Forex week in review 28/2026: the US–Iran truce breaks down and the RBNZ surprises with a hike

The short version: a war restarted and the currency market barely flinched. Between Tuesday and Wednesday the US–Iran ceasefire broke down, oil jumped about 6%, and President Trump said the deal was "over". The Dollar Index finished the week up 0.09%, according to RTTNews. The biggest currency move came from somewhere else entirely: the Reserve Bank of New Zealand raised rates when many economists had expected it to wait, and the kiwi gained 1.05%. Sterling rose to a three-week high as Andy Burnham locked up the Labour leadership.

Weekly opens and closes come from Yahoo Finance hourly data, measured from the Sunday evening open to the Friday 5pm New York close. RTTNews reported EUR/USD falling from 1.1437 to 1.1414 and GBP/USD rising from 1.3352 to 1.3407 on its own data, within a few pips of ours.

Where we left off

The previous week ended with a weak US jobs report (57,000 against a 110,000 forecast), released on a Thursday because of the Independence Day holiday. That stopped a three-week dollar rally and cut the odds of a July Fed hike to below one in five. The yen had touched its weakest level since 1986 before recovering. Catch up with forex week in review, 29 June–3 July 2026.

The interim US–Iran agreement signed in June had been fragile for weeks. Talks were paused until after the funeral ceremonies for Ayatollah Ali Khamenei, who was killed on the first day of the US–Israeli attack on Iran in February, and the two sides disagreed over who controlled shipping through the Strait of Hormuz.

Monday 6 and Tuesday 7 July: a quiet start

Price action was subdued at the start of the week, with the market still digesting the payrolls miss and the US back from its holiday. EUR/USD spent Monday and Tuesday close to 1.14. That changed with the news from the Gulf.

Tuesday 7 and Wednesday 8 July: the truce breaks

According to reporting carried by GV Wire, Iranian forces were reported to have attacked three commercial ships in the Strait of Hormuz; the Pentagon cited those attacks as its reason for acting, and Iran did not claim responsibility. The US then carried out airstrikes on several targets in Iran and reimposed sanctions on Iranian oil sales. Iran's armed forces said they attacked US military sites in Bahrain and Kuwait, and the Revolutionary Guard later said it had targeted 85 US sites and shot down a US MQ-9 drone. Iran's chief negotiator, Mohammad Bagher Ghalibaf, accused the US of major violations of the preliminary accord.

Speaking at the NATO summit in Ankara on Wednesday, President Trump said of the deal: "To me, I think it's over." He threatened to strike Iran again and floated reinstating the US Navy blockade of Iranian ports, while saying he was open to further talks. The International Maritime Organization warned ships against transiting the strait.

Oil rose about 6% after Trump's remarks, to above $78 a barrel, its highest level in more than two weeks.

Why currencies hardly moved

You might expect a collapse in a ceasefire to send investors into safe havens: the dollar, the yen, the Swiss franc and gold. Instead the Dollar Index rose only modestly to its weekly high of 101.28 on Wednesday, the yen weakened, the franc weakened and gold fell.

The reason is the same one we have been discussing for four weeks: interest rates. Higher oil prices mean higher inflation, and higher inflation means central banks are more likely to keep rates high or raise them. On Yahoo Finance data, the US 10-year Treasury yield rose from about 4.46% to about 4.57% over the week. Gold, the yen and the franc all pay little or no interest, so rising yields work against them even in a crisis. Our guide to central banks and interest rates explains how rate expectations feed through to currencies.

This is the most counterintuitive lesson of the summer: the textbook safe-haven trade does not always work when the crisis itself is inflationary.

Wednesday 8 July: the RBNZ moves first

The Reserve Bank of New Zealand raised its official cash rate by 25 basis points to 2.50%. Westpac said the hike came "against our expectations", and several previews had expected a hold at 2.25%. The decision was reached by consensus. Westpac said the main argument for moving was concern that financial conditions would have eased further if the rate had been left unchanged, and that the committee seemed comfortable with an end-2026 rate in the 2.75–3% range.

