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Global PMI data for April paints a clear picture: the Iran war shock is now feeding through the world economy, but not in a uniform way. Rising energy costs and supply disruptions are hitting all major regions, yet the transmission differs sharply depending on economic structure, demand conditions, and policy constraints. What emerges is not synchronized slowdown, but fragmented stagflation.

The common thread is unmistakable. Across Australia, Japan, the Eurozone and the UK, businesses are reporting surging input costs, longer delivery times, and a growing need to secure supplies ahead of further disruptions. Energy, shipping, and raw materials are the key drivers, with the Strait of Hormuz disruption acting as the central transmission channel. The result is a broad-based cost shock now pushing through supply chains globally.

Nowhere is the impact clearer than in the Eurozone. The Flash Composite PMI fell into contraction, driven by a sharp collapse in services, the weakest since the pandemic period. The region’s heavy reliance on imported energy makes it particularly vulnerable to the “Hormuz gap,” where supply disruption translates quickly into both higher prices and weaker demand. While manufacturing remains in expansion, this strength is largely artificial, driven by stockpiling rather than genuine demand. The Eurozone is already slipping into a stagflationary phase—falling growth alongside rising prices.

The UK is showing a different pattern, but one that may prove equally fragile. PMI data rebounded, With Manufacturing reaching a multi-year high. However, this strength is being driven by front-loaded demand, as firms rush to secure inputs before costs rise further. Price pressures have surged at rates not seen outside the pandemic, and supply delays are intensifying. Growth is being pulled forward, suggesting that the current expansion may not be sustainable.

Australia presents a classic policy trap. The Composite PMI returned to expansion, but manufacturing output remains in contraction, pointing to underlying weakness. At the same time, cost pressures have surged to the highest level in nearly four years. This creates a “nightmare scenario” for the Reserve Bank of Australia: growth is fragile, yet inflation is being pushed higher by external shocks, leaving limited room for policy flexibility.

Japan’s case is more nuanced but no less challenging. Manufacturing is surging, with PMI at 54.9 and output at multi-year highs, supported by export demand and precautionary production. However, services are slowing, and input costs are rising rapidly. The weak Yen is acting as a double-edged sword—boosting exports while sharply increasing the cost of imported energy and raw materials. Rather than broad inflation, Japan is experiencing a margin squeeze, with companies struggling to pass through rising costs.

Across all regions, a key feature is the role of stockpiling. Firms are accelerating purchases and building inventories in anticipation of further supply disruptions and price increases. This behavior is temporarily boosting manufacturing activity but is unlikely to be sustained. Once inventories are rebuilt or demand weakens, production could slow sharply.

Inflation dynamics are also shifting. This is no longer just an energy story. While oil remains the initial trigger, price increases are spreading across goods and services, reflecting both supply constraints and precautionary pricing behavior. The risk of second-round effects is rising, particularly in Europe and the UK, where cost pass-through is more immediate.

Central banks are now facing increasingly complex trade-offs. The European Central Bank is confronted with contraction and inflation simultaneously, limiting its policy options. The Bank of England and Reserve Bank of Australia are facing pressure to tighten policy even as growth shows signs of fragility. The Bank of Japan remains more cautious but is not immune to rising cost pressures.

The broader takeaway is clear. The oil shock from the Iran war is not producing a synchronized global slowdown, but a fragmented and uneven adjustment. Europe is already contracting, the UK is front-loading growth, Australia is caught in a policy trap, and Japan is absorbing the shock through costs.

Ultimately, this divergence is likely to define the next phase of the global cycle. Markets will increasingly differentiate between regions based on how they absorb the shock. The common factor remains oil—and as long as supply risks persist, the inflationary pressure will continue to shape both policy and market direction.

US Initial Unemployment Claims Edge Higher to 214k

US initial jobless claims ticked up by 6k to 214k in the week ending April 18, above expection of 210k. Four-week average also edged higher to 210.75k. Read More.

UK PMI Composite rises to 52.0 and Manufacturing Surges to 47-Month High

PMI data shows the UK economy rebounding, but inflation pressures are rising fast. The recovery may not last if the crisis drags on. Read More.

Eurozone PMI Composite Falls to 48.6, Signals -0.1% GDP Contraction in Q2

Eurozone PMI drops below 50 as war-driven energy costs hit services and push inflation higher, signaling -0.1% GDP contraction. Read More.

Japan PMI Composite Falls to Four-Month Low, Out Prices Hit Record

Manufacturing is driving Japan’s growth, but services are losing momentum and costs are rising fast. The divergence is becoming harder to ignore. Read More.

Australia Composite PMI Back in Expansion, Price Pressures Highest in Nearly Four Years

Australia PMI Composite returned to growth at 50.1 in April, led by services rebound. Manufacturing output weakened while rising fuel and shipping costs lifted inflation pressures to highest in nearly four years. Read More.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 159.20; (P) 159.38; (R1) 159.66; More...

