interest rate decision, but an interest rate hike could be on the cards for June if the situation in the Middle East is not resolved.
Expected ranges:
- EURUSD 1.1415–1.1920
- EURGBP 0.8615–0.8770
GBP | Sterling
The pound fell against the US dollar as global tensions and rising energy costs weighed on growth. While recent developments offered some relief, uncertainty still clouds the outlook for the UK economy.
The pound continues to lose ground against the US dollar due to the ongoing US/Iran conflict. Since late Feb GBPUSD has dropped from around US$1.3570 to a low of US$1.3158 on March 31. The pound’s downturn is largely driven by the jump in energy prices, which could impact economic growth depending on how long the conflict continues.
The dialling down of the rhetoric by US President Trump during the ceasefire announcement on April 7 saw GBPUSD push back up towards US$1.35. A knock-on effect of the rise in Brent Crude and wholesale gas prices is that inflation will likely rise over coming months, which could lead the Bank of England (BoE) to potentially raise interest rates.
For the time being, the BoE will likely maintain policy, so it is likely that there will be no rate changes at the April 30 interest rate decision unless the situation develops in the Middle East. Should free flow of shipping return, and energy prices drop, then we may see interest rate cuts in the second half of the year.
Expected ranges:
- GBPUSD 1.3100–1.3700
- GBPEUR 1.1400–1.1610
AUD | Australian dollar
The Australian dollar weakened as global tensions and uncertainty pushed investors toward the US dollar. Mixed interest rate signals and rising energy costs also added pressure, clouding its short-term outlook.
Over the past month, the Australian dollar delivered a weaker performance against the US dollar, falling by approximately 2.76% as the ongoing US/Iran conflict drives global sentiment toward risk aversion. By the end of March 2026, the AUDUSD exchange rate hovered around US$0.6898–US$0.6903.
Although the Reserve Bank of Australia (RBA) previously raised rates and markets were pricing the possibility of further tightening, minutes from its March meeting reflected increasing uncertainty about the future policy path, reducing the appeal and potential yield advantage of the AUD. With the US Federal Reserve expected to keep interest rates higher for longer to fight inflation, the US dollar could continue to be more attractive to investors.
Additional downward pressure to the AUD is coming from elevated oil prices and broader commodity market volatility. Rising energy costs, driven by the conflict and supply concerns, may limit AUD potential despite generally firmer commodity prices.
While the AUD remains fundamentally supported by Australia’s relatively high yield environment, near-term direction will likely depend on whether the conflict can be resolved, and clearer monetary policy signals.
Expected ranges:
- AUDUSD 0.6834–0.7148
- AUDEUR 0.5939–0.6059
- AUDGBP 0.51833–0.52860
- AUDNZD 1.1966–1.2208
NZD New Zealand dollar
The New Zealand dollar fell as global tensions and rising energy costs hurt confidence. Investors moved toward the US dollar, while uncertainty around interest rates and weaker growth added further pressure.
Over the past month, the New Zealand dollar (NZD) weakened materially against the USD, declining by approximately 3.64%, slipping to around US$0.572–US$0.573, its lowest level in four months, as global macroeconomic pressures intensified. By March 31, the NZDUSD exchange rate hovered near US$0.5725.
Deepening concerns of a prolonged global energy shock from the US/Iran conflict, weighed heavily on risk‑sensitive currencies like the NZD. The New Zealand economy is particularly exposed to rising energy prices, and the Reserve Bank of New Zealand (RBNZ) has warned that elevated fuel costs may accelerate inflation while simultaneously eroding household spending power, an environment that threatens domestic growth. Although the RBNZ has indicated that it may look through temporary energy‑driven inflation spikes, policymakers also signalled the possibility of further rate increases should inflation expectations become unanchored. Markets are pricing in a modest probability of an interest rate hike in April, and roughly a 50% chance of tightening by May.
At the same time, strengthening demand for the US dollar, a global safe haven, added to the NZD’s decline as investors flocked to USD‑denominated assets in response to the worsening energy‑market outlook.
While the NZD remains modestly higher than 12 months ago, its near‑term trajectory is clearly constrained by geopolitical instability, domestic economic fragility, and the potential for tighter monetary policy both in New Zealand and abroad.
Expected ranges:
- NZDUSD 0.5681–0.5920
- NZDEUR 0.4923–0.5015
- NZDGBP 0.4301–0.4368
USD | United States dollar
The US dollar eased as global tensions cooled, but a strong economy and steady jobs kept it supported. Future moves will likely depend on inflation, employment data, and any return of global uncertainty.
The US dollar has softened slightly in recent sessions following a period of elevated safe haven demand, driven by the US/Iran conflict. The easing of geopolitical tensions has reduced demand for defensive positioning, leading the USD to stabilise at more normal levels.
Domestically, the United States economy remains comparatively resilient. Strong consumer activity and a stable labour market continue to support the economy, reinforcing the Federal Reserve’s (Fed) cautious approach to policy easing. Market pricing has adjusted accordingly, with expectations for interest rate cuts being pushed further out as Fed policymakers maintain a “higher for longer” narrative.
Recent communication from Federal Reserve officials has continued to stress the need for confidence that inflation is sustainably returning to target before any meaningful policy shift is considered. This stance has supported US yields and, by extension, the US dollar, particularly against currencies where central banks are perceived to be closer to easing cycles.
Over the coming weeks, the USD direction is likely to remain highly reactive to incoming inflation and labour market data. Any change from the current direction of economic resilience could see shifts to rate expectations, while continued global uncertainty may still drive periodic demand for the US dollar as a preferred reserve and liquidity currency.
