FX pairs for April 2026: USD Surge, yen concerns, and RBNZ rate hike risks

The current Middle East war has profoundly impacted currency exchange rates by introducing a dual shock of risk aversion and surging energy costs. The US dollar (USD) has so far emerged as the clear winner, rising against most major peers due to its status as the world's primary safe-haven asset and its structural advantage as a net energy exporter. The conflict-driven rise in oil prices toward $100 per barrel has fueled inflation concerns globally¹, prompting markets to price in a "Higher for Longer" interest rate scenario for the Federal Reserve, which is fundamentally supportive of the Greenback. Conversely, currencies tied to energy-importing economies, such as the euro (EUR) and Japanese yen (JPY), have weakened significantly. For Europe, higher energy costs act as a tax on growth, pushing the EUR and GBP to five-month lows against the USD. Similarly, the JPY’s traditional safe-haven status is being tested as the burden of expensive crude imports raises stagflation risks, pushing the yen toward the critical 160 level and raising the possibility of intervention by Japanese authorities.

The US economy remains surprisingly resilient, outperforming many global peers despite high borrowing costs. The Real GDP is expanding at a solid pace, with forecasts for 2026 hovering around 2.4%.²

This growth is being anchored by robust business investment — particularly in AI-related infrastructure — and steady, though slowing, consumer spending.

The labor market has transitioned from "red hot" to "stable but sluggish", the unemployment rate ticked up to 4.4% in February 2026.³ While higher than the 2023 lows, it remains historically healthy. Payroll growth has slowed significantly – February saw a surprising loss of 92,000 jobs, though this was largely attributed to a healthcare sector strike and government downsizing rather than broad economic weakness.

Inflation is "sticky" and hovering just above the Fed’s 2% target. The annual inflation rate, Headline CPI held steady at 2.4% in February, however, the rebounding energy prices following the Middle East war are a major concern. Policy makers are currently "looking through" this energy spike, assuming it is temporary, but they are watching closely to ensure it doesn't bleed into long-term inflation expectations.⁴

Core inflation (excluding food and energy) sits at 2.5%, reflecting the difficulty in bringing down costs in the service sector.

The Federal Reserve held the federal funds rate steady at 3.50% to 3.75% during its March 18 meeting. After a series of cuts in late 2024 and 2025, the Fed has entered a "wait-and-see" mode. The committee is balancing the risk of cutting too early (reigniting inflation) against the risk of waiting too long (stifling the labor market).

According to the futures market for interest rate futures contracts⁵, the current market pricing suggests a single 0.25% rate cut is the most likely outcome for the remainder of 2026, likely toward the end of the year.

At the March press conference, Chair Jerome Powell emphasized⁶ that while the economy is "doing pretty well," the path forward has been clouded by external shocks. The Fed explicitly added language to its policy statement noting that the implications of the Iran-Israel conflict for the US economy are "uncertain."

Despite the pause, Powell struck a mildly hawkish tone, acknowledging that "some movement toward fewer cuts" was emerging among committee members due to sticky services inflation.

The USD has strengthened against most major currencies recently. Its status as a net energy exporter makes the US better positioned than Europe or Asia to handle high oil prices, reinforcing the "Dollar Exceptionalism" trend.

• April 3, 2026: Employment Situation Report (Jobs data for March).
• April 10, 2026: Consumer Price Index (CPI) release.
• April 28–29, 2026: Next FOMC Meeting (Interest rate decision).
• May 2026: Official handover of the Fed Chairmanship.

As of late March 2026, Japan is standing at a historic crossroads. After decades of battling falling prices, the nation is finally entering a structural shift, one defined by sustainable inflation and the first consistent cycle of interest rate hikes in a generation. But as Japan finds its footing in this "new normal," external forces like Middle East volatility and surging energy costs are putting the recovery to the test.

The Japanese economy is currently in a state of "moderate recovery." Real GDP is projected to grow between 0.7% and 1.2% for 2026.⁷

While these numbers might seem small on a global scale, they actually represent growth that exceeds Japan’s long-term potential.

However, the shadow of the Middle East conflict looms large. Because Japan depends heavily on imported energy, oil prices nearing $100 per barrel pose a major risk, potentially eating away at the hard-won wage growth citizens have started to see.

The real engine behind this policy shift is the labor market. Unemployment is holding steady at a remarkably low 2.5%.⁸ This "tightness" means workers have more leverage, which usually leads to higher wages.

Inflation, however, is a bit of a mixed bag right now. While CPI recently dipped to 1.3% due to government energy subsidies, this can be a temporary lull. With oil prices rising and a weakening Yen, headline inflation is projected to bounce back near 2.0% in 2026.⁹

For the first time since 1995, we are seeing significant movement from the Bank of Japan (BOJ). The short-term policy rate now sits at 0.75%, and markets are betting heavily on more to come. Data from the futures markets (Bloomberg’s data) suggests that there is a 70.4% chance of another hike as early as April, with rates potentially hitting 1.25% by the end of the year.