USD/JPY edged higher today, but remains bounded in established range below 160.45. Intraday bias remains neutral and more consolidations could still be seen. Further rise is expected with 157.49 cluster support (38.2% retracement of 152.25 to 160.45 at 157.31) intact. On the upside break of 160.45 will target a retest on 161.94 high. However, firm break of 157.31/49 will bring deeper fall back to 61.8% retracement at 155.38 next.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 153.80) holds. Firm break of 161.94 will pave the way to 61.8% projection of 102.58 to 161.94 from 139.87 at 176.75.

US initial jobless claims ticked up by 6k to 214k in the week ending April 18, above expectation ion of 210k. Four-week average also edged higher to 210.75k.

Continuing claims rose by 12k to 1.821M in the week ending April 11, suggesting a modest increase in the number of people staying on unemployment benefits. Four-week moving average of continuing claims rose 1k to 1.812M.

Full US jobless claims release here.

EUR/USD has declined steadily, falling to 1.1688 on Thursday. The US dollar has returned to ten-day highs amid a lack of progress in US-Iran peace talks, boosting demand for the currency as a safe-haven asset.

The Strait of Hormuz remains effectively closed. Tehran continues to control this strategically vital waterway, with reports indicating it has previously seized two vessels in the area. At the same time, the US blockade of Iranian ports persists, contributing to higher energy prices and increasing risk for inflation.

Meanwhile, US President Donald Trump stated that the current truce will remain in force indefinitely, as Washington awaits a new peace proposal from Iran.

Investors remain concerned about US inflation, reinforcing expectations that the Federal Reserve will keep interest rates unchanged for the remainder of the year. Earlier, Fed nominee Kevin Warsh emphasised the importance of maintaining the central bank's independence from the White House.

Market focus now shifts to weekly jobless claims and PMI data, which should provide further insight into the outlook for the US economy.

Technical Analysis

On the H4 chart, EUR/USD is trading within a consolidation range around 1.1736, currently extending down to 1.1693. The pair is likely to move lower towards 1.1680. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, indicating sustained bearish momentum.

On the H1 chart, EUR/USD is developing a move lower towards 1.1680. A corrective rebound to 1.1711 may follow, before a further decline towards 1.1620. The Stochastic oscillator confirms this view, with its signal line below 20 and pointing firmly downwards, suggesting continued short-term downside pressure.

Conclusion

EUR/USD has declined for a third consecutive session amid geopolitical tensions and a stronger dollar. The lack of progress in US-Iran peace talks, combined with Tehran's control over the Strait of Hormuz and the ongoing US blockade of Iranian ports, has kept energy prices elevated and inflation risks in focus. Trump's indication that the truce will remain in place indefinitely, pending a new proposal from Iran, offers little immediate relief. With markets now pricing in no Fed rate cuts this year and key US data approaching, the euro remains under pressure. Technical signals suggest further downside towards 1.1680, and potentially to 1.1620 in the near term.

UK business activity picked up in April, with the Flash PMI Composite rising from 50.3 to 52.0, a two-month high. Services activity rose from 50.5 to 52.0. Manufacturing PMI jumped from 51.0 to 53.6, the highest level in nearly four years, with output returning to expansion at 51.8, up from 49.2. However, much of this strength appears to be driven by front-loaded demand, as firms rush to secure inputs and build inventories ahead of expected supply disruptions.

That urgency is being fueled by rising costs. Price pressures have surged at one of the fastest rates outside of the pandemic period, driven not only by higher energy prices but also broader supply concerns. Supply chain delays have also intensified, reaching levels rarely seen outside crisis periods, adding further upward pressure to prices.

The survey underscores the increasingly difficult trade-off facing the Bank of England. The sharp spike in price pressures is likely to intensify calls for further rate hikes to contain inflation. However, policymakers cannot ignore the growing signs of fragility in demand and confidence.

While April’s PMI points to a modest rebound from March, consistent with around 0.2% quarterly growth, the underlying details—softening employment, weaker sentiment, and supply-driven activity—suggest that this pace may prove short-lived if the crisis persists.

Full UK PMI flash release here.

Eurozone business activity slipped back into contraction in April, with the Flash Composite PMI dropping from 50.7 to 48.6, a 17-month low. The downturn was driven primarily by a sharp deterioration in the services sector, where activity fell from 50.2 to 47.4, the weakest level in over five years.

The services slump highlights the growing impact of the Middle East conflict on the broader economy. Rising energy costs and supply disruptions are weighing heavily on demand, pushing activity down at a pace not seen since the pandemic period. The data suggests the Eurozone is already entering a mild contraction, with GDP expected to shrink slightly by -0.1% in the second quarter.

In contrast, manufacturing continues to show resilience. Output edged up from 52.0 to 52.2, while the headline PMI rose to from 51.6 52.2, the highest in nearly four years. However, this strength appears less encouraging beneath the surface. Much of the growth is being driven by "stock building" as firms rush to secure inputs ahead of further price increases and supply shortages.

