Forex Today: US Dollar surges near recent highs as markets watch PCE inflation and Middle East

Here is what you need to know for Tuesday, June 23:

The US Dollar (USD) traded near the 101.00 level on a positive note on Monday, near the 13-month high of 101.13 reached on Friday, as investors balanced softer Oil prices, renewed hopes for peace between the United States (US) and Iran, and expectations that the Federal Reserve (Fed) could remain restrictive for longer.

Markets are also looking ahead to Thursday’s US Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred inflation gauge, which could shape expectations for the next policy move.

EUR/USD fell near 1.1430 as the Euro (EUR) failed to hold firm following a weak Consumer Confidence report released on Monday. ECB President Christine Lagarde said that policymakers are not seeing signs that the latest inflation shock requires a more aggressive policy response, while markets continue to assess the ECB’s latest inflation projections after the central bank recently said headline inflation is expected to average 3% in 2026.

GBP/USD traded with a slightly positive tone near 1.3250 as the Pound Sterling (GBP) remained steady despite political uncertainty in the United Kingdom (UK) following the Prime Minister Keir Starmer's resignation announcement. Investors are likely to focus on upcoming Bank of England (BoE) commentary this week, with BoE officials Taylor and Dhingra due to speak on Tuesday and Breeden also scheduled for Wednesday.

USD/JPY hovered near intervention levels almost all day, trading near 161.60 after almost surpassing a four-decade high of 162.00 earlier in the session as the Japanese Yen (JPY) continued to struggle against the Greenback’s yield advantage. Attention now turns to upcoming Japanese indicators later in the week, including Leading Indicators and Tokyo Consumer Price Index (CPI).

AUD/USD remained under pressure near 0.7000 amid fragile risk sentiment, with traders looking ahead to Australian inflation data on Wednesday and jobs figures on Thursday. Those releases could be decisive for Reserve Bank of Australia (RBA) expectations, as markets have recently shifted between pricing in a pause and a more cautious policy path.

West Texas Intermediate (WTI) Oil fell sharply near $74.20 per barrel as optimism around US-Iran peace talks reduced some geopolitical risk premium. Oil prices dropped more than 3% as talks in Switzerland suggested a possible deal that could bring fresh Iranian barrels back into the market.

Gold (XAU/USD) recovered from a one-week low as lower Oil prices eased inflation concerns, while uncertainty around US policy and geopolitical risks kept demand for the metal alive. Spot Gold rose 0.84% to $4,190 per troy ounce, although expectations for tighter Fed policy limited the upside.

What’s next in the docket:

Tuesday, June 23:

• US Richmond Fed Manufacturing Index
• Global Flash PMIs

Wednesday, June 24:

• Australian CPI
• BoJ Summary of Opinions
• BoC Summary of Deliberations

Thursday, June 25:

• US PCE
• US GDP
• Jobless Claims
• Australian Jobs data

Friday, June 26:

• Tokyo CPI
• Final University of Michigan Consumer Sentiment.