US Approves 60 Day Iran Oil Export; Dollar Holds Firm Ahead of PCE

Market Wrap-up: Markets Await PCE as US Approves 60-Day Iran Oil Export LicenseDevelopments in the Middle East remained the primary driver of market sentiment during the latest session, while traders positioned ahead of Thursday’s PCE inflation report.

Specifically, the US Treasury issued a 60 day license allowing Iran’s oil production, transportation, and sales activities to continue. The license also permits Iranian crude imports into the United States, with transactions allowed to be settled in US dollars.

The move followed comments from US Vice President JD Vance, who stated that Washington and Tehran had made "significant progress" during peace negotiations held in Switzerland over the weekend.

These developments came just one day after US President Donald Trump warned that military operations against Iran could resume, raising concerns over the durability of the temporary peace agreement reached between the two countries last week.

Trump issued the warning on June 21, coinciding with Vance’s meeting with Iranian officials in Switzerland. The talks took place as Tehran reiterated its intention to keep the Strait of Hormuz closed, a strategically important global oil shipping route.

During the latest session, international benchmark Brent crude declined 3.3% to settle at $77.90 per barrel, while US WTI crude fell 2.3% to $74.82 per barrel.

Despite the decline in oil prices, concerns over inflation remained elevated. US equities closed lower as technology stocks came under heavy selling pressure amid rising risk aversion.

Large cap technology names were the primary drag on the broader market. Alphabet fell 5% following concerns over an AI talent exodus. Amazon and Meta Platforms declined 4.8% and 2.3%, respectively, while Microsoft lost 3%.

SpaceX was also among the worst performing stocks, plunging 16% and marking its third consecutive daily decline.

Meanwhile, the DXY remained firmly above the 101.00 level as markets continued to anticipate a stronger PCE reading compared with April, reinforcing expectations that the Federal Reserve may need to keep interest rates higher for longer.

Looking ahead, traders will closely monitor Flash Manufacturing and Services PMI data from the UK, France, Germany, and most importantly the United States. The ADP Weekly Employment Change report will also be closely watched.

XAU/USD: Gold Rises as Lower Oil Prices Ease Inflation Concerns

Key takeaway:

Gold prices gained nearly 1% on June 22 as progress in US-Iran peace negotiations weighed on oil prices and helped ease inflation concerns.

According to CME Group’s FedWatch Tool, markets are currently pricing an 89% probability of a Federal Reserve rate hike by December, up sharply from 61% before last week's policy meeting.

Bank of America stated that its previously projected gold target of $6,000 per ounce is unlikely to materialize under current conditions, noting that markets would need to completely eliminate expectations of further rate hikes before such a level could be achieved.

Technical Outlook:

Daily Bias: Bullish

Support: 4,135

Resistance: 4,220

WTI: Oil Slides After US Authorizes Iranian Oil Exports

Key takeaway:

Oil prices declined sharply at the start of the week after the US Treasury authorized Iranian crude production and export activities through the end of August.

The US Treasury issued a 60-day license allowing Iran’s oil production, transportation, and sales activities to continue. The license also permits Iranian crude imports into the United States, with transactions allowed to be settled in US dollars.

The decision followed comments from US Vice President JD Vance, who stated that Washington and Tehran had achieved "significant progress" in peace negotiations held in Switzerland over the weekend.

Technical Outlook:

Daily Bias: Neutral

Support: 71.56

Resistance: 79.19

DXY: US Dollar Holds Near Highs Ahead of PCE Inflation Report

Key takeaway:

The US dollar traded near recent highs as investors awaited the upcoming PCE inflation report while continuing to monitor developments in the Middle East.

The primary driver behind the dollar’s strength remains the Federal Reserve’s increasingly hawkish stance.

The latest Summary of Economic Projections showed that 9 out of 19 policymakers now expect one rate hike this year.

This marks a significant shift from the March projections, when no officials supported further monetary policy tightening.

Technical Outlook:

Daily Bias: Bearish

Support: 100.54

Resistance: 101.12

EUR/USD: Euro Stays Rangebound as Traders Monitor US-Iran Talks

Key takeaway:

EUR/USD traded within a narrow range as investors monitored diplomatic developments surrounding the Washington-Tehran negotiations in Switzerland.

Meanwhile, the euro faced a relatively dovish backdrop following recent remarks from European Central Bank President Christine Lagarde.

Lagarde acknowledged that the current inflation shock is "too large to ignore," but emphasized that there is no evidence of unanchored inflation expectations or dangerous second-round effects that could threaten the ECB’s policy objectives.

Technical Outlook:

Daily Bias: Bullish

Support: 1.14177

Resistance: 1.14879

USD/JPY: Japanese Yen Steadies Near 161.50 as Intervention Risks Persist

Key takeaway:

The Japanese yen traded broadly flat around 161.50 as traders remained highly alert to the risk of official intervention.

USD/JPY continues to be supported by the yield advantage of the US dollar. However, as the pair approaches the 162.00 level, the risk of verbal or direct intervention from Tokyo increases substantially. This leaves the pair vulnerable to sharp pullbacks even as the broader trend remains tilted to the upside.

Japanese Finance Minister Satsuki Katayama stated on Monday that authorities stand ready to respond appropriately to currency market fluctuations whenever necessary.

Technical Outlook:

Daily Bias: Bearish

Support: 160.98

Resistance: 161.80

Overall, markets are being pulled in two directions: improving oil supply expectations following progress in US-Iran diplomacy and the prospect of tighter Federal Reserve policy.

Oil prices fell sharply after Washington authorized Iranian oil exports for the next 60 days, yet the US dollar remained firm as investors continued to price in a stronger PCE inflation reading and a higher for longer interest rate outlook.

That combination weighed on US equities, particularly the technology sector, while gold continued to find support from defensive positioning and lingering geopolitical uncertainty. In currency markets, the US dollar maintained its advantage over both the euro and the Japanese yen, supported by policy divergence and yield differentials.

Attention now turns to upcoming PMI releases and, more importantly, the PCE inflation report, which could shape the next move in the dollar, Treasury yields, and Federal Reserve rate expectations.

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