A surprise hike is about as clean a currency catalyst as exists. NZD/USD had been the weakest major for two weeks in late June; this week it was the strongest, finishing up 1.05% at 0.5765 after reaching 0.5793.

The Fed minutes

Later on Wednesday, the minutes of the Fed's June meeting were released. Participants said inflation "had increased further and remained well above the Committee's 2 percent longer-run objective", and that both core and headline inflation had moved higher with price pressures becoming more broad-based. The causes they cited were lingering tariff effects, supply chain disruption related to Hormuz and demand tied to AI-related investment.

Minutes are always old news in one sense: they describe a meeting three weeks earlier. They matter when they reveal how many officials hold a view, or what they are worried about that the statement did not say. This set confirmed that the June meeting's hawkish projections were not a one-off.

USD/JPY reached its weekly high of 162.71 on Wednesday, close to the 40-year high it had set the previous week, and EUR/USD and GBP/USD hit their weekly lows of 1.1391 and 1.3321 respectively, according to RTTNews.

Thursday 9 July: Labour nominations open

Nominations for the Labour leadership opened on Thursday. According to Euronews, 322 of Labour's 402 MPs nominated Andy Burnham on the first day. A challenger needs 81 MP nominations to get on the ballot, and with 322 already committed, the arithmetic left almost no room for anyone else. Armed forces minister Al Carns had ruled himself out late on Wednesday, and Wes Streeting had already backed Burnham. Nominations were due to close on 16 July, with Burnham expected to become Prime Minister on 20 July if unopposed.

During the week, the ECB also published the account of its June meeting, which showed officials were convinced inflationary pressures had become too broad and too persistent, according to RTTNews.

Friday 10 July: sterling at a three-week high, the yen firms

GBP/USD reached 1.3453, its weekly high and a three-week high, according to RTTNews and FXStreet. RTTNews put sterling's gains down to signs of political stability in the UK. That is a contrast with June, when the Makerfield result and Starmer's resignation had both come with bouts of pound weakness. The market's fear was never Burnham himself so much as a long and divisive contest.

The yen firmed on Friday after reports that Japanese pension funds would invest more in Japanese financial assets. The Dollar Index slipped to its weekly low of 100.60 before recovering to close at 100.95, according to RTTNews. By Friday, oil had given back much of its midweek jump, with WTI near $71.60 a barrel according to FXStreet. Gold was trading near $4,102.

Pair by pair

EUR/USD: -0.20%

A small loss in a week with a lot of news. The euro was pulled one way by higher oil (Europe imports most of its energy, so an oil shock is a terms-of-trade hit) and the other by a hawkish ECB account. The range was only about 70 pips, from 1.1464 to 1.1395.

GBP/USD: +0.40%

The cleanest story of the week. Political uncertainty that had weighed on sterling for months was disappearing day by day. The pair closed at 1.3402.

USD/JPY: +0.16%

The pair spent the week within about 145 pips of the 162.84 high it set the week before. Every approach to that area brought more talk of intervention; we now know from the Ministry of Finance's data that Japan did not intervene at any point between 29 June and 29 July. The Friday dip came on the pension fund reports.

NZD/USD: +1.05%

The week's outperformer, on the RBNZ hike. The Australian dollar, which had no central bank meeting, rose a more modest 0.24%.

USD/CHF: +0.56%

The franc weakened in a week of military escalation. That is unusual and worth remembering. With the SNB at a 0% policy rate and openly prepared to intervene against franc strength, and US yields rising, the safe-haven bid never really showed up.

Gold: -1.76% (futures)

COMEX futures fell from $4,187.50 to $4,113.70. The same logic applied: higher yields and a firmer dollar outweighed demand for protection.

A worked example: the carry behind a rate decision

The RBNZ hike changes the interest rate gap between New Zealand and the US, and that gap is what you pay or receive overnight on a CFD position. Here is a simplified, illustrative calculation. Real broker swap rates include a markup and are based on interbank rates rather than policy rates.

