Forex Today: US Dollar stays resilient ahead of key PMI data
Here is what you need to know on Tuesday, June 23:
The US Dollar (USD) benefits from the risk-averse market atmosphere on Tuesday and stays resilient against its major rivals. The economic calendar will feature preliminary June Purchasing Managers' Index (PMI) data for Germany, the Eurozone, the United Kingdom (UK) and the United States (US) on Tuesday. Meanwhile, investors will continue to pay close attentio to news surrounding the Middle East crisis and scrutinize comments from central bank officials.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.38% | -0.30% | 0.19% | 0.10% | 0.80% | 0.84% | 0.22% | |
| EUR | -0.38% | -0.68% | -0.11% | -0.23% | 0.48% | 0.42% | -0.15% | |
| GBP | 0.30% | 0.68% | 0.32% | 0.41% | 1.09% | 1.11% | 0.51% | |
| JPY | -0.19% | 0.11% | -0.32% | -0.15% | 0.57% | 0.60% | -0.05% | |
| CAD | -0.10% | 0.23% | -0.41% | 0.15% | 0.71% | 0.76% | 0.09% | |
| AUD | -0.80% | -0.48% | -1.09% | -0.57% | -0.71% | 0.00% | -0.58% | |
| NZD | -0.84% | -0.42% | -1.11% | -0.60% | -0.76% | -0.01% | -0.59% | |
| CHF | -0.22% | 0.15% | -0.51% | 0.05% | -0.09% | 0.58% | 0.59% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
US Vice President JD Vance said late Monday that Iran agreed to allow International Atomic Energy Agency (IAEA) inspectors back into the country after negotiations in Switzerland. Iran, however, denied this claim, saying that Tehran made "no new commitments." In the meantime, "if Iran doesn't live up to their agreement, or if they're not behaving, I will do what I have to do," US President Donald Trump told reporters. On the other hand, Iran’s top negotiator Mohammad Bagher Ghalibaf said that the US agreed to release $12 billion in frozen Iranian funds.
US stock index futures lose between 0.5% and 2% on Tuesday, pointing to a cautious market stance. The USD Index, which registered small gains on Monday, holds above 101.00 and remains within a touching distance of the 13-month high it set above 101.10 last Friday.
The Bank of Japan (BoJ) reported early Tuesday that Japan's core consumer inflation rate excluding one-off factors, as measured by the Japanese central bank's new gauge, climbed 2.7% in May. This figure exceeded the BoJ’s 2% target and eased from 2.8% in April. Meanwhile, core-core CPI excluding special factors was up 2.1% in May, versus a 2.2% rise in April. USD/JPY trades at its highest level in nearly two years at around 161.70 in the European morning on Tuesday. Japan’s Finance Minister Satsuki Katayama noted that she held virtual talks with US Treasury Secretary Scott Bessent on Monday, discussing global financial markets and Iran conflict effects. Moreover, Japan’s Chief Cabinet Secretary Minoru Kihara reiterated that they will take appropriate action against the foreign exchang (FX) moves if needed.
After posting small losses on Monday, EUR/USD struggles to stage a rebound and trades at around 1.1420 early Tuesday.
Lagarde downplays inflation risks, keeps Euro bulls cautious
The 4.6/10 FXS Speechtracker score for European Central Bank (ECB) President Christine Lagarde's speech on Monday stood below her 6/10 historic average, signalling a mildly dovish tilt as she noted that they saw “no evidence yet of de-anchoring or second-round effects” that would justify more forceful tightening. Confidence that “with appropriate monetary policy action, inflation will return to target” reinforced a steady-hands stance rather than an urgent push toward additional hikes, limiting immediate upside for the Euro.
By highlighting the Iran war weighing on activity, a slowdown in services, and an outlook with upside inflation risks but downside growth risks, Lagarde acknowledged a stagflationary mix, yet stressed that the current inflation shock is smaller than the last one, which tempered hawkish expectations. Overall, the balance of risks and language pointed to a cautious, data-dependent ECB, likely capped Euro gains as markets pared back bets on aggressive future tightening.
The data from Canada showed on Monday that annual inflation, as measured by the Consumer price Index (CPI), climbed to 3.2% in May from 2.8% in April. This print surpassed the market expectation of 3%. After registering marginal losses on Monday, USD/CAD regains its traction and rises toward 1.4200 in the European morning on Tuesday.
Following the immediate negative reaction to British Prime Minister Keir Starmer's resignation announcements, GBP/USD reversed its direction and closed the day in positive territory on Monday. The pair stays on the back foot early Tuesday and trades below 1.3250.
Gold (XAU/USD) climbed above $4,200 and ended the day higher on Monday but failed to keep its footing. Pressured by the Middle East uncertainty, XAU/USD stays under bearish pressure and declines toward $4,100, losing nearly 2% on a daily basis.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
