Dollar Faces Pressure, Precious Metals Retreat (06.20.2025)

EUR/USD hovered near 1.1520 on Fed hawkishness and rising Middle East tensions, while demand offered potential support to the dollar.

The yen strengthened as Japan’s core inflation hit a 16-month high, fueling expectations of further BOJ tightening. Gold slipped below $3,360 as investors sold off with geopolitical risks and limited Fed rate-cut prospects. GBP/USD steadied near 1.34 following a divided BoE vote, and silver retreated from a 13-year high.

Yen Edges Higher as Inflation Surges

The Japanese yen traded stronger near 145 per dollar, rebounding as Japan’s core inflation rose for the third straight month to 3.7%, its highest since January 2023. The data strengthens expectations that the Bank of Japan may continue policy tightening.

Earlier in the week, the BOJ held rates at 0.5% but highlighted how rising wages are being passed on to consumers, keeping inflation elevated. Governor Kazuo Ueda emphasized a data-driven path forward, keeping the door open for more hikes if needed.

The key resistance is at $145.30, while the major support is located at $142.50.

Gold Falls as Mideast Tensions Rise

Gold dropped below $3,360 per ounce, hitting a one-week low and on track for its first weekly decline in three. Investors trimmed holdings to cover losses in other markets, with risk sentiment shaken by the intensifying conflict between Israel and Iran. Israeli strikes reportedly targeted key sites in Tehran following an Iranian missile strike on an Israeli hospital.

Uncertainty also surrounds the US response, with President Trump weighing direct military action. A decision is expected within two weeks.

Despite the Fed holding rates steady and signaling two potential cuts this year, Chair Powell cautioned that tariffs could push inflation higher. New Fed projections flagged slower growth, higher prices, and weaker job markets in 2025. This could limit rate cuts, dampening gold’s appeal as a non-yielding asset.

Resistance is seen at $3,370, while support holds at $3,316.

GBP/USD Stable as BoE Vote Splits

The pound steadied near 1.34 following the Bank of England’s decision to hold rates. The vote revealed deeper division than expected, with six members supporting a hold and three pushing for a 25 basis point cut, contrary to forecasts of a 7-2 split.

The BoE faces a tough balancing act as it weighs sticky inflation, geopolitical risks, and the economic drag of US tariffs.

Resistance is seen at 1.3500, while support holds at 1.3415.

Silver Pulls Back After Multi-Year High

Silver fell 2% to $35.60 per ounce, marking its third straight session in the red. The decline followed a powerful rally to 13-year highs, as traders took profits and sold off precious metals to offset losses from geopolitical turmoil.

The Fed’s steady-rate stance and warning on inflation risks tied to Trump’s new tariffs also weighed on sentiment. Adding pressure, a massive metals discovery in Argentina was confirmed, estimated to contain over 80 million ounces of gold and silver, one of the largest finds in decades.

First resistance is at 37.50, while support starts at 35.40.