• After the hike, the New Zealand cash rate is 2.50% and the US federal funds target range is 3.50–3.75%. The gap is roughly 1.1 percentage points in the dollar's favour.
• One standard lot of NZD/USD is 100,000 New Zealand dollars, worth about $57,650 at 0.5765.
• A long position (buying NZD, selling USD) is on the wrong side of that gap. Before any broker markup, the annual cost would be roughly 1.1% of $57,650, about $634, or about $1.74 a day.
• On Wednesdays, most brokers charge three days of swap to cover the weekend settlement, so that day's charge would be about three times as large.

The RBNZ's hike narrowed the gap by a quarter of a point, which on this example reduces the yearly cost of holding a long position by about $144. Small numbers on one lot, but they add up over months and over larger positions. Our guide to swap and overnight financing explains triple-swap Wednesdays and swap-free accounts, and hidden broker fees covers the other costs that do not appear in the spread.

Leverage makes all of this more consequential. Under ESMA rules retail leverage on major pairs is capped at 30:1, but most retail CFD accounts still lose money (broker disclosures typically show 61–89%), and a geopolitical week like this one can produce gaps that stop-losses cannot fully protect against. See slippage explained.

What this week teaches

1. Safe havens are not a law of nature

The yen, the franc and gold all fell in a week of military escalation. They did so because the escalation was inflationary and pushed yields up. Before assuming a crisis will lift a haven, ask what it does to interest rates.

2. Surprises come from the meetings nobody is watching

The week's biggest currency move came from Wellington, not Washington or Tehran. Smaller central banks can and do surprise, which is why it is worth checking the economic calendar for every currency you hold, not just the big four.

3. Political risk can unwind as fast as it builds

Sterling spent months pricing a messy leadership fight. When the outcome became certain, the pound rose. That makes the pound a good case study for how economic data and events move forex: what matters is the change in uncertainty, not the identity of the winner.

4. Ranges can be quiet when news is loud

EUR/USD moved about 70 pips all week. News volume and price volatility are not the same thing. A quiet range in a noisy week often means the market is waiting for a scheduled catalyst, and next week had two big ones.

Scheduled next week (13–17 July)

These are events on the calendar only; we do not forecast their effect on prices.

• Monday 13 July: speeches from Fed Governors Bowman and Waller, ECB Executive Board member Schnabel and BoE Chief Economist Pill.
• Tuesday 14 July: US CPI inflation for June, and the first day of Fed Chair Kevin Warsh's semiannual testimony to Congress, before the House Financial Services Committee.
• Wednesday 15 July: Warsh before the Senate Banking Committee, China's second-quarter GDP, the Bank of Canada's policy decision and Monetary Policy Report, and US producer prices.
• Thursday 16 July: UK GDP for May, US retail sales for June, and the close of Labour leadership nominations.
• Friday 17 July: final eurozone HICP inflation for June.
• During the week: the Fed's Beige Book survey of regional business conditions.

Next recap: forex week in review, 13–17 July 2026. For a broader look at why weeks like this catch out retail traders, read why most retail CFD traders lose.

Sources

• RTTNews: Dollar Index edges up amidst rate cues, war cries
• GV Wire: Trump casts doubt on future of ceasefire after latest strikes
• Westpac IQ: RBNZ Monetary Policy Review, July 2026
• Euronews: Burnham on course to become next UK PM with 322 Labour MPs backing him
• FXStreet: Forecasting the upcoming week, US CPI and Warsh testimony to test the dollar's recovery
• IG: US CPI June 2026, bank earnings and Fed Warsh
• Japan Ministry of Finance: Foreign exchange intervention, 29 June to 29 July 2026
• Yahoo Finance: EUR/USD historical data (also GBPUSD=X, JPY=X, NZDUSD=X, CHF=X, AUDUSD=X, GC=F, ^TNX)