Governor Kazuo Ueda has made it clear: if inflation stays on track, the Bank will continue to pull back its monetary support.¹⁰ Meanwhile, government bond yields are hitting multi-decade highs, reflecting a market that is bracing for a faster normalization of policy.

One of the most visible signs of this struggle is the value of the yen. Despite higher rates at home, the JPY has been sliding against the US dollar, and has approached the critical 160 level. In times of global tension, investors flock to the dollar, and the massive cost of Japan's energy imports only adds to the currency's burden.

• April 28, 2026: The BOJ interest rate decision — keep an eye out for a potential hike.
• Early May 2026: New CPI data will reveal the true impact of current oil prices.

As we’ve reached late March 2026, New Zealand’s economy is finally finding its footing. After the aggressive interest rate cuts we saw throughout 2024 and 2025, we’re seeing a classic "textbook" recovery. However, it’s not all smooth sailing, recent geopolitical tensions in the Middle East have tossed some fresh inflationary risks into the mix, making the growth outlook a bit more complex than we’d like.

The stagnation of the last two years is officially in the rearview mirror. Thanks to strong commodity prices and the delayed perk of lower interest rates, GDP is gaining some serious momentum. Here is the breakdown:

• Real GDP grew by 0.2%¹¹ in the final quarter of 2025.
• Bloomberg analysts’ surveys suggest annual growth to land near 2.4% for 2026.
• Manufacturing indexes and business surveys from early 2026 show that activity is definitely picking up.

The labor market is finally steadying. Unemployment hit a 10-year peak of 5.4%¹² in late 2025¹³, but it wasn’t because of mass layoffs — it was actually a "participation surge" with more people looking for work.

Meanwhile, inflation remains the RBNZ’s biggest headache. At 3.1% (as of December 2025), it's just outside the 1–3% target band. The goal is to hit that 2.0% midpoint in the next year, but expensive oil could make that a bumpy ride.

The Reserve Bank (RBNZ) currently has the Official Cash Rate (OCR) sitting at 2.25%. We’ve come a long way from the peak of 5.50%, but the RBNZ shifted to a "wait and see" mode in February. While the easing cycle seems finished, the conversation has changed. Markets now see a 50/50 chance of a 1 - 2 x 25 basis points rate hike by the end of the year or early 2027. (According to Bloomberg’s analysts’ surveys)

Major players like ANZ, Westpac, and BNZ are actually forecasting a bump to 2.50% later this year¹⁴. RBNZ Governor Anna Breman has warned of "vigilance," especially as the Iran-Israel conflict drives up oil prices and threatens to spike inflation.

• April 8, 2026: The next OCR decision.
• April 21, 2026: Q1 CPI release (the big inflation update).
• May 27, 2026: RBNZ monetary policy statement and future projections.

This technical analysis report evaluates the NZD/JPY daily chart as of late March 2026. The pair has transitioned from a strong bullish trend into a period of consolidation and potential reversal.

The NZD/JPY is in a neutral-to-bearish consolidation phase. While the long-term trend was bullish, the exhaustion in RSI and the breakdown of the moving average slope suggest a corrective phase is underway.

• Historical context: The pair exhibited a sustained bullish trend from October 2025 through early February 2026, characterized by higher highs and higher lows, supported by multiple "Gaps" (runaway gaps) indicating strong momentum.
• Current formation: Price action has shifted into a descending triangle or a tightening wedge pattern since February. The upper boundary is defined by lower highs, while the lower boundary is finding horizontal support near the 92.000 level.
• Pivot levels: Price is currently trading just above the S1 support (92.018). A decisive break below this could signal a move toward S2 (90.454). Conversely, the Pivot Point (P) at 93.496 serves as the immediate overhead resistance.

• MA cross: The 9-period EMA (blue) and the 21-period MA (green/orange) have flattened significantly.
• Crossover signal: A bearish crossover appears to be forming, with the shorter-term EMA moving below the longer-term MA. This indicates a loss of upward momentum and a shift toward a neutral-to-bearish bias.
• Price relation: The candles are currently trading below the 9-day EMA, suggesting that the short-term path of least resistance is down.

• Current reading: The RSI (14) is currently at 42.30, which is below the 50-midline but not yet in "oversold" territory (under 30).
• Divergence: Since February, there has been a visible bearish divergence; while price attempted to hold steady, the RSI peaks have been consistently lower, suggesting weakening buying pressure.

This technical analysis report evaluates the USD/JPY daily chart as of March 29, 2026. The pair remains in a dominant long-term bullish trend, currently testing a major psychological and structural threshold.

