Global FX ends the week mixed as the USD softens despite sticky inflation
๐ The 08โ13 June week saw the US dollar lose momentum even as US inflation stayed firm. DXY briefly moved above 100 but later slipped back toward 99.7โ99.8, reflecting weaker safe-haven demand.
๐ฅ US May CPI rose 4.2% YoY, while PPI climbed 6.5% YoY and came in hotter than expected, mainly due to energy pressure. This keeps the Fed in focus and limits expectations for early easing.
๐ข However, geopolitics shifted sentiment. Hopes for a ceasefire and a possible IranโIsraelโUS agreement reduced the risk premium, pulled oil lower in several sessions and weakened defensive USD flows.
๐ฆ The euro stayed supported after the ECB raised rates by 25bp, bringing the deposit rate to 2.25%. The reaction was limited, but the ECBโs focus on energy-driven inflation helped EUR maintain a firmer base.
๐ฑ Major pairs remained mostly range-bound. EUR/USD held near 1.15โ1.16, USD/JPY stayed close to 160 but remained capped by intervention risk, while AUD, CAD and NOK saw mixed support from risk-on flows.
๐ Overall, the dollar weakened slightly, but this is not yet a clear bearish USD trend. Inflation and positioning still support the greenback, while easing geopolitical tension reduces short-term haven demand.
๐งญ Next week, markets will focus on the FOMC, BoJ and BoE. A firm Fed tone could lift DXY back toward 100โ101, while a softer message and calmer Middle East headlines may support EUR/USD and risk-sensitive currencies.
โ ๏ธ Hormuz and oil prices remain the key risk. Any renewed escalation could quickly lift inflation expectations and bring safe-haven flows back into the US dollar.
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