
FX Markets Reflect Policy Divergence as ECB and BoJ Eye June Hikes
The US dollar posted modest gains in late May 2026, with the DXY index rising 0.9 percent amid resilient US growth, while EUR/USD traded near 1.16 and USD/JPY near 160. Central banks in the euro area and Japan are positioned for potential 25 basis point rate increases in June, highlighting policy divergence from the Federal Reserve. Longer-term forecasts point to eventual USD softening as capital continues to favor US assets tied to technology investment.