• Long-term structure: The pair has been trading within a well-defined ascending channel since mid-2025. This is characterized by consistent higher highs and higher lows, supported by a rising lower boundary (purple line).
• Current positioning: Price is currently trading at 160.315, having recently broken above the 160.00 psychological barrier. It is hovering near the R1 Weekly Pivot (160.251).
• Gaps: Several "runaway gaps" are visible during the October and February rallies, indicating periods of intense buying pressure where the market failed to fill orders at lower prices.
• Recent momentum: Following a "Throwback" to the lower channel support in June, the pair regained its footing and has accelerated toward the upper channel resistance.

• Alignment: The 9-period EMA (blue) is trending above the 21-period MA (orange/green), confirming a strong bullish alignment.
• Support role: The 21-period MA has acted as dynamic support throughout the trend. Most recently, the price bounced off this average in early March to launch its current attack on the 160.00 level.

• RSI (5-period): Currently at 69.37, approaching the overbought threshold (70+). This suggests strong near-term momentum but warns that the pair may be reaching a "stretched" state where a minor consolidation or pullback is likely.
• MACD (12, 26, 9): The MACD line is above the signal line and the zero axis, showing positive momentum. However, the histogram is starting to flatten, hinting that the rate of acceleration may be slowing as it hits resistance.
• ATR (14): At 1.157, volatility remains relatively high compared to the previous year, reflecting the market's sensitivity to central bank policy divergence.

This technical analysis report evaluates the EUR/JPY daily chart as of March 29, 2026. The pair is currently testing a long-term ascending support line while oscillating around key pivot levels.

The EUR/JPY is at a critical junction. While the primary trend is bullish, the bearish RSI divergence and overbought Stochastic levels suggest a period of exhaustion. The "squeeze" between the ascending support line and the flat moving averages indicates a breakout may be imminent.

• Long-term trend: The pair remains in a clear primary bullish trend characterized by a significant ascending support line (purple) that has held since May 2025.
• Current consolidation: Since hitting a peak near 186.839 (R1) in early February, the price has entered a sideways-to-slight-downward consolidation phase, forming a series of lower highs while the ascending support continues to rise.
• Gap activity: Two notable "Gaps" are marked — one in October and one in February. The February gap acted as an exhaustion point, leading to the current corrective phase.

• MA cross (9, 21): The 9-day EMA (blue) and 21-day MA (orange/green) are currently tightly entwined and flat. This indicates a neutral market state or a "squeeze" where price is waiting for a catalyst to define the next move.
• Price interaction: The candles are currently oscillating around both averages, further confirming the lack of clear short-term directional momentum despite the long-term bullish bias.

• RSI (14, close): Currently at 55.98, which is neutral. Notably, a bearish divergence is highlighted (pink line), where the RSI made lower highs while the price initially made higher highs in early 2026. This often precedes a trend slowdown or reversal.
• Stochastic (14, 1, 3): Currently at 89.41, placing the pair in the overbought zone. This suggests that while the trend is up, the immediate upside might be limited without a period of cooling off or a minor pullback to support.

This technical analysis report evaluates the USD/CAD daily chart as of March 30, 2026. The pair is currently experiencing a strong bullish breakout from a multi-month corrective pattern.

The USD/CAD has shifted into a strong bullish phase following the breakout from its descending channel. The move is fueled by a resurgent US Dollar and geopolitical risk premiums, though the extremely high RSI (90+) warns that the market can be "over-extended."

• Long-term structure: The pair has been trading within a large descending wedge/channel since late 2025. This period was marked by high volatility due to geopolitical tensions and "Shortfall" pullbacks, where the price failed to reach the upper boundary.
• Recent breakout: A significant bullish breakout occurred in mid-March, with the price slicing through the primary descending resistance line (red).
• Current positioning: USD/CAD is currently trading at 1.38949, marking a two-month high. It has successfully cleared the Weekly Pivot (P) at 1.38198 and is currently testing the R1 resistance (1.39700).
• Historical context: The chart highlights a "Bearish Engulfing" pattern and "Agreement to postpone tariffs" back in early 2025, which previously capped the upside; however, the current momentum suggests those historical ceilings are being re-challenged.

• Golden cross potential: The 50-day MA (orange) is trending upwards and closing in on the 200-day MA (green). A crossover here would signal a long-term structural shift from bearish to bullish.
• Short-term support: The 9-day EMA (blue) is sloping steeply upward, providing immediate dynamic support for the current vertical rally.

