The US. dollar continued to face downward pressure this week, with the Dollar Index (DXY) unable to reclaim the psychologically important 100.00 level. Despite stronger-than-expected nonfarm payroll gains in May and rising wage growth, the dollar struggled to hold ground due to downward revisions to prior jobs data and persistent political noise. The high-profile spat between Elon Musk and President Trump, coupled with warnings over potential recessionary fallout from new tariffs, further rattled investor sentiment. As Tesla shares tumbled and broader market volatility increased, safe-haven flows did not favour the dollar, which remains rangebound. Looking ahead, market focus will turn to how the Fed interprets these mixed signals, with further clarity expected from upcoming economic releases and any fallout from the Musk-Trump feud. Unless the dollar can stage a convincing rebound, near-term risks appear tilted to the downside.

The Canadian dollar surged to its highest level in nearly eight months this week, buoyed by broad-based US dollar weakness, firming oil prices, and optimism around US-China trade talks. This resilience came despite a string of mixed domestic data. Canada’s trade deficit widened sharply in April, driven by a steep drop in exports to the US, amid intensifying tariff friction. Meanwhile, the May jobs report showed rising unemployment even as full-time hiring rebounded, suggesting an uneven labour market recovery. The Bank of Canada kept rates steady at 2.75% for a second straight meeting, taking a cautious stance as it monitors evolving trade dynamics and inflation risks. Markets are pricing in only a modest chance of a cut at the next BoC decision in late July, barring further economic deterioration. Looking ahead, inflation and retail sales figures will be closely watched for signs of underlying momentum, while trade developments remain a key wildcard for CAD direction.

Expected weekly trading range:

1.35 - 1.39

Despite delivering its eighth consecutive rate cut, the ECB surprised markets with a hawkish tone that helped lift the euro against the USD this week. The ECB reduced its deposit facility rate by 25 bps to 2% on June 5, aiming to support growth amid softening inflation and trade risks. However, President Lagarde signalled that the easing cycle may be nearing its end, adopting a cautious, data-driven stance moving forward. This guidance stood in contrast to the US Federal Reserve, where uncertainty around future rate moves persists. Investors interpreted the ECB's messaging as a potential pause in cuts, boosting the euro despite the dovish policy action. Supporting the move was a continued easing in eurozone inflation and modest Q1 GDP growth. Looking ahead, EUR direction will hinge on US inflation and jobs data, ECB commentary, and developments in transatlantic trade tensions.

Expected weekly trading range:

1.54 - 1.58

The Pound Sterling posted modest weekly gain nearing levels last seen in early 2022. This rise was fueled by the UK’s resilient economic performance and the recent US.-UK trade agreement that helped avert fresh steel and aluminum tariffs. Q1 GDP data showed the UK is leading G7 growth, buoyed by strong services output and rising exports outside the EU. However, persistent inflation, now at 3.5%, and a softening labour market are complicating the Bank of England’s path forward. While the BoE cut rates in May, policymakers have struck a cautious tone amid global uncertainties. With inflation trending above target, markets expect the central bank to pause further easing in the short term. Looking ahead to next week, markets will watch for fresh UK GDP and labour market data, while broader trade policy developments and US economic releases could steer pound sentiment.

Expected weekly trading range:

1.82 - 1.88

The Japanese yen continued to weaken against the US and Canadian dollar, with USD/JPY rising above 144. This latest move reflects broader dollar strength amid disappointing US data and persistent global trade uncertainties. Despite holding its benchmark rate at 0.50%, the Bank of Japan remains cautious. Governor Ueda reiterated that future rate hikes hinge on economic resilience, suggesting no rush to tighten policy. April inflation held steady at 3.6%, while unemployment edged higher, reinforcing the BoJ's patient stance. Looking ahead, investors will closely monitor the upcoming June 17 BoJ meeting and US economic data, both of which could influence yen direction. Rising global risk sentiment and trade headlines will also play a key role in shaping JPY performance next week.

