Fed Chair Powell Testifies, U.S. New Home Sales, Crude Oil Inventories

The EUR/USD pair rose on Tuesday, extending its winning streak to a fourth consecutive session and trading near its yearly highs. The move was largely driven by a weaker US Dollar, as risk sentiment improved following news of a ceasefire agreement between Israel and Iran, easing geopolitical tensions in the Middle East.

According to the New York Times, recent U.S. intelligence assessments indicate that Israeli strikes on Iran did not damage nuclear facilities, countering earlier reports from CNN. This development further calmed market nerves, boosting equities and pressuring the Dollar.

Despite the upbeat tone, Federal Reserve Chair Jerome Powell maintained a cautious stance during testimony before the House of Representatives. He described current monetary policy as "modestly restrictive" and reiterated that while inflation remains a concern, the Fed is open to rate cuts should price pressures continue to ease. Other Fed officials struck a similar tone, suggesting a wait-and-see approach is appropriate given current economic conditions.

Meanwhile, the Eurozone's economic outlook brightened, as Germany’s IFO Business Climate Index rose for a sixth consecutive month, climbing to 88.4 in June from 87.5 in May.

European Central Bank officials maintained a balanced tone. ECB Governing Council member François Villeroy de Galhau suggested that rate cuts remain a possibility if inflation expectations stay subdued. Slovak central bank governor Peter Kazimir, previously seen as a hawk, shifted to a more neutral stance, saying the ECB is likely near its neutral policy rate. Despite the improving data, the Euro’s reaction was muted, as traders looked ahead to the ECB’s next moves.  In the U.S., fresh data from the Conference Board showed a sharper-than-expected decline in consumer confidence, with the June reading falling to 93.0 from 98.0 in May.

Gold prices fell on Tuesday as Federal Reserve Chair Jerome Powell pushed back against imminent rate cuts, citing continued uncertainty around inflation—particularly the impact of tariffs. The move came amid a broader retreat in the US Dollar, as market sentiment shifted away from safe-haven assets.

Despite the hawkish tone from Powell during his testimony before the US House of Representatives, bullion initially recovered some ground. He stated that monetary policy remains “modestly restrictive”, and reiterated that rate cuts could be considered if inflation remains contained. However, the broader risk-on mood ultimately weighed on gold.

Adding to the pressure, a ceasefire between Israel and Iran reduced geopolitical tensions in the Middle East, further dampening demand for safe-haven assets like gold.

Elsewhere, China’s central bank took steps to support its economy by easing monetary policy and injecting liquidity into the financial system—another factor contributing to the improved global sentiment and lower demand for gold.

Looking ahead, markets will closely monitor additional commentary from Federal Reserve officials, with Chair Powell set to speak again on Wednesday before the US Senate. Key upcoming data releases include Durable Goods Orders, GDP revisions, and Initial Jobless Claims, all of which could further shape expectations around Fed policy and market direction.

Oil prices fell on Tuesday, hitting a two-week low, as markets reacted to the announcement of a ceasefire between Israel and Iran, easing fears of major supply disruptions in the Middle East.

The steep decline follows Monday’s losses for both benchmarks, erasing the geopolitical risk premium built up after Israel’s June 13 strikes on Iranian military and nuclear facilities.

However, the ceasefire remains fragile. U.S. President Donald Trump accused both sides of violating the truce just hours after its announcement, raising concerns over the agreement’s durability.

Oil prices also faced pressure from broader market dynamics. China, the world’s largest oil importer, was reportedly granted continued access to Iranian oil, which may soften the impact of Western sanctions on global supply.

On the supply side, Kazakhstan’s state energy firm KazMunayGaz raised its 2025 output forecast at the Chevron-led Tengiz oilfield to 35.7 million metric tons, up from a prior estimate of 34.8 million.

The steady increase in output from OPEC+ members and allies, including Kazakhstan and Guyana, has added to bearish sentiment, even as markets await U.S. inventory data.

The U.S. Energy Information Administration (EIA) is set to release weekly crude inventory reports. Analysts expect a drawdown of 800,000 barrels for the week ending June 20. If confirmed, this would mark the fifth consecutive week of inventory declines—the longest such streak since January.

U.S. stocks closed sharply higher on Tuesday, buoyed by easing geopolitical tensions following an Iran-Israel ceasefire and Federal Reserve Chair Jerome Powell’s remarks that kept the possibility of future rate cuts alive.

Markets reacted positively to President Donald Trump's announcement that a ceasefire between Iran and Israel was now "in effect," helping unwind the geopolitical risk premium that had weighed on investor sentiment and driven oil prices higher.

Despite the fragile situation, the market welcomed the initial signs of de-escalation, sending oil prices plunging and easing concerns over supply-driven inflation.

Investor sentiment was further lifted by Fed Chair Jerome Powell’s testimony before Congress, in which he emphasized that “many paths are possible” for monetary policy.

Consumer confidence in the United States declined more than expected in June, according to data released Tuesday, as Americans grew increasingly uneasy about the economic outlook despite continued strength in the labor market and historically low unemployment.

The report revealed a broad-based deterioration in sentiment, with consumers expressing less optimism about both current conditions and future expectations. Analysts pointed to growing worries over inflation and the potential economic impact of new tariffs as key factors behind the decline.