Price pressures are intensifying sharply. Input costs and output prices have surged at the fastest rates since 2000 outside of the pandemic, reflecting higher energy prices and broader commodity inflation.

Full Eurozone PMI flash release here.

Market Overview

The crypto market capitalisation has fallen by 0.8% over the past 24 hours to $2.6 trillion, driven by pressure on altcoins, while Bitcoin has been pulling the market upwards, a relatively unusual situation. Leading the day’s gains with fairly modest figures were Bitcoin (+0.4%), Hedera (0%) and Aptos (0%). The corrective pullback is more pronounced, with losses of 5% for Dash, 4.9% for Theta and 4.8% for Basic Attention Token.

Sentiment continues to improve rapidly, with the corresponding index rising to 46 — a high not seen in over three months.

On Wednesday evening, Bitcoin briefly exceeded $79K, confirming our view of relatively weak resistance in the $75–86K range. This was the positive side of the close correlation with traditional financial markets. The flip side of this correlation was a pause in growth as key indices pulled back from all-time highs, causing the leading cryptocurrency to retreat to the $78K range.

News Background

The Volo liquid staking protocol on the Sui blockchain lost $3.5 million due to a hack. According to estimates by Memento Research, April was the worst month for the decentralised finance (DeFi) sector in terms of losses. The largest incidents involved the Drift and Kelp protocols, with combined losses approaching $600 million.

Within a few days of the Kelp hack, users withdrew $15.1 billion from the Aave lending protocol, notes EmberCN. Aave, the largest decentralised lending protocol, found itself at the centre of a systemic DeFi crisis after hackers used it to withdraw funds stolen from Kelp.

Tron founder Justin Sun has filed a lawsuit in a California federal court against Donald Trump’s family crypto platform, World Liberty Financial, claiming that his WLFI tokens were frozen without cause and threatened with destruction.

New York has sued crypto exchanges Coinbase and Gemini over contracts on the prediction market that violate gambling laws. The lawsuit follows several similar proceedings in other states. There is a possibility that the case will reach the US Supreme Court.

Trump’s nominee for Fed chair, Kevin Warsh, expressed support for cryptocurrencies during his testimony before the US Senate. According to him, digital assets “have already become an integral part of the US financial services industry”.

Daily Pivots: (S1) 214.96; (P) 215.31; (R1) 215.71; More...

GBP/JPY is still extending consolidations below 215.89 and intraday bias remains neutral. Further rise is expected as long as 213.29 resistance turned support holds. Firm break of 215.89 will resume larger up trend to 61.8% projection of 199.04 to 214.98 from 209.58 at 219.43.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. This will remain the favored case as long as 55 W EMA (now at 204.83) holds, even in case of another deep pullback.

Daily Pivots: (S1) 186.46; (P) 186.90; (R1) 187.14; More...

Intraday bias in EUR/JPY stays neutral as consolidations continue below 187.93. Another fall might be seen to 38.2% retracement of 182.56 to 187.93 at 185.87. But strong support would be seen there to bring rebound. On the upside, though, break of 187.93 will resume larger up trend.

In the bigger picture, up trend from 114.42 (2020 low) is in progress Next target is 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next. For now, medium term outlook will stay bullish as long as 180.78 support holds, even in case of deeper pullback.

Daily Pivots: (S1) 0.8657; (P) 0.8680; (R1) 0.8693; More…

Intraday bias in EUR/GBP is back on the downside with break of 0.8675 support. Rebound from 0.8610 could have completed at 0.8740 already. Deeper fall would be seen back to retest 0.8610 low. On the paused, above 0.8692 minor resistance will turn intraday bias neutral again first.

In the bigger picture, strong support was seen again from 38.2% retracement of 0.8821 to 0.8863 at 0.8618. Break of 0.8788 resistance will argue that larger rise from 0.8221 might be ready to resume through 0.8863 (2025 high). Nevertheless, sustained trading below 0.8618 should confirm bearish reversal, and bring deeper fall to 61.8% retracement at 0.8466 at least.

Daily Pivots: (S1) 1.6318; (P) 1.6378; (R1) 1.6412; More...

EUR/AUD's fall from 1.6842 is in progress and intraday bias remains neutral. Deeper decline should be seen to retest 1.6125 low. Firm break there will resume whole down trend from 1.8554 to 1.5913 fibonacci level next. On the upside, above 1.6477 minor resistance will turn intraday bias neutral first.

In the bigger picture, fall from 1.8554 (2025 high) is in progress and deeper decline should be seen to 61.8% retracement of 1.4281 to 1.8554 at 1.5913, which is slightly below 1.5963 structural support. Decisive break there will pave the way back to 1.4281 (2022 low). For now, risk will stay on the downside as long as 55 W EMA (now at 1.7131) holds, even in case of strong rebound.