Market Digest

The U.S. Dollar continued its impressive rally, climbing to a 13-month high as investors strengthened expectations that the Federal Reserve will maintain a restrictive monetary policy. With Thursday's Core PCE inflation report approaching, traders are increasingly pricing in another interest rate hike later this year, reinforcing demand for the greenback.

The stronger dollar placed heavy pressure on precious metals, sending gold below the key $4,000 level for the first time since November 2025. Rising Treasury yields and higher interest rate expectations continued to reduce the appeal of non-yielding assets, while improving sentiment surrounding U.S.-Iran negotiations weakened safe-haven demand.

Oil prices also remained under significant pressure. WTI crude fell to its lowest level in four months after increased tanker traffic through the Strait of Hormuz and expectations of additional Iranian crude exports eased concerns over global supply disruptions. Despite a larger-than-expected decline in U.S. crude inventories, improving supply prospects dominated market sentiment.

In the currency market, the New Zealand dollar fell to a seven-month low as broad U.S. Dollar strength and risk-off sentiment outweighed expectations of another Reserve Bank of New Zealand rate hike. Meanwhile, the Canadian dollar weakened to its lowest level in a year, pressured by falling crude oil prices and widening interest rate differentials between the United States and Canada.

Markets now turn their attention to Australia's employment report and the highly anticipated U.S. Core PCE inflation data and Final GDP release, which are expected to play a crucial role in determining the Federal Reserve's next policy move.

Technical Analysis

NZD/USD – Bearish Momentum Continues

NZD/USD extended its decline to fresh seven-month lows as sellers maintained full control of the trend. The pair remains below all major moving averages, while the MACD continues to signal increasing downside momentum. Although the RSI has entered oversold territory, suggesting the possibility of a short-term corrective rebound, the broader outlook remains bearish unless price recovers above 0.5680.

Key resistance is located at 0.5680, followed by 0.5790. Initial support is found at 0.5580, with further downside toward 0.5530.

USD/CAD – Bullish Trend Remains Strong

USD/CAD advanced to fresh one-year highs as rising U.S. yields and weaker oil prices continued to support the U.S. Dollar. The pair remains firmly above all major moving averages, confirming the long-term bullish trend. While the RSI indicates extremely overbought conditions, suggesting a possible period of consolidation, momentum continues to favor buyers.

Immediate resistance stands at 1.4265, followed by 1.4385, while support is located at 1.4115 and 1.3935.

XAU/USD – Gold Breaks Below $4,000

Gold extended its decline after breaking below the important $4,000 psychological level. Technical indicators continue to favor sellers, with price trading below all major moving averages and MACD confirming strong bearish momentum. Although oversold conditions may trigger temporary rebounds, the overall trend remains negative while prices remain below resistance at $4,380.

The next major support is located around $4,045, followed by $3,930, while resistance is seen at $4,380 and $4,540.

Economic News

Gold Under Pressure

Gold suffered another sharp decline as markets increased expectations for additional Federal Reserve tightening. Spot gold briefly fell below $4,000 before recovering modestly as bargain hunters entered the market. The stronger U.S. Dollar and rising Treasury yields continue to weigh heavily on bullion, while investors await Thursday's Core PCE inflation report for further policy guidance.

Oil Falls to Four-Month Low

WTI crude declined below $70 per barrel as improving diplomatic relations between the United States and Iran reduced geopolitical risk premiums. Increased shipping through the Strait of Hormuz and expectations of additional Iranian oil exports continue to improve global supply conditions, offsetting the bullish impact of declining U.S. crude inventories.

New Zealand Dollar Weakens

The New Zealand dollar extended its losing streak as investors favored the stronger U.S. Dollar ahead of key inflation data. Although the Reserve Bank of New Zealand is still expected to raise interest rates in July, widening policy divergence with the Federal Reserve continues to pressure the Kiwi.

Canadian Dollar Slides

The Canadian dollar weakened further as lower oil prices and stronger U.S. yields encouraged additional buying of the greenback. The Bank of Canada maintained its policy rate while acknowledging ongoing economic risks, leaving USD/CAD well supported.

U.S. Dollar Remains Firm

The U.S. Dollar Index extended gains for a fifth consecutive session, supported by expectations that inflation may remain elevated enough to justify further Federal Reserve tightening. Markets are now closely watching the Core PCE inflation report, Final GDP figures, Durable Goods Orders and Jobless Claims for confirmation of the Fed's higher-for-longer policy outlook.

Upcoming Economic Events

Australia will release Employment Change and the Unemployment Rate, both of which could influence expectations for future Reserve Bank of Australia policy.

The United States will publish the Core PCE Price Index and Final GDP, two high-impact releases that could significantly influence Federal Reserve interest rate expectations and determine the next major move across the forex, commodities and precious metals markets.