Dollar Holds Near 13‑Month High Ahead of U.S. PCE Inflation
The U.S. Dollar Index was little changed around 101.60, staying just below its 13‑month peak after a brief pause in its recent rally. The dollar’s resilience comes as the Federal Reserve recently kept its benchmark interest rate steady at 3.50%‑3.75%, leaving markets highly sensitive to any signs of underlying price stickiness in the upcoming Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, scheduled for later in the day.
Euro Stalls Near $1.13 Amid ECB Rate Path Repricing
The euro traded marginally higher at $1.13, struggling to establish structural upside. Momentum has been capped by a rapid repricing of the European Central Bank’s interest‑rate trajectory, driven by Brent crude futures falling over 1.5% to below $73 per barrel, which erased the geopolitical risk premium from the Middle‑East conflict. Recent Eurozone data point to a steep slowdown in private‑sector activity, prompting money markets to sharply scale back expectations for aggressive ECB hikes in the second half of the year. Analysts note the contrast between a sputtering Eurozone economy that may see a dovish ECB pause and a highly resilient U.S. economy, biasing the EUR/USD pair toward the downside.
Sterling Near $1.31, Weighed by UK Inflation and Manufacturing
The British pound was pinned near $1.31. Domestic services inflation remains sticky, while broader UK manufacturing data show a slowdown, leaving the pound vulnerable to dollar‑driven momentum once the U.S. PCE numbers are released.
Australian Dollar Slides After Strong May Jobs Report
The AUD/USD slipped 0.12% to around $0.69 following the release of Australian employment data showing 40,300 jobs added in May, the strongest increase in five months. However, April employment was revised sharply lower, tempering optimism. Capital Economics indicated that the resilient labor market does little to settle the debate over the Reserve Bank of Australia’s next policy move, with persistent underlying inflation still supporting the view that policymakers could still deliver one final “insurance” rate hike.
New Zealand Dollar Remains Under Pressure
The NZD/USD continued to face pressure after touching a seven‑month low earlier in the week, with both Antipodean currencies taking direction from shifting U.S. interest‑rate expectations.
Wider Geopolitical and Market Context
Investors also kept an eye on developments in U.S.–Iran negotiations, which together with the forthcoming U.S. inflation report are expected to shape near‑term sentiment toward the dollar and broader currency markets.