With the PCE deflator on the horizon, the market is assessing the upside potential for the U.S. dollar

With the PCE deflator on the horizon, the market is assessing the upside potential for the U.S. dollar

28.05.2026

In the U.S. currency market the previous day, amid renewed tensions over the situation in the Middle East, the U.S. dollar held steady as investors focused on inflation concerns stemming from a rebound in crude oil prices and rising U.S. interest rates.The USD/JPY pair fluctuated within a range of 159.17 to 159.59 before closing near 159.57, continuing to trade near the key 160.00 level.On the upside, the range from 159.60 to around 160.00 is likely to act as resistance, while on the downside, the immediate focus will be on whether the pair can hold above the 159.20 to 159.00 range.Today, the U.S. April PCE deflator and the revised GDP figures for the January–March quarter are scheduled for release, and we will be watching to see if this expands the upside potential for the U.S. dollar.

European currencies were weighed down by the strong U.S. dollar, and the euro struggled to gain ground against the dollar.The euro/dollar pair fluctuated within a range of the 1.1620s to the 1.1660s before closing in the upper 1.1620s; the immediate focus is on whether it can hold near the 1.1600 level.On the upside, the 1.1650 to 1.1660 range is likely to be watched, while on the downside, the 1.1600 to 1.1580 range is likely to be in focus.Today’s schedule includes remarks by ECB President Lagarde, the minutes of the ECB Governing Council meeting, and the eurozone’s May economic sentiment index; we will be watching to see how the euro reacts to these developments regarding monetary policy and economic conditions.

Today’s economic indicators include France’s April Producer Price Index (PPI) at 15:45, remarks by ECB President Lagarde at 16:10, the eurozone’s May consumer confidence (final reading) at 18:00,the ECB Governing Council meeting minutes at 20:30, the U.S. April PCE Deflator and Core PCE Deflator at 21:30, the revised U.S. Q1 GDP, the previous week’s U.S. initial jobless claims, Canada’s Q1 current account balance,22:00 South African Reserve Bank policy rate, and 23:00 U.S. April new home sales. During New York trading hours in particular, the U.S. PCE deflator and revised GDP figures are likely to influence the outlook for U.S. interest rates, so we will carefully monitor the reactions of the U.S. dollar, the euro, and the Canadian dollar.