THE US dollar traded in a narrow range on Tuesday, with the US Dollar Index (DXY) holding near the 101 level as markets digested mixed economic signals and reiterated hawkish commentary from Federal Reserve officials.
The greenback found support after Cleveland Federal Reserve President Beth Hammack said inflation remained uncomfortably high and warned that further interest rate increases could still be necessary if price pressures fail to ease.
“The inflation remains too high and further rate hikes may be needed if price pressure persists,” Hammack indicated, underscoring the central bank’s continued cautious stance.
In currency markets, the euro weakened modestly with EUR/USD drifting towards 1.1420 after fresh data showed German inflation easing to 2.4 per cent in June from 2.7 per cent in May.
However, losses were partially contained by stronger-than-expected German retail sales, which rose 1.1 per cent in May following a decline the previous month.
Sterling was broadly unchanged around 1.3255 after Bank of England Governor Andrew Bailey said policymakers were in no hurry to alter interest rates. Bailey noted that UK inflation could still rise towards 3.2 per cent later in the year but stressed that tighter financial conditions provided the central bank with time to assess the impact of higher energy costs.
The Japanese yen remained under significant pressure, with USD/JPY trading near multi-decade highs around 162.60, as speculation persisted over possible intervention by Japanese authorities to stabilise the currency.
The Australian dollar outperformed its peers, with AUD/USD advancing towards 0.6920, supported by upbeat Chinese economic data and the Reserve Bank of Australia’s latest meeting minutes, which reinforced optimism over Australia’s trade-linked growth outlook.
In commodities, oil prices steadied near US$70 a barrel after recording their steepest quarterly decline since 2020, as traders weighed easing geopolitical risk premiums alongside expectations of improving global supply conditions.
Gold traded within a narrow range as a firmer US dollar and renewed expectations of a prolonged restrictive US monetary policy limited demand for the non-yielding asset.
Market participants remain focused on upcoming economic releases and central bank commentary for further guidance on inflation trends and the future path of US interest rates. - July 1, 2026
