The US Dollar (USD) experienced a broad pullback from recent highs on Thursday as global markets turned cautious ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, for May [2][3][4]. The Greenback had previously reached a 13-month high of 101.80 on Wednesday, but eased as safe-haven demand softened amid reports of progress in US-Iran peace negotiations and as traders reassessed the outlook for Federal Reserve interest rate hikes [4].
Currency pairs responded divergently to the shifting sentiment. The NZD/USD pair remained under pressure for the seventh consecutive day, trading near 0.5650 during Asian hours, reflecting a persistent bearish bias. Technical analysis indicated the pair is oversold, with the 14-day RSI around 28, and the spot price moving within a descending channel. Key support levels are identified at 0.5630 and the 14-month low of 0.5580, with further downside possible to 0.5485, the lowest since March 2020. Resistance is seen at the nine-day EMA of 0.5717 and the 50-day EMA of 0.5826. The New Zealand Dollar was the weakest among major currencies, particularly against the Swiss Franc, with a -0.18% move versus CHF on the day [1].
The USD/CAD pair consolidated just below the 1.4250 level, which marked its highest since April 2025, after a bullish breakout through the November 2025 highs near 1.4130. The MACD indicator remained firmly positive, but the RSI was in overbought territory near 88, suggesting stretched upside pressure. Analysts noted that while the path of least resistance remains upward, some near-term consolidation or a modest corrective decline is likely before the uptrend resumes. The Canadian Dollar was strongest against the New Zealand Dollar over the past 30 days [2].
Meanwhile, the Swiss Franc (CHF) rebounded, with USD/CHF edging lower to around 0.8110 after retreating from an 11-month high. The CHF benefited from its safe-haven status as markets monitored ongoing Lebanon-Israel tensions and awaited the US PCE data. Market participants have increased bets on US rate hikes, with a 66.4% probability of a September increase according to the CME FedWatch Tool, following hawkish comments from new Fed Chair Kevin Warsh [3].
In Asia, the Indonesian Rupiah (IDR) gained ground, pushing USD/IDR down to around 17,970. The IDR was supported by strong foreign capital inflows, with Bank Indonesia reporting approximately IDR 105 trillion entering government and central bank bonds in June. The Rupiah also benefited from MSCI's decision to defer a downgrade of Indonesia's equity market status. However, the USD's downside may be limited as markets are pricing in an 83.1% probability of Fed rate hikes by year-end, and the upcoming PCE data is expected to show headline inflation rising from 3.8% to 4.1% year-over-year in May, with core PCE edging to 3.4% [4].
Across the board, markets are in a holding pattern, awaiting the US PCE release, which is expected to be a key driver for the next directional move in the US Dollar and global currency markets [2][3][4].
CONCLUSION
The US Dollar's recent rally has paused as traders await critical US PCE inflation data and reassess the Federal Reserve's rate hike trajectory. Currency markets are showing divergent moves, with the New Zealand Dollar under heavy pressure, the Swiss Franc rebounding on safe-haven demand, and the Indonesian Rupiah supported by capital inflows. The upcoming PCE figures are likely to set the tone for the next phase in global FX markets.