• RSI (5-period): Currently at 90.61, which is deep in the extremely overbought territory. While this confirms very strong buying pressure, it also signals a high risk of a "mean reversion" or temporary pullback as traders take profits.
• Divergence analysis: The RSI previously showed several Negative Divergences (N.DIV) in late 2025, which accurately predicted the preceding downtrend. The current lack of divergence during this spike suggests the move is purely momentum-driven.

This technical analysis report evaluates the USD/CHF daily chart as of March 30, 2026. The pair is currently in a sharp recovery phase, attempting to break out of a long-term bearish structure.

The USD/CHF is displaying strong bullish momentum in the short term but faces a major "moment of truth" as it approaches the 0.8000 level and the long-term descending resistance line.

• Long-term structure: The pair has been trading under a dominant descending resistance line (red) since mid-2025. However, since late January 2026, a new ascending support line (dark blue) has formed, creating a large symmetrical triangle or wedge-like structure.
• V-shaped recovery: Following a sharp "Gap" down in early February, the price has staged a significant V-shaped recovery, clearing multiple resistance levels in rapid succession.
• Current positioning: USD/CHF is currently trading at 0.79924, hovering right at the R3 monthly pivot (0.79839). This is a critical psychological level as it approaches the parity-like threshold of 0.80000.

• Bullish crossover: The 9-day EMA (blue) recently crossed above the 21-day MA (orange/green), a signal that short-term momentum has turned decisively bullish.
• Support role: The 21-day MA is now sloping upward, acting as dynamic support for the current leg of the rally.
• Alignment: Price is currently trading well above both averages, indicating strong "away-from-mean" momentum, which often precedes a period of consolidation.

• RSI (14, close): Currently at 66.08, which is nearing the overbought threshold (70.00). The RSI has made a series of higher lows, supporting the strength of the current recovery trend.
• Gap analysis: The significant bearish gap from early February remains largely "unfilled" in terms of structural price action, though current levels are now testing the origin of that drop.

As we head into April 2026, the global forex landscape remains defined by policy divergence and geopolitical uncertainty. The US dollar continues to reinforce its "Exceptionalism" trend, driven by the Federal Reserve's cautious, data-dependent pause and the USD's structural advantage as a safe-haven and net energy exporter amid Middle East tensions. This strength keeps pressure on peers, particularly the Japanese yen, which struggles near the 160 level despite the Bank of Japan's structural shift toward higher rates. Meanwhile, pairs like NZD/JPY and EUR/JPY are at critical technical junctures, balancing long-term bullish trends against short-term exhaustion signals and potential reversals. Traders should focus intently on the upcoming Jobs data, CPI releases, and the monetary policy decisions from the Fed and the BOJ, as these will be the key catalysts defining the next directional move.

Footnotes:

1- https://finance.yahoo.com/personal-finance/banking/article/5-ways-oil-prices-over-100-a-barrel-could-hit-your-wallet-203144606.html

2- https://www.federalreserve.gov/monetarypolicy/fomcpresconf20260318.htm

3 - https://www.marketpulse.com/markets/us-inflation-is-rising-the-fed-is-waiting-and-forecasts-are-getting-weaker/

4 - https://www.google.com/url?q=https://www.reuters.com/business/feds-jefferson-sustained-higher-energy-prices-could-worsen-inflation-spending-2026-03-26/&sa=D&source=docs&ust=1774954234079134&usg=AOvVaw3ZkRe0Um7b9xSOLSN9gcmo

5 - https://www.google.com/url?q=https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html&sa=D&source=docs&ust=1774954272967944&usg=AOvVaw1nESjpUyWAUFBTarvq0vl8

6 - https://www.cnbc.com/2026/03/18/fed-meeting-today-live-updates.html

7 - https://www.dir.co.jp/english/research/report/jmonthly/20260306_025617.html

8 - https://tradingeconomics.com/japan/unemployment-rate

9 - https://www.boj.or.jp/en/mopo/outlook/index.htm

10 - https://www.bloomberg.com/news/articles/2026-03-19/boj-holds-rates-steady-as-iran-conflict-clouds-inflation-outlook

11 - https://www.stats.govt.nz/news/gdp-increases-0-2-percent-in-the-december-2025-quarter/

12 - https://www.stats.govt.nz/news/unemployment-rate-at-5-3-percent-in-the-september-2025-quarter/#:~:text=The%20seasonally%20adjusted%20NEET%20rate%20rose%20to,percentage%20points%20annually.%20*%20Graph.%20*%20Table.

13 - https://www.stats.govt.nz/news/annual-inflation-at-3-1-percent-in-december-2025/#:~:text=Aotearoa%20New%20Zealand's%20consumers%20price%20index%20(CPI),12%20months%20to%20the%20September%202025%20quarter.

14 - https://www.bnz.co.nz/assets/markets/research/BNZMO_20260112.pdf?8ecb254f0b994a4db7f8ddf5eb01f229060d06