Forex Today: US Dollar stays neutral as Fed’s Waller reinforces inflation commitment

Here is what you need to know on Monday, July 6:

The US Dollar Index (DXY) remains neutral near the 100.90 level at the end of the American session on Monday as investors digest hawkish comments from Federal Reserve (Fed) Governor Christopher Waller and resilient United States (US) services data. Waller said Fed policymakers remain committed to the 2% inflation target, calling it a credible pledge. He also noted that policy risks have “flipped around,” with the labor market appearing stabilized as inflation has risen.

EUR/USD traded with limited momentum near the 1.1440 level as European Central Bank (ECB) Executive Board member Isabel Schnabel warned that the Eurozone is not back to a pre-war situation, even after the recent fall in Oil prices. Schnabel added that the current shock cannot simply be looked through, because it is already creating indirect and potentially second-round effects.

GBP/USD elevated near the 1.3390 level even as the Greenback held firm. Investors continued to monitor the contrast between a cautious Bank of England (BoE) outlook and a Fed that remains focused on inflation risks.

USD/JPY gained to the 162.10 level as firm US Dollar demand and resilient US data kept upward pressure on the pair. Markets remain sensitive to yield differentials and any fresh comments from Japanese authorities if the Yen continues to weaken.

AUD/USD gained ground near the 0.6960 level after Australia’s TD-MI Inflation Gauge slowed to 3.9% YoY in June from 4.4%. The softer inflation reading reduced pressure on the Reserve Bank of Australia (RBA) to maintain a more hawkish stance, weighing on the Aussie.

West Texas Intermediate (WTI) Oil remained in focus near the $68.70 per barrel after ECB’s Schnabel warned that the recent decline in Oil prices does not mean the inflation shock has fully disappeared. Energy markets remain sensitive to geopolitical risks and possible second-round effects on inflation.

Gold struggled to gain traction close to the $4,160 level as the US Dollar stayed supported by Waller’s remarks. The precious metal remains vulnerable when Fed officials push back against rate-cut expectations and reinforce the central bank’s inflation-fighting stance.