Forex week in review 24/2026: the ECB hikes, US core inflation cools and peace hopes return

The week of 8–12 June was a week of central banks and of a single, very volatile Thursday. The ECB raised interest rates for the first time since September 2023, the Bank of Canada held, US inflation landed on consensus with a softer core reading underneath, and Middle East headlines swung from a threatened US strike on Iran to talk of an imminent agreement in a matter of hours.

The Dollar Index (DXY) closed at 99.75, down 0.32% from 100.07, according to RTTNews. Both its weekly high of 100.31 and its weekly low of 99.59 came on Thursday. USD/JPY made its whole weekly range on Thursday too. That concentration of movement into one session is the theme of this recap.

Where the story stood on Monday

The previous week ended with the dollar back above 100 after US payrolls of 172,000 against 85,000 expected and with US–Iran talks stalled, as covered in last week's recap. USD/JPY was above 160, in the zone where Japan had intervened in April. The ECB was widely expected to raise rates on Thursday.

Early on Monday 8 June, reports that Iran would end attacks on Israel improved sentiment, according to RTTNews. The Dollar Index touched 100.21 before easing. EUR/USD dipped to 1.1500, its weekly low, and GBP/USD to 1.3305, and both then recovered.

Day by day

Monday 8 June and Tuesday 9 June: waiting for the data

With US CPI and two central bank decisions due later in the week, the first two days were mostly positioning. The Australian dollar made its weekly high of 0.7079 on Monday, according to RTTNews. The Dollar Index traded either side of 100, having touched 100.21 early on Monday before easing to around 99.89, according to RTTNews.

Wednesday 10 June: CPI on consensus, Bank of Canada on hold

US May CPI rose 4.2% year on year, up from 3.8% and in line with expectations, according to RTTNews. Headline prices rose 0.5% on the month, also in line. Core inflation rose to 2.9% year on year, as expected, but the monthly core increase was 0.2% against 0.3% expected, down from 0.4% in April.

At first, the market focused on the headline. FXStreet reported that the Dollar Index firmed above 100.00, EUR/USD slipped toward 1.1540, GBP/USD toward 1.3370 and AUD/USD toward 0.7000, while USD/JPY climbed above 160.50 on rising Treasury yields. Gold traded near $4,070. RTTNews also reported an exchange of attacks between the US and Iran that day, which raised doubts about an early peace deal, and WTI rose 3% to $90.80.

The Bank of Canada held its policy rate at 2.25% for a fifth consecutive meeting, according to the Canadian Press. Governor Tiff Macklem said first-quarter real GDP had fallen at a 0.1% annualised rate and that inflation had risen to 2.8% in April, largely because of the energy shock. He described a dilemma: raising rates could slow the economy further, while cutting could let higher inflation persist. Holding, he said, "balances those risks".

Thursday 11 June: a hike, a threat and a reversal

Thursday brought the ECB decision, US producer prices and the week's biggest geopolitical swing.

The ECB hiked. The Governing Council raised its three key rates by 25 basis points: the deposit facility rate to 2.25%, the main refinancing rate to 2.40% and the marginal lending rate to 2.65%, effective 17 June, according to the Banco de España. Staff projections put headline inflation at 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028, according to FXStreet. Core inflation was projected at 2.5% in both 2026 and 2027, and GDP growth at 0.8% in 2026 and 1.2% in 2027, according to BNP Paribas via FXStreet.

President Christine Lagarde said the decision was unanimous, robust across all scenarios and unconditional, and that future decisions would be taken meeting by meeting with no pre-set path. FXStreet reported that, according to sources familiar with the matter, policymakers were leaning toward a pause in July if energy prices stayed near current levels, while a September hike remained possible. The euro initially fell after the decision, then rebounded.

That reaction is typical of a "dovish hike": the central bank delivers the expected move but signals that it may not be the start of a long series. Because the hike itself was priced, the market traded the guidance about what comes next. Our guide on central banks and interest rates explains how forward guidance can matter more than the decision.

US producer prices stayed hot. Producer inflation rose to 6.5% year on year in May, its highest since 2022, according to FXStreet. Core PPI rose 0.4% on the month and held at 4.9% year on year. RTTNews reported the monthly headline PPI at 1.1% against 0.7% expected, driven mainly by gasoline.