Expected weekly trading range:

104.36 - 107.14

The Swiss franc saw mild weakness this week, retreating slightly against the US dollar, though it remains one of the top-performing major currencies this year. A dip into deflation in May has amplified pressure on the Swiss National Bank to act more decisively, with markets now widely expecting a 25bp rate cut at the June 19 meeting. While the SNB continues to refute US allegations of currency manipulation, it faces the dual challenge of curbing franc strength and reviving inflation. With global trade tensions still weighing on export outlooks and a watchful eye on the Fed's next moves, CHF may remain range-bound near-term. The SNB’s stance next week could be pivotal for the franc’s direction through the summer.

Expected weekly trading range:

0.59 - 0.61

The yuan came under renewed pressure this week, with both onshore and offshore rates slipping and the trade-weighted CFETS index falling to its lowest level in nearly two years. Despite robust Q1 GDP figures and signs of export resilience, deflationary pressures and concerns over slowing domestic demand are weighing heavily on the currency. The People's Bank of China's recent LPR cuts and aggressive liquidity injections reflect growing urgency to bolster economic momentum. Still, markets appear unconvinced that current measures will be enough, particularly with trade tensions simmering beneath the surface. While the upcoming US-China talks offer a potential reprieve, unresolved issues could keep markets on edge. All eyes now turn to the next round of inflation and trade data, which may determine whether the PBoC will deepen its policy easing at the June 19 meeting.

Expected weekly trading range:

5.17 - 5.33

The Indian rupee posted a slight gain this week, recovering modestly against the US dollar. However, the INR continues to face headwinds from sustained foreign equity outflows and steady corporate demand for dollars, keeping its broader trajectory under pressure. In a surprise move, the Reserve Bank of India delivered a larger-than-expected 50bps rate cut and slashed the CRR by 100bps, signaling a strong push to stimulate growth amid easing inflation. The shift to a neutral policy stance suggests the RBI may tread carefully moving forward, weighing financial stability against growth risks. While strong Q1 GDP data and softening inflation provide a supportive backdrop, persistent labour market concerns and external volatility limit the upside for the rupee. Next week, investors will watch US data, capital flow trends, and domestic consumption to assess the rupee’s near-term direction.

Expected weekly trading range:

61.69 - 63.57

The Australian dollar held steady this week, trading within a tight range, as support from a softer greenback helped offset domestic economic headwinds. Despite weak Q1 GDP growth and subdued consumer spending, the AUD avoided deeper losses thanks to market anticipation of further RBA easing and improving global risk sentiment. The Reserve Bank of Australia’s recent 25bps rate cut, its second of the year, underscores a cautious approach in response to persistent global trade uncertainties and tepid inflation. However, ongoing US economic concerns and potential relief in global trade tensions may continue to lend near-term support. Looking ahead, Australian labour market and retail sales data, along with global risk trends, will be key in shaping the currency’s trajectory.

Expected weekly trading range:

0.88 - 0.90

The New Zealand dollar advanced to a fresh 2025 high this week as the greenback weakened on the back of soft US data and heightened global trade tensions. The kiwi’s relative strength was also supported by its safe-haven appeal amid ongoing geopolitical uncertainty. While the RBNZ delivered its sixth consecutive rate cut in May, it signalled a deeper easing cycle to counter subdued domestic demand and external headwinds. Nonetheless, inflation is within target, and recent GDP showed a modest rebound, suggesting the economy is stabilizing. Looking ahead, the NZD will likely take cues from upcoming US data, global trade developments, and domestic indicators such as retail sales and housing figures. Any sustained risk-off sentiment or signs of resilience in New Zealand’s economy could further support the kiwi in the near term.

Expected weekly trading range:

0.81 - 0.83

The Mexican peso posted a modest gain this week, supported by a stable labour market and improving agricultural output. Despite Mexico's inflation edging above Banxico’s target range, the central bank is expected to stay on its easing path after delivering three straight 50bps cuts, citing sluggish growth and tame core inflation. The peso’s resilience is notable given the broader global uncertainty and rising energy prices that have driven up non-core inflation. As the June 26 Banxico meeting approaches, markets will watch closely for signals on whether further cuts are in store. Meanwhile, trade tensions with the US and upcoming inflation data remain key variables that could stir market sentiment and influence the peso’s next move.

Expected weekly trading range:

13.74 - 14.16