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FinanceDollar hits 13-month high, gold plunges to 7.5-month low on hawkish Fed outlook
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The US dollar surged to a 13-month high on Wednesday, while gold and silver prices plunged to multi-month lows, driven by expectations of tighter Federal Reserve policy. The dollar continued its week-long rally following the FOMC's hawkish stance on June 17, which projected higher interest rates later this year. Gold fell 2.73% to a 7.5-month low, and silver dropped 4.76% to a 6.5-month low. The euro weakened to a fresh one-year low after ECB President Lagarde's dovish comments reduced rate hike expectations, despite stronger German IFO data. The yen remained near 23-month lows against the dollar, with intervention risks rising after Japan's finance minister discussed currency action with the US Treasury secretary. US economic data showed a larger-than-expected Q1 current account deficit and an unexpected decline in May new home sales. Markets are pricing a 32% chance of a Fed rate cut in July.
Source report
Rich Asplund Wed, June 24, 2026 at 7:37 AM PDT | 4 min read
- DX-Y.NYB: -0.18%
- GC=F: +0.82%
- EUR=X: -0.12%
The dollar index (DXY00) rose by +0.26% today, reaching a new 13-month high and extending its week-long surge. The dollar continues to receive carryover support from last Wednesday, when the FOMC's hawkish stance projected higher interest rates later this year. However, the dollar pulled back from its best level after May's new home sales unexpectedly fell to a four-month low.
The US Q1 current account balance registered a deficit of -$225.8 billion, wider than the -$208.9 billion expected.
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US May new home sales unexpectedly fell -7.3% month-over-month to a four-month low of 580,000, weaker than expectations of an increase to 640,000.
Swaps markets are discounting a 32% probability of a +25 basis point rate cut at the next FOMC meeting on July 28–29.
EUR/USD
EUR/USD (^EURUSD) fell to a fresh one-year low today, down -0.31%. The dollar's strength weighed on the euro. Additionally, the euro is declining amid negative carryover from Monday, following ECB President Lagarde's dovish comments, which reduced the chances of additional ECB rate hikes. Lagarde stated she sees no need for a more forceful ECB response to the US-Iran war.
Today's Eurozone economic data was supportive of the euro, as the German IFO business confidence index rose more than expected.
- German June IFO business confidence index: rose +0.6 to 85.6, stronger than the expected 85.5.
Markets are discounting a +7% chance of a +25 basis point rate hike by the ECB at its next policy meeting on July 23.
USD/JPY
USD/JPY (^USDJPY) rose by +0.11% today. The yen moved lower and sits just above Monday's 23-month low against the dollar. The yen remains under pressure amid concerns that the BOJ is falling behind the curve in normalizing monetary policy. Last week, BOJ Deputy Governor Uchida said the BOJ will assess the impact of rate hikes on the economy, signaling a glacial pace of policy tightening.
Yen losses were contained today amid hawkish comments from BOJ Governor Kazuo Ueda, who stated:
"With underlying inflation moving toward 2% and financial conditions remaining accommodative, we expect to continue increasing the interest rate and adjusting the degree of monetary accommodation in response to economic activity, prices, and financial conditions."
The risk of intervention in currency markets to support the yen is rising. Japanese Finance Minister Satsuki Katayama said she spoke with US Treasury Secretary Scott Bessent on Tuesday, and they agreed to take "bold" steps on currencies if needed, noting that the nations are increasingly "aligned" on foreign-exchange policy. With the yen firmly above 160 per dollar, intervention risks have increased, as Japanese authorities have intervened in the forex market several times in the past when the yen reached that level.
- Japan May PPI services prices: unchanged from April at +3.3% year-over-year, matching expectations and marking the highest level in 14 months.
Markets are discounting a +2% chance of a +25 basis point BOJ rate hike at the next policy meeting on July 31.
Gold and Silver
- August COMEX gold (GCQ26): down -113.10 (-2.73%)
- July COMEX silver (SIN26): down -2.955 (-4.76%)
Gold and silver prices added to this week's sharp decline, with gold plunging to a 7.5-month low and silver sinking to a 6.5-month low. Today's rally in the dollar index to a 13-month high is bearish for metals. Precious metals are being weighed down by negative carryover from last Wednesday, when the FOMC signaled higher interest rates this year, sparking liquidation of long precious metals positions.
Precious metals found some support from today's fall in WTI crude oil prices to a 3.5-month low, which has eased inflation expectations and could prompt global central banks to ease monetary policy — a bullish factor for precious metals.
Image: Shiny gold bullion by Million Photos via Shutterstock
Source
Yahoo FinanceWestern
Part of this Story
US dollar fluctuates as US-Iran conflict ends with peace deal