Iran: from threat to talks in hours. President Trump posted that the US would hit Iran "very hard tonight" and said he would prefer taking Kharg Island, according to FXStreet. The Dollar Index jumped above 100.30, its highest since late March. Later, Trump called off the strikes, saying the two sides were close to an agreement. Iran said a deal was not yet finalised. According to Iran's Mehr news agency, as reported by FXStreet, a memorandum of understanding would include US commitments to lift sanctions, withdraw forces from around Iran and lift the blockade, along with reopening the Strait of Hormuz, cancelling oil sanctions and releasing frozen Iranian funds.

The Dollar Index reversed and ended the day down about 0.4%. Gold rose 3.4% and recovered above $4,200. WTI traded near $87. EUR/USD made its weekly high of 1.1591, GBP/USD its high of 1.3435, and AUD/USD recovered above 0.7050 after dropping to 0.6979, near a two-month low. USD/JPY traded between 159.64 and 160.63 in the same session.

Friday 12 June: UK GDP dips, cautious optimism

The Office for National Statistics reported that UK GDP fell 0.1% in April after 0.3% growth in March. Services output fell 0.2%, production was flat and construction rose 0.1%. Over the three months to April, GDP was still up 0.7%. FXStreet described risk sentiment as cautiously optimistic on the prospect of a US–Iran truce, with US stock index futures marginally higher.

Pair by pair

EUR/USD: 1.1521 to 1.1569 (+0.42%)

The euro held the 1.1500 round number on Monday and rose on the week as the ECB delivered and the dollar eased late on Thursday. Notice that the ECB hike on its own produced an initial dip, not a rally. What lifted the euro was the combination of a softer dollar after the core CPI miss and the peace headlines, not the hike itself. Our guide on support and resistance discusses why round numbers like 1.1500 often act as turning points.

GBP/USD: 1.3341 to 1.3407 (+0.49%)

Sterling gained despite a contraction in April GDP. The weak month was largely expected (RTTNews said the 0.1% fall matched forecasts), and the three-month growth rate remained solid. A data release that matches consensus rarely moves a currency much, even if the headline sounds negative.

USD/JPY: 160.32 to 160.23 (−0.06%)

Almost unchanged on the week, but the entire 99-pip range came on Thursday. The pair spent most of the week above 160, the zone where Japan intervened at the end of April. RTTNews said markets expected the Bank of Japan to raise rates at its meeting the following Tuesday. Expectations of a BoJ hike and a softer US core CPI both work against further yen weakness, while the wide rate gap still favours the dollar. The result was a stalemate.

AUD/USD: 0.7047 to 0.7046 (−0.01%)

Flat on the week, but with a dip below 0.70 on Thursday. FXStreet noted that NAB saw the RBA's next move as likely to be a cut, in contrast with the hikes of earlier in the year. RTTNews reported that markets expected the RBA to hold at its meeting the following Tuesday.

XAU/USD: 4,330.13 to 4,215.32 (−2.65%)

Gold fell to about $4,024 on Wednesday, according to StatMuse daily data, then jumped 3.4% on Thursday as the dollar reversed. It still closed the week lower. Over five weeks, gold has fallen from about $4,715 to about $4,215, a reminder that rising rate expectations have weighed on it more than the war has supported it.

Why "in line" can still move markets

The US CPI release is a good teaching example. Headline and core annual rates were exactly as forecast. A quick reading would say "no surprise". But the monthly core rate came in at 0.2% against 0.3% expected. Monthly core is the number markets use to judge the current pace of underlying inflation, and RTTNews said the softer reading weighed on the dollar and, together with lower oil, eased fears of Fed hikes.

The lesson is that a release contains several numbers, and the one that matters can change depending on what the market is worried about. In this cycle the concern is whether energy is spreading into everything else, so core is the focus. Our guide on how to use an economic calendar shows how to read the consensus for each component before the release.

One day, whole week: risk lessons from Thursday

When an entire weekly range happens in one session, two risks dominate.

