Markets Await PCE Inflation Data; Dollar Holds Near Highs While Risk Currencies Struggle

Markets entered a wait-and-see mode ahead of the Federal Reserve's most closely watched inflation gauge — the Personal Consumption Expenditures (PCE) price index — with FX market intraday volatility narrowing. The dollar index oscillated in a tight 105.80–106.20 range while risk currencies such as the Australian and New Zealand dollars came under mild pressure. Markets expect April core PCE at 2.8% year-on-year; a beat would reinforce the "higher for longer" rate narrative and push the dollar higher, while a miss could trigger a brief dollar pullback. Options market data shows implied volatility for dollar-centric pairs edging higher around the data release, reflecting traders actively reducing directional exposure ahead of the number.