Expected ranges:
- DXY 97.969–100.643
JPY | Japanese yen
The yen slid against the dollar as global tensions boosted demand for safer currencies. Still, support from Japan’s central bank and possible government action may help steady things in the near term.
From March through early April, the Japanese yen weakened against the US dollar, with USDJPY rising from 156.13 to 159.67 at the North American session close, while strengthening slightly against the euro from 184.19 to 183.88.
Escalating geopolitical tensions in the Middle East drove oil prices higher, pressured risk assets, and lifted bond yields amid renewed inflation concerns. This environment supported broad US dollar strength and safe haven demand. USDJPY climbed steadily through March, breaking above 159.50 after mid-month and briefly surpassing the key 160 level for the first time since July 2024, before pulling back slightly following verbal intervention by Japanese officials.
Despite the US dollar’s broad strength, the yen performed relatively well among G10 currencies, supported by the Bank of Japan’s (BoJ) increasingly tougher approach to managing inflation. The BoJ held its policy rate at 0.75% in March and continued tapering bond purchases, while signalling vigilance toward inflation risks and openness to further tightening. Markets now expect a potential 25bp rate hike in April. Although ongoing geopolitical tensions could push USDJPY higher in the near term, expectations of BoJ tightening, possible government intervention, and a more moderate energy shock are likely to limit excessive yen weakness and support a gradual stabilization in the currency.
Expected ranges:
- USDJPY 155.00–165.00
- EURJPY 170.00–189.00
CAD | Canadian dollar
The CAD has been steady but under pressure from weaker economic data and stronger demand for the US dollar. Labour data, inflation and central bank decisions will likely impact future direction.
In recent weeks, the Canadian dollar has traded within a relatively tight range, influenced by a mix of external risk sentiment and softer domestic data. Recent strength has been less a function of domestic momentum and more a reflection of broader USD softness and an improvement in global risk appetite following easing geopolitical tensions in the Middle East. That said, underlying Canadian data has been less supportive, with services activity remaining in contraction territory and economic momentum showing signs of fatigue.
From a policy perspective, Bank of Canada Governor Tiff Macklem has emphasised uncertainty around the path forward, noting that inflation risks from tariffs may be offset by excess supply, reinforcing a cautious stance. In response, markets have lowered expectations for further interest rate increases. The gap between Canadian and US dollar rates continues to put pressure on the CAD.
Looking ahead, the CAD is likely to remain highly sensitive to oil dynamics and central bank decisions. While energy prices are providing some intermittent support for the CAD, safe haven demand for USD is continuing to add headwinds for CAD strength.
In the near term, labour market data and inflation prints will be critical in shaping expectations around whether the Bank of Canada can maintain its current stance or be forced to adjust.
Expected ranges:
- CADUSD 0.7160–0.7283
SGD | Singapore dollar
The US dollar strengthened against the Singapore dollar as global tensions and rising energy costs weighed on the economy. Still, steady growth and underlying inflation may help keep the currency relatively supported.
Over the last month, USDSGD trended higher as the USD surged on geopolitical shocks. Spiking oil prices hit Singapore, a major energy importer, with a “double-whammy”: increased USD demand for energy settlements and a global “risk-off” sentiment that typically pressures trade-dependent currencies.
Singapore’s economy continues to show a resilient but moderating growth profile. February NODX grew 4.0% y/y, marking a sixth consecutive month of expansion. While this was a cooling from January’s 9.2% surge, it was salvaged by a massive 43.2% boom in electronics and AI-related demand (specifically ICs and disk media). In contrast, the manufacturing sector showed signs of caution as the Manufacturing PMI edged down slightly to 50.5 in March. On the price front, headline inflation eased to 1.2% in February, but core inflation ticked up to 1.4%, driven by rising transport and services costs. These sticky core prices provide a fundamental floor for the SGD despite broader USD strength.
Looking ahead, the USDSGD pair will be heavily influenced by developments in the US/Iran conflict ceasefire and upcoming US inflation data. These factors will be critical in determining whether the pair tests higher levels or begins to consolidate as risk premiums fluctuate.
Expected range:
- USDSGD 1.2580–1.2920
HKD | Hong Kong dollar
The Hong Kong dollar stayed weak against the US dollar as higher US rates attracted investors. Local spending is improving, but global factors, like US policy, are still driving the currency’s direction.
Over the past month, USDHKD remained pinned toward the weak end of the trading band, frequently hovering near 7.84. The primary driver is the persistent negative carry trade; as US interest rates stay significantly higher than Hong Kong’s Interbank Offered Rate (HIBOR), investors continue selling HKD for the higher yielding Greenback. This pressure intensified following the ongoing US/Iran conflict, which bolstered the USD globally.
Domestic data shows a resilient but uneven recovery. February retail sales surged 19.3% y/y, boosted by the Lunar New Year and returning visitors. However, price pressures are creeping back; CPI hit a 9-month high of 1.7% in late March due to rising transport and electricity costs. The Hong Kong Monetary Authority (HKMA) noted that markets remain orderly but cautioned the public regarding interest rate volatility as the Aggregate Balance remains lean.
Looking ahead, while strong retail performance supports local sentiment, the macro story remains firmly driven by the Federal Reserve’s policy trajectory. HIBOR may see a minor spike late next month due to seasonal corporate dividend demand, but this is unlikely to be sufficient to significantly close the wide yield gap with the USD.
Expected range:
- USDHKD 7.83–7.85
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