The US dollar staged a dramatic turnaround late last week after Israel’s surprise military strikes on Iran jolted global markets. While the greenback had been on track for another weekly slide amid dovish Fed expectations, Friday’s escalation drove investors into safe-haven assets, lifting the dollar alongside gold, the Swiss franc, and yen. Oil prices soared as Brent crude surged above $75, igniting fresh inflation concerns and pushing US Treasury yields lower. Despite the dollar’s sharp one-day rally, the strongest in a month, the broader trend remains fragile, with markets now laser-focused on whether the conflict escalates and how it influences the Fed’s all important interest rate decision next week. If tensions persist and energy prices stay elevated, the greenback could extend gains, especially if upcoming US inflation and retail sales data show signs of stickiness.

The Canadian dollar weathered the storm from escalating Israel–Iran tensions better than most, thanks to surging oil prices and resilient domestic data. While USD/CAD initially spiked above 1.3650 on safe-haven flows, the loonie quickly clawed back ground as crude rallied over 7%, showcasing CAD’s strong commodity-linked support. Canada’s jobs report added further tailwinds, with a surprise gain of 8,800 jobs easing recession fears despite a nine-year high in unemployment. CAD now hovers near 1.36, with support from rising oil and a narrowing Canada–US yield spread. Looking ahead, potential Iranian retaliation and volatile oil prices will remain key drivers. If oil holds above $75 and Canadian data remains solid, CAD could stay firm, though another wave of USD strength could cap its gains.

Expected weekly trading range:

1.34 - 1.38

The euro posted a volatile week, rallying midweek on soft US inflation data and ECB signals of a rate pause, only to reverse sharply on Friday as Israel’s strikes on Iran triggered risk-off flows. EUR/USD briefly touched a near 4-year high before retreating, with euro-denominated assets pressured by a flight to US safe havens. Despite the late-week dip, the euro still notched a net gain versus the dollar. Looking ahead, the euro’s trajectory will largely depend on geopolitical developments in the Middle East, US economic releases including retail sales, and fresh commentary from the ECB.

Expected weekly trading range:

1.54 - 1.59

The pound saw a volatile week, initially rallying to a two-year high on the back of strong UK Q1 GDP growth and optimism over a US-UK tariff agreement, but it reversed course sharply on June 13 as Israel’s strikes on Iran triggered a broad risk-off move that sent GBP down. While positive economic fundamentals provided support earlier, weak April GDP and soft manufacturing data revived concerns about domestic momentum. With geopolitical tensions driving safe-haven flows into the dollar, and BoE rate expectations holding steady for now, sterling’s near-term direction will hinge on upcoming UK data and how the global risk mood evolves.

Expected weekly trading range:

1.81 - 1.87

The yen remain volatile during the week, capped by a sharp decline on June 13 as Israel’s strikes on Iran triggered a flight to safety. Earlier in the week, yen found modest support amid softer US inflation and renewed tariff concerns, but risk-off sentiment on Friday boosted haven demand for the US dollar. The BoJ’s upcoming policy meeting adds further intrigue, with markets eyeing any hints of rate normalization. Looking ahead, geopolitical developments and key US data will guide yen moves. If the BoJ signals even a mild hawkish shift or if geopolitical risks deepen, the yen could extend gains. However, if the Fed stays firm on delaying cuts, USD strength may cap JPY upside in the near term.

Expected weekly trading range:

104.53 - 107.71

The Swiss franc rallied on June 13 as Israel’s strikes on Iran sent global markets into risk-off mode, boosting demand for traditional safe havens like CHF, the yen, and gold. The franc ticked up by around 0.4% intraday, adding to its already strong YTD gains. This surge comes despite Switzerland slipping into deflation, which has raised expectations of a policy rate cut at the SNB’s June 19 meeting, possibly to zero or even negative territory. If geopolitical tensions escalate further, the CHF could strengthen more, though aggressive SNB action or a rebound in US yields may temper the rally.

Expected weekly trading range:

0.59 - 0.61

The yuan traded in a narrow range last week, with USD/CNY hovering between 7.17 and 7.19. Over the past month, CNY has gained slightly supporting a modest annual appreciation. Liquidity support from the PBoC, through ¥400B in six-month reverse repos and a previous ¥1T injection, helped stabilize bond yields and anchor the onshore rate. Meanwhile, a breakthrough in US–China trade talks, including easing rare earth export curbs, lifted sentiment. Still, markets remain cautious, with traders watching for follow-through on trade deals, upcoming Chinese economic data, and any safe-haven swings tied to global geopolitical risks.

Expected weekly trading range:

5.21 - 5.37

The Indian rupee traded between 85.30 and 86.20 against the dollar during the week, closing on a weaker note after a midweek dip triggered by surging oil prices. A 50 bp rate cut by the RBI on June 6, paired with a 100 bp CRR reduction, initially supported INR and boosted local equity and bond sentiment. However, forward premiums narrowed post-cut, reducing carry-trade appeal and leaving the rupee more exposed to dollar strength. A spike in Brent crude briefly pushed INR to a two-month low, prompting RBI intervention via state banks. With FX volatility at a six-week low, markets are watching for RBI moves, crude dynamics, and US macro data to steer near-term direction.

Expected weekly trading range:

62.28 - 64.23

The Australian dollar weakened last week, with AUD/USD falling nearly 1% as global risk-off sentiment eclipsed support from commodities. Despite firm iron ore prices, investors retreated from risk-sensitive currencies like the Aussie following mild escalations in Middle East tensions. RBA minutes revealed that policymakers considered a 50 bp cut before opting for 25 bp, underscoring caution amid flat inflation and external uncertainty. Markets now price in a strong chance of another cut in July. Looking ahead, AUD direction will hinge on global risk appetite, RBA guidance, and key domestic data, particularly retail sales and employment figures.

Expected weekly trading range:

0.87 - 0.91

The New Zealand dollar slipped last week, with NZD/USD closing around 0.60. The move reflected broader risk aversion tied to geopolitical tensions, though the kiwi later found modest relief from softer US inflation data. Markets now turn to the RBNZ’s June 18–19 policy meeting, where another 25 bp rate cut is widely expected. However, markets will focus more intently on the central bank’s forward guidance, which could sway NZD sentiment sharply. With inflation expectations anchored and external risks persisting, near-term NZD movement will hinge on USD dynamics, RBNZ tone, and global risk mood.

Expected weekly trading range:

0.81 - 0.83

The Mexican peso strengthened notably last week, hitting its strongest level in nearly 10 months as softer US inflation and easing US–China tensions fueled global risk appetite. However, intraday volatility persisted due to geopolitical jitters surrounding the Middle East. Despite Banxico’s three rate cuts in 2025, rising inflation and cautious commentary from Deputy Governor Heath suggest the central bank may slow the pace of easing at the June 26 meeting. Looking ahead, the peso’s momentum hinges on Banxico’s decision, upcoming inflation and GDP data, and external factors like oil prices and USD strength.

Expected weekly trading range:

13.74 - 14.16