USD Rises to Highest Level Since May 2025

Market Wrap-up: USD Hits May 2025 High as Hawkish Fed Drives Market RepricingThe DXY index extended its advance toward the 100.80 area, pressuring broader financial markets after the Federal Reserve delivered a hawkish message at its latest policy meeting. Gold continued to decline sharply, falling below the $4,200/oz mark.

Major currencies also came under selling pressure, including the euro, British pound, and Japanese yen. The Japanese yen weakened to its lowest level in nearly two years, with USD/JPY briefly touching 161.80. This level stands well above the 160.00 area where Japanese authorities previously intervened in the currency market.

Japanese Finance Minister Satsuki Katayama stated during the Asian session this morning that the government remains prepared to take decisive action against speculative activity in the foreign exchange market. These comments may help limit further yen weakness in the short term.

Meanwhile, the Bank of England maintained its policy rate at 3.75%, leading the British pound to extend losses against the US dollar. As for the euro, despite the ECB’s hawkish rhetoric and previous rate hike, the currency continues to move toward a three-month low near 1.14100 against the US dollar.

The bright spot in the previous session came from the US equity market after President Donald Trump announced that Intel would partner with Apple on chip design projects in the United States. The news sent Intel shares surging 10.6%, leading gains across the semiconductor sector. Nvidia advanced roughly 3%, while Micron Technology jumped nearly 9%. The rally helped the Nasdaq, S&P 500, and Dow Jones all close higher despite continued strength in the US dollar.

The oil market was largely unchanged, although WTI edged higher during the Asian session after reports emerged that US Vice President JD Vance had canceled his trip to Switzerland for talks with Iran because logistical preparations were not yet complete. Nevertheless, the market's primary focus remains the implications of Fed Chair Kevin Warsh’s policy stance from the previous session.

The Fed’s higher for longer narrative was further reinforced by resilient labor market data. Initial Jobless Claims fell by 4,000 to 226,000 in the week ending June 13, close to market expectations of 225,000, indicating layoffs remain limited. Continuing Claims rose to 1.81 million, suggesting some softening in re-employment conditions among unemployed workers.

Looking ahead, no major economic releases are scheduled for today, while US banks will be closed for the Juneteenth National Independence Day holiday. Trading activity is expected to remain relatively subdued, although thinner liquidity conditions could trigger periods of irregular volatility.

XAU/USD: Gold Falls Below $4,200 as Stronger USD and Fed Expectations Weigh

Key takeaway:

Gold prices declined on June 18 after the Federal Reserve delivered a more hawkish policy message, pushing the US dollar to its highest level in a year and increasing market expectations that interest rates could remain elevated for longer.

According to CME Group’s FedWatch Tool, markets are currently pricing an 88% probability of a Fed rate hike in December, up sharply from 61% before the Fed meeting.

Technical Outlook:

Daily Bias: Bearish

Support: 4,053

Resistance: 4,170

WTI: Oil Holds Near Recent Lows as Markets Assess US-Iran Peace Deal Impact

Key takeaway:

Oil prices traded with limited volatility on June 18 after US Vice President JD Vance stated that vessels carrying more than 12 million barrels of oil had successfully passed through the Strait of Hormuz overnight, signaling a gradual normalization of energy transportation flows.

Since the United States and Iran announced a conflict-ending agreement on June 14, oil prices have fallen by more than 11%.

However, downside pressure may be limited after Vice President JD Vance canceled his trip to Switzerland for negotiations with Iran due to unresolved logistical issues, leaving some uncertainty around the implementation process.

Technical Outlook:

Daily Bias: Bearish

Support: 73.43

Resistance: 79.19

DXY: US Dollar Climbs to Highest Level Since May 2025 on Fed Higher for Longer Outlook

Key takeaway:

The US Dollar Index (DXY) climbed to its highest level since May 2025 after the Federal Reserve kept interest rates unchanged at 3.50%-3.75% during the first policy meeting chaired by Kevin Warsh on Wednesday.

Additional support came from labor market data, with Initial Jobless Claims falling by 4,000 to 226,000 in the week ending June 13, close to expectations of 225,000 and highlighting continued labor market resilience.

Meanwhile, Continuing Claims increased to 1.81 million, indicating some moderation in labor market conditions for individuals already receiving unemployment benefits.

Technical Outlook:

Daily Bias: Bullish

Support: 100.80

Resistance: 101.26

EUR/USD: Euro Slides Toward Three-Month Low as Dollar Strength Accelerates

Key takeaway:

The euro fell to a two-month low as expectations of additional Fed tightening continued to support the US dollar.

On the European side, the economic backdrop remains unfavorable for the single currency. Germany’s IFO Institute reaffirmed expectations of weak growth and persistent inflation pressures in Europe’s largest economy.

In addition, European Central Bank policymaker José Luis Escrivá stated that higher energy costs are spreading into services and transportation, while warning that the inflation outlook across the European Union remains highly uncertain.

Technical Outlook:

Daily Bias: Bearish

Support: 1.13910

Resistance: 1.14879

USD/JPY: Japanese Yen Near Two-Year Low as USD/JPY Approaches Intervention Zone

Key takeaway:

The Japanese yen weakened to its lowest level in nearly two years against the US dollar on Thursday, with USD/JPY reaching 161.81 and increasing the risk of official intervention.

According to the latest data from Japan’s Statistics Bureau, National CPI rose 1.5% year-on-year in May, up from 1.4% previously.

Additional details showed that National CPI excluding fresh food increased 1.4% year-on-year in May, unchanged from the previous reading and in line with market expectations.

Technical Outlook:

Daily Bias: Neutral

Support: 160.79

Resistance: 161.80

Overall, markets continue to react primarily to the Federal Reserve's reinforced higher for longer interest rate stance. The US dollar remains supported by expectations of tighter monetary policy and resilient labor market data, putting pressure on gold as well as major currencies including the euro, British pound, and Japanese yen.

Meanwhile, US equities have diverged from the broader market trend as capital flows returned to semiconductor stocks following news of a partnership between Intel and Apple.

In the energy market, oil prices continue to trade within a relatively narrow range as investors assess the impact of the US-Iran peace agreement and monitor further developments surrounding the negotiation process.

At present, the dominant market driver remains the repricing of Federal Reserve rate expectations. With a relatively light economic calendar and US markets observing the Juneteenth holiday, trading sentiment is likely to remain focused on the US dollar, Treasury yields, and any new signals regarding the future path of monetary policy.

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