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 New

In the previous session, the U.S. dollar held firm amid renewed tensions over the situation in the Middle East, as concerns about inflation driven by a rebound in crude oil prices and rising U.S. interest rates weighed on the market. The dollar/yen 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 159.60 to 160.00 range 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. With the release of the U.S. April PCE deflator and the revised Q1 GDP figures scheduled for today, we will be watching to see if the upside potential for the U.S. dollar expands.

European currencies were weighed down by the strong U.S. dollar, causing the euro to face resistance against the dollar. The EUR/USD pair fluctuated within a range of 1.1620 to 1.1660 before closing in the upper 1.1620s; the immediate focus will be on whether it can hold around 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 ECB Governing Council meeting minutes, and the Eurozone May Economic Sentiment Index. We will be watching to see how the euro reacts to these developments regarding monetary policy and economic sentiment.

Today’s key economic indicators include the French April Producer Price Index (PPI) at 3:45 p.m., remarks by ECB President Lagarde at 4:10 p.m., the final Eurozone May Consumer Confidence Index at 6:00 p.m.,the ECB Governing Council minutes at 20:30, the U.S. April PCE Deflator and Core PCE Deflator at 21:30, the U.S. Q1 GDP revision, U.S. initial jobless claims for the previous week, Canada’s Q1 current account balance, the South African Reserve Bank’s policy rate at 22:00, and U.S. April new home sales at 23:00.Particularly during New York trading hours, the U.S. PCE Deflator and revised GDP figures are likely to influence expectations for U.S. interest rates, so we should carefully monitor the reaction of the U.S. dollar, the euro, and the Canadian dollar.