Forex Weekly Forecast: April 22–26, 2026

The previous week had already set a decisive backdrop: the announcement of a two-week truce between the U.S. and Iran, conditional on the reopening of the Strait of Hormuz, triggered one of the sharpest market moves of the year. WTI plunged more than 16% in a single session, while global equities surged. However, the truce ended without being effectively implemented in the Strait: vessel traffic remained well below pre-conflict levels, and the U.S. naval blockade on Iranian ports stayed in place.

Last week unfolded against that backdrop: a fragile truce, WTI recovering toward the $85 level, the VIX falling below 20, and markets remaining cautious as they awaited clearer signals on whether the agreement would hold. The DXY declined toward the 98 level, a move that reflected short-covering rather than a structural shift toward U.S. dollar weakness.

On the macroeconomic front, the key data release of the week was the March Producer Price Index (PPI), which came in below expectations in both its headline and core readings. This helped ease concerns about rising inflationary pressures and suggested that the energy shock has not yet fully passed through the cost chain.

In commodities, gold extended its rally for a fourth consecutive week, advancing toward the $4,878 level, supported by its dual role as a safe haven and an inflation hedge. Copper also posted a strong performance, reclaiming the $6 per pound level, driven by better-than-expected industrial activity data from China, expectations of further fiscal stimulus, and a first-quarter annual GDP reading of 5% that surprised markets and reinforced the outlook for sustained demand from the world’s largest consumer of the metal.

With no significant domestic developments in Chile or Colombia, the appreciation of both the Chilean peso and the Colombian peso was entirely driven by renewed risk appetite in emerging market currencies. This was supported by the global weakness of the U.S. dollar and the recovery in copper prices. USD/CLP closed around 879, while USD/COP ended near 3,600, a key support level for the pair.

What initially appeared to be an optimistic end to the week was completely reversed over the weekend. Iran once again closed the Strait of Hormuz, arguing that the U.S. naval blockade constituted a violation of the truce. New incidents involving vessels in the region were reported, including the interception of a cargo ship by the U.S. Navy. Donald Trump threatened to resume attacks if no agreement is reached, while the formal truce expires on Tuesday the 21st. As a result, markets opened the week with high volatility, a sharp appreciation of the U.S. dollar, and declining equities, although conditions began to stabilize as the session progressed.

Short-Term Outlook

The short-term outlook is almost entirely driven by the outcome of the conflict in the Middle East. The base scenario of recent weeks—where a resolution to the conflict would pave the way for a structural weakening of the U.S. dollar, a recovery in emerging markets, and a normalization of commodities—remains valid as a medium-term view. However, it has been temporarily put on hold due to the fragility of the truce. What became clear over the weekend is that any market interpretation based on Friday’s optimism was premature.

Our structural view of a weaker U.S. dollar in the medium term remains intact, supported by U.S. macro fundamentals: an expanding fiscal deficit and real interest rates that do not provide historical support for the dollar. However, the Federal Reserve still has room to adjust rates at least once this year. In a context of a persistent energy shock, this could trigger episodes of sharp dollar strength—such as the one observed at the start of this week—that contradict the underlying trend. For the Chilean peso (CLP) and the Colombian peso (COP), the short-term outlook is mixed: last week’s appreciation is now partially reversing, and the key will be the trajectory of oil and copper prices in the coming days.

Interest Rate Barometer

The Fed’s rate barometer shows a 97.4% probability of rates remaining unchanged at the April 29 meeting, with only a 2.6% chance of a hike. The market continues to price in a scenario of stable rates in the short term, although the persistence of the energy shock and the potential de-anchoring of inflation expectations leave the door open for a rate adjustment before year-end.

The Federal Reserve is facing its most complex dilemma in years: inflation is rising due to supply-side factors that monetary policy cannot directly address. The Committee remains in full observation mode, refraining from providing forward guidance while the conflict remains unresolved. The April 29 meeting will be the first real test of how the Committee communicates its stance in this environment

FOMC Meeting Schedule 2026

Weekly Outlook and Scenarios

We remain in an environment of uncertainty, with the formal truce set to expire on Tuesday, April 21. Whether it is renewed—or not—will determine the direction of all risk assets. The market is facing a binary split that directly conditions Forex behavior.

In a favorable scenario for emerging market currencies, the truce is extended under clear conditions, the Strait gradually resumes normal operations, and oil consolidates its correction toward the $80 level.

In an adverse scenario, the truce collapses without an agreement, hostilities resume, and the energy shock once again impacts global inflation with full force. Oil would likely move back above $100, the U.S. dollar would strengthen as a safe-haven asset, and the Federal Reserve would come under pressure to raise rates before year-end.