Forex Today: Markets stabilize ahead of key central bank meetings

Here is what you need to know on Tuesday, June 17:

The trading action in financial markets turns subdued on Tuesday as investors remain optimistic about a de-escalation of the Israel-Iran conflict. Economic sentiment data from the Eurozone and Germany will be featured in the European economic calendar. Later in the day, May Retail Sales and Industrial Production data from the US will be watched closely by market participants.

The Wall Street Journal reported on Monday that Iran was looking to end hostilities with Israel and resume the talks over its nuclear program. Later in the day, G7 leaders attended a summit in Canada and issued a joint statement calling for a "de-escalation" on Iran on Monday. The G7 statement said that members have been consistently clear that Iran can never have a nuclear weapon. Meanwhile, US President Donald Trump left the summit early and travelled back to Washington. Although there was speculation that Trump was going back to work on a cease fire deal between Israel and Iran, he clarified that this was not the case. Early Tuesday, a senior Iranian army commander reportedly noted that the attacks against Israel will intensify later in the day.

The US Dollar (USD) Index stays quiet and holds slightly above 98.00 after ending the first day of the week virtually unchanged. In the meantime, US stock index futures trade modestly lower. The Federal Reserve will announce monetary policy decisions on Wednesday.

The Bank of Japan (BoJ) announced on Tuesday that it left the short-term interest rate target steady in the range of 0.4%- 0.5%, as widely anticipated. In the policy statement, the BoJ noted that the economic growth is likely to moderate as trade policies lead to a slowdown in overseas economy and a decline in corporate profits. BoJ Governor Kazuo Ueda repeated in the post-meeting press conference that they will keep raising interest rates if prices and the economy moves in line with their outlook. Meanwhile, Bloomberg reported that US President Donald Trump and Japanese Prime Minister Shigeru Ishiba failed to reach a trade agreement on the sidelines of the G7 summit. Despite these developments, USD/JPY fluctuates in a tight channel at around 144.50 early Tuesday.

Crude oil prices declined sharply and the barrel of West Texas Intermediate (WTI) lost about 4% on Monday. Early Tuesday, the WTI is up nearly 2% on the day, trading slightly above $71.

Gold lost more than 1% on Monday and snapped a three-day winning streak. In the European session, XAU/USD remains flat below $3,400.

GBP/USD extends its sideways grind above 1.3550 after closing little changed on Monday. The UK's Office for National Statistics (ONS) will release May inflation data on Wednesday. On Thursday, the Bank of England (BoE) will announce monetary policy decisions.

EUR/USD ended the first trading day of the week marginally higher. The pair stays in a consolidation phase early Tuesday and moves up and down in a narrow band above 1.1550.