First, gaps and fast markets. A threat of military action, followed hours later by its withdrawal, is not something you can put on a calendar. Price can move through stop levels without trading at them. Our guide to slippage explains why stops can fill at worse prices in fast markets.

Second, the temptation to chase. Traders who bought the dollar on the threat, then sold it on the reversal, may have been stopped out twice in one day. Having a plan before the session, and a maximum number of trades or a daily loss limit, protects against that. Our guide on trading psychology covers revenge trading and overtrading.

Worked example (illustrative): an account of €10,000 risks 1% per trade, or €100. A trader buys USD/JPY at 160.50 with a stop 50 pips lower, at 160.00. The correct size is €100 divided by 50 pips, or €2 per pip. One standard lot of USD/JPY moves ¥1,000 per pip, about €5.40 with EUR/JPY near 185 (1.1569 × 160.23), so the trader needs about 0.37 lots. If the market gaps from 160.50 to 159.70 on a headline, the stop fills 30 pips worse than planned and the loss is about €160 instead of €100. That is painful but survivable. With ten times the size, it would be a €1,600 loss, 16% of the account in one headline. Our position sizing guide covers the calculation, and remember that most retail CFD accounts lose money; leverage magnifies losses on exactly these days.

How the week fits the bigger picture

Five weeks ago, hot US inflation and an oil price above $100 pushed the market toward pricing Fed hikes, and the dollar surged. Since then the story has alternated with every Iran headline. This week tilted the balance slightly the other way: US core inflation showed signs of cooling, the ECB started to raise rates, and a deal looked closer again. None of that was settled by Friday. The Iran agreement was not final, the Fed had yet to hold its first meeting under Kevin Warsh, and the Bank of Japan and Bank of England were both due to decide the following week.

What this week teaches

• An expected hike can weaken a currency. The euro dipped on the ECB decision because the guidance hinted at a pause.
• Look past the headline rate. US CPI was in line on the annual numbers, but the monthly core miss changed the tone.
• One session can contain the whole week. Plan for headline days with smaller size and clear rules.
• Central banks are diverging. The ECB hiked, the Bank of Canada held, markets expected the BoJ to hike and the RBA to hold. Divergence is what drives currency pairs over months.
• Gold follows real rates more than headlines. Even with a war, gold fell most weeks when rate expectations rose.

Scheduled next week (15–19 June)

These are scheduled events only, listed for planning; they are not forecasts of direction.

• Tuesday 16 June: Bank of Japan policy decision; Reserve Bank of Australia policy decision.
• Wednesday 17 June: UK May CPI from the ONS; the ECB's rate increase takes effect; Federal Reserve decision with updated projections, the first FOMC meeting chaired by Kevin Warsh.
• Thursday 18 June: Bank of England policy decision; UK by-election in Makerfield, with Andy Burnham standing for Labour and results due in the early hours of Friday.
• Friday 19 June: US markets closed for the Juneteenth holiday, so liquidity will be thinner.
• All week: Whether the reported US–Iran agreement is finalised, and any steps to reopen the Strait of Hormuz.

Sources

• RTTNews: Peace deal hopes, soft core CPI dent dollar (15 June 2026)
• RTTNews: Dollar surged last week amidst Middle East uncertainty, strong US payrolls (8 June 2026)
• RTTNews: US dollar ends roughly flat amid re-escalation in the Middle East, US CPI (10 June 2026)
• FXStreet: Forex Today, US Dollar rebounds after inflation data (10 June 2026)
• FXStreet: Forex Today, US Dollar retreats from ten-week high (11 June 2026)
• FXStreet: Forex Today, renewed hopes of US–Iran peace deal (12 June 2026)
• FXStreet / BNP Paribas: ECB, an adjustment but not necessarily the start of a tightening cycle
• Banco de España: ECB raises rates by 25 basis points in June
• BOE Report / Canadian Press: Bank of Canada holds key rate steady in fifth consecutive decision (10 June 2026)
• ONS: GDP monthly estimate, UK, April 2026
• ONS: Consumer price inflation, UK, May 2026 (release date)
• Newsquawk: Preview of the Makerfield by-election on 18 June 2026
• StatMuse: daily gold prices, June 2026
• StatMuse: gold price, 1–5 June 2026