The US dollar’s rally is extending today, but the market remains cautious about intervention by Japanese officials. The Dollar Index has not fallen since last Tuesday. It has risen by a little more than 2% since the Fed delivered its hawkish hold last week. Yet, for the second consecutive session, the dollar is rising without it being backed by higher two-year rates. The greenback is at new highs for the year against many G10 currencies today, including the euro, sterling, Swedish krona, and the New Zealand and Canadian dollars.
More ships are transiting the Strait of Hormuz and reports indicate ships are keeping their satellite signals switched on, reflecting growing confidence by ship owners. August WTI fell to about $71.55 today, its lowest level since March 10. Equities have mostly stabilized after yesterday’s tech-led decline. The focus shifts to Micron Technology earnings later today.
Prices
G10
• The euro spent most of the North American session yesterday below $1.14, and it was sold to almost $1.1375. It has not been able to trade much above there today, and the euro has taken another leg down today. It has frayed $1.1340, the (38.2%) retracement of the euro’s rise since February 2025. A convincing break could target the $1.11-$1.12 area.
• The market knows it is risking BOJ intervention with continued yen weakness. The pricing of the risk reversals in the options market seems consistent with dollar bulls buying puts as a hedge. The yen spent yesterday consolidating inside Monday’s range. In North America yesterday, the market seemed reluctant to push the dollar much above JPY161.60. It is in about a JPY161.50-80 range today. Options for a little more than $1 bln at JPY161.50 expire today.
• Sterling unwound Monday’s gain yesterday and extended the losses today to a new low for the year near $1.3155. A convincing break could target $1.3040 next and then the low from last November (~$1.2985).
• The Canadian dollar falling for the tenth consecutive session today, which would the match its April-May 2017 slide. The greenback reached nearly CAD1.4240 today, the highest level in 14 months. Although the momentum indicators are stretched, the price action remains constructive. The next chart point is closer to CAD1.44.
• The Australian dollar continues to break down. It was sold slightly below $0.6910 yesterday and $0.6885 today, its lowest level since early April. The next technical target is in the $0.6835-55 area, which houses the March low and the 200-day moving average.
EM
• The risk-off mood sent the Mexican peso to its lowest level since early April. The dollar reached MXN17.6045. The greenback settled near session highs and the next technical target is the around MXN17.6450, which corresponds to the (50%) retracement of the losses since the end of March high (~MXN18.1645). The US dollar gains have been extended to MXN17.6145. The MXN17.6460 area corresponds to next retracement area. While the Mexican peso was the worst performer in Latam yesterday with almost a 1.3% loss, the Colombian peso was strongest currency among from the emerging market economies, gaining almost 0.5%.
• The dollar pushed against this month’s high against the offshore yuan. It approached CNH6.7980 yesterday. The gains have been extended today to CNH6.8160. It has not settled above CNH6.80 since May 20. Nearby technical resistance is around CNH6.82 and then near CNH6.85. Over the past 100 sessions, the correlation of changes in the dollar against the offshore yuan and the Dollar Index is near 0.75, the highest late 2024. The dollar’s strength seemed to give the PBOC little choice but to set the dollar’s reference rate higher today for the fourth consecutive session (CNY6.8195 vs. CNY6.8171 yesterday). It is the longest advance since six sessions in April 2025.
• The dollar initially edged higher against the Indian rupee. It narrowed the gap that was created on the June 15 lower opening but did not close it. It extends to about INR94.9475 (it reached ~INR94.9335) before sellers emerged, ostensibly helped by the continued drop in oil prices and optimism that a trade pact with the US is near completion.
Other Markets
• Equities are mixed today. Most of the large bourses in the Asia Pacific but Japan and Taiwan rose. South Korea’s Kospi that dropped 10% yesterday bounced back 3.25%. Europe’s Stoxx 600 is trading with a heavier bias after dropping nearly 0.75% yesterday. The S&P 500 and Nasdaq gapped lower yesterday. The gaps extend to Monday’s lows (~7460 and 26125, respectively). The S&P and Nasdaq futures are trading with a firmer bias (~0.15% and 0.50%, respectively).
• Benchmark 10-year yields are softer. Yields slipped fractionally in the Asia Pacific regions, but are off 1-2 bp in Europe, with the UK Gilt yield leading. The 10-year US Treasury yield is a little more than a basis point lower near 4.48%.
• Gold could not find much traction yesterday and fell to $4091 and the losses were extended to $4050 today. Recall that on June 11, the yellow metal recorded the low for the year (~$4024). Silver was sold to almost $61.50 yesterday but held about 2/10ths of a penny above the low set earlier this month. It has been pressed to a new low for the year today, slightly below $60.75.
• August WTI made a marginal new three-month low slightly below $72.50 yesterday and to above $71.55 today, the lowest since March 10. There looks to be chart support around $70.00. On the eve of the US-Israel attack on Iran at the end of February, August WTI settled around $65.70. Meanwhile, the average price of retail gasoline, according to AAA, has fallen every day since May 20 until yesterday, when it rose by a couple of tenths of a cent. Near $3.93, for a cumulative loss of about 14%. The average retail price was slightly below $3 before the war began.
Data
• The US reports Q1 26 current account deficit today. It has already reported a trade deficit in Q1 of about $181 bln. The trade deficit drives the current account deficit, which is expected to be around $210 bln. Last year’s current account deficit was about $1.12 trillion after a $1.19 trillion shortfall in 2024 and $928 bln in 2024. The economic identity means that provided the US runs a current account deficit, foreign investors must accumulate US assets. The issue is which assets and at what prices. May new homes sales also are on tap, and after a 6.2% decline in April a 3.3% bounce is anticipated (median projection in Bloomberg’s survey). Through April new homes sales are off about 8% this year. When asked about whether the current monetary policy setting was restrictive, Fed Chair Warsh explained at last week’s press conference it was restrictive for housing but not the financial markets.
• Mexico reports CPI for the first half of June, and a minor decline in the headline and core year-over-year readings are expected. Regardless of the data, the central bank will stand pat when it meets on Thursday, leaving the overnight rate target at 6.5%.
• Germany’s June IFO survey was encouraging. The current assessment rose to 87.0 from 86.1, while the expectations component edged up more mildly to 84.1 from 83.9. The overall business climate improved to 85.6 (from 85.0). While it is the second consecutive month of improvement, it remains below the 88.5 high seen before the Middle East war began.
• Australia reported a larger-than-expected 0.7% decline in May CPI (+0.4% in April). Yet, given the base effect, the year-over-year rate ticked down to 4.0% from 4.2%. The trimmed mean rose by 0.4%, a little more than expected, and the year-over-year rate edged up to 3.6% from 3.4%. The central bank meets next on August 11. It is expected to be on hold until at least Q4. Tomorrow, Australia reports May jobs data. Recall that its lows 18.6k jobs (10.7k full-time) in April, and a recovery is expected last month.
• Japan reported PPI service prices rose 3.3% year-over-year in May after the April series was revised to 3.3% from 3.0% initially. That matches the March reading, which was the highest since March 2025. After this month’s hike, the BOJ is seen on the sidelines until Q4, and a rate hike is nearly fully discounted by the end of the year.
Reviewed by Marc Chandler
on
June 24, 2026
Rating:
