The euro has come under a little pressure as the week gets going, primarily by persistent geopolitical tensions in the Middle East, including the ongoing disruption in the Strait of Hormuz and uncertain ceasefire talks, which have kept oil prices elevated and raised upside risks to eurozone inflation while weighing on regional growth prospects. Stronger-than-expected US economic data, particularly the resilient March labor market report, has reinforced expectations of higher-for-longer Federal Reserve rates amid rising US inflation pressures, widening the policy divergence with the ECB. The ECB’s latest projections show upward revisions to 2026 inflation due to energy costs but a downward revision to growth, with the central bank maintaining rates unchanged while adopting a cautious stance that limits aggressive easing hopes. These fundamentals, combined with broader safe-haven demand for the dollar, have driven the euro’s softer tone.

The yen has softened since the Friday close, pressured by heightened geopolitical tensions in the Middle East and ongoing risks around the Strait of Hormuz, which have lifted energy prices and worsened Japan’s terms of trade as a major importer. At the same time, persistent policy divergence with the Federal Reserve—supported by resilient US data and firmer rate expectations—continues to underpin the dollar, while the Bank of Japan maintains a cautious normalization path amid fragile domestic growth. Together, these dynamics, alongside the dollar’s dominance in attracting safe-haven flows in a higher-yield environment, have reinforced the yen’s weaker tone.

The Australian dollar has softened since the Friday close, weighed by ongoing geopolitical tensions in the Middle East and risks around the Strait of Hormuz, which have kept oil prices elevated and dampened global risk sentiment, supporting safe-haven demand for the US dollar. As a high-beta currency, the AUD has been particularly sensitive to this shift, with broader risk aversion offsetting any support from firm commodity prices. At the same time, stronger-than-expected US data, particularly resilient labor market figures, have reinforced higher-for-longer Federal Reserve expectations, widening policy divergence with the Reserve Bank of Australia. China-related sentiment remains an additional headwind, with ongoing uncertainty around the growth outlook limiting upside for Australia’s export-driven economy and further weighing on the currency.

The euro has been supported by the ongoing fragile US-Iran ceasefire and the associated reopening of the Strait of Hormuz, which has eased immediate oil supply disruption fears and driven a sharp pullback in crude prices. This has reduced stagflation risks for the eurozone by limiting imported inflation pressures while preserving some growth resilience, leading to a relief move in risk assets and a dialing back of expectations for aggressive near-term ECB rate hikes. With no meaningful economic data releases or central bank commentary emerging to alter the narrative, the single currency has also benefited from softer safe-haven flows into the dollar and modestly improved European sentiment, though lingering doubts over the ceasefire’s durability continue to limit upside conviction.

The Japanese yen has strengthened modestly amid the fragile US-Iran ceasefire and reopening of the Strait of Hormuz, which has triggered a sharp decline in oil prices and eased immediate energy supply disruption fears for Japan as a major net importer. Lower crude costs have reduced imported inflation pressures and supported risk sentiment, diminishing safe-haven demand for the dollar while highlighting the yen’s sensitivity to oil and geopolitical developments. With no major economic data releases and limited fresh central bank commentary, growing market expectations for a potential Bank of Japan rate hike as early as April—to address persistent inflation—have provided additional underlying support, though lingering doubts over the ceasefire’s durability continue to cap the yen’s gains.

The Australian dollar has been supported by the fragile US-Iran ceasefire and reopening of the Strait of Hormuz, which has triggered a sharp decline in oil prices and eased immediate energy supply disruption fears. As a major commodity exporter, Australia has benefited from improved global risk sentiment and reduced stagflation risks, weighing on safe-haven flows into the dollar and supporting carry trade appetite. However, lower crude costs have also tempered imported inflation pressures, leading markets to scale back expectations for aggressive near-term RBA rate hikes amid a more balanced growth and inflation outlook, which has helped cap the extent of the Aussie’s upside.

The euro has been primarily supported by diplomatic breakthroughs in the Middle East, including a US-Iran agreement on a two-week ceasefire that includes potential reopening of the Strait of Hormuz, which has eased safe-haven demand for the US dollar and lowered fears of prolonged energy price shocks weighing on eurozone growth. This geopolitical de-escalation has been reinforced by resilient eurozone economic signals, such as moderate inflation around 2.5% driven by prior energy pressures, helping sustain the European Central Bank’s relatively cautious and data-dependent stance compared to mixed US indicators and ongoing Federal Reserve rate path uncertainty. Overall, reduced geopolitical risk premiums have shifted flows in favor of the euro on fundamental grounds.

The yen has been primarily supported by diplomatic breakthroughs in the Middle East, including a US-Iran agreement on a two-week ceasefire with potential reopening of the Strait of Hormuz, which has eased geopolitical tensions, reduced safe-haven flows into the dollar, and lowered concerns over prolonged high energy prices that heavily burden Japan’s import-dependent economy. This de-escalation has offset some pressure from elevated oil costs and helped temper fears of imported inflation, while expectations of a near-term Bank of Japan rate hike and official warnings against excessive yen weakness have provided additional fundamental backing. Overall, the reduced risk premium from geopolitics has shifted flows in favor of the yen against the backdrop of persistent US dollar strength and mixed domestic economic signals.

The Australian dollar has been primarily supported by diplomatic breakthroughs in the Middle East, including a US-Iran agreement on a two-week ceasefire with potential reopening of the Strait of Hormuz, which has eased geopolitical tensions, boosted global risk sentiment, and lowered oil prices sharply. This development has reduced safe-haven demand for the US dollar while alleviating imported inflation pressures for Australia and supporting its commodity export outlook through improved risk appetite. The relief has complemented the Reserve Bank of Australia’s hawkish stance, with recent rate hikes to 4.10% and market expectations for potential further tightening in May amid still-elevated domestic inflation, helping sustain the AUD against mixed US economic signals and Federal Reserve policy uncertainty. Overall, the geopolitical de-escalation has shifted fundamental flows in favor of the risk-sensitive Australian dollar.

The euro has been supported over the past 24 hours primarily by a softer U.S. dollar backdrop, with markets reassessing Fed policy expectations after mixed U.S. data and cautious commentary around inflation risks. At the same time, improving risk sentiment—driven by easing geopolitical concerns—has reduced demand for the dollar as a safe haven, indirectly benefiting the single currency. On the European side, relatively stable data and a lack of dovish surprises from the European Central Bank have helped anchor rate expectations, while resilience in recent regional indicators continues to support the view that policy will remain restrictive for longer. Overall, the move has been less about euro-specific catalysts and more a function of shifting rate differentials and broader macro positioning.

The yen has come under pressure amid a combination of external and policy-driven factors, with elevated oil prices on the back of Middle East tensions weighing on Japan’s terms of trade given its heavy reliance on energy imports. At the same time, persistent divergence in rate expectations continues to act as a headwind, with the Bank of Japan maintaining a cautious normalization path relative to other central banks, despite firmer domestic data and ongoing inflation concerns. While Japanese officials have reiterated warnings around excessive FX moves, markets remain unconvinced about the likelihood of imminent intervention, leaving the currency sensitive to broader yield differentials and shifts in global risk sentiment.

The Australian dollar has been supported by an improvement in global risk sentiment and a softer U.S. dollar backdrop, with easing geopolitical tensions helping to lift demand for higher-beta currencies. On the domestic side, relatively resilient data and stable expectations around the Reserve Bank of Australia have reinforced the view that policy will remain on hold for now, without a shift toward aggressive easing. At the same time, stronger signals out of China—Australia’s key trading partner—have provided an additional tailwind, particularly through the commodities channel, leaving the currency primarily driven by external growth expectations and broader macro positioning.

The euro has rebounded, supported by a softer dollar and tentative signs of geopolitical de-escalation. The latest data highlighted a mixed macro backdrop, with Eurozone inflation picking up to 2.5% YoY driven by energy costs, while core inflation eased and growth indicators—such as German retail sales and French consumption—remained weak, reinforcing a stagflationary tone. European Central Bank officials have acknowledged this balance, signaling caution as policymakers weigh persistent inflation risks against softening demand. For now, the euro’s outlook remains finely balanced, with upside limited by weak activity even as inflation keeps the ECB from turning decisively dovish, while upcoming labor market and PMI data will be key in shaping expectations.

Japan’s latest data points to resilient but cautious economic conditions, with the Bank of Japan Q1 Tankan survey showing improved business sentiment across both manufacturing and services, even as firms grow more cautious on the outlook and scale back capital expenditure plans. Meanwhile, the final March manufacturing PMI was revised slightly higher and remained in expansion territory, though momentum has softened from February, with easing output and demand. Rising input costs—driven by energy prices, a weaker yen, and labor shortages—are also becoming more pronounced, with companies increasingly passing these pressures on to consumers.

Australia’s latest data highlights a sharp divergence in the economy, with a strong rebound in housing—driven by a surge in apartment approvals—contrasting with a steep downturn in manufacturing. While dwelling approvals jumped to near five-year highs and housing activity shows resilience, the manufacturing sector has slipped back into contraction, with sentiment, employment, and capacity utilization all deteriorating sharply amid rising energy costs and supply chain disruptions. In short, a housing-led recovery is being overshadowed by a renewed industrial slowdown, as geopolitical energy shocks weigh heavily on the sector.

The euro is trying to hold up after five straight days of declines. Recent data showed a renewed rise in eurozone inflation, led by Germany, pointing to stronger price pressures, while growth indicators weakened, with softer confidence and slower retail sales suggesting cooling demand. This mix highlights a stagflationary backdrop, a risk also flagged by ECB Stournaras, who warned that escalating Middle East tensions could trigger an energy shock and further complicate the outlook. Overall, while higher inflation may make the ECB more cautious on rate cuts, weak growth, rising energy costs, and a stronger dollar continue to weigh on the euro.

The Yen has pared earlier gains, with USDJPY still hovering near the 160 level—a zone closely watched for potential intervention by Japanese authorities. Recent Tokyo inflation data showed easing price pressures, with both headline and core CPI remaining below the BoJ’s 2% target, while softer retail sales and industrial production point to weakening domestic demand. Labor market conditions remain relatively stable, but overall, the data suggest a mixed economic backdrop that reduces pressure on the Bank of Japan to tighten policy more aggressively.

The Australian dollar remains under pressure near a two-month low, weighed down by heightened geopolitical tensions and a stronger US dollar. Recent RBA minutes highlight a central bank still focused on fighting inflation, delivering another rate hike and signaling more could follow as price pressures—partly driven by energy risks—and tight labor markets persist, even as consumer demand shows signs of strain. Meanwhile, credit data points to resilience, with lending activity stabilizing and picking up modestly despite higher borrowing costs.

The euro is edging slightly higher, but remains down nearly 2% this year as it continues to underperform against a stronger dollar, driven by escalating Middle East tensions and a lack of near-term diplomatic progress. The worsening geopolitical backdrop is keeping energy prices elevated, reinforcing inflation risks. ECB’s Villeroy stressed the bank’s commitment to anchoring inflation expectations at 2%, warning against premature rate cut bets and leaving the door open to further tightening if needed. Still, the euro remains pressured by a challenging mix of high energy costs, weak growth, and ongoing dollar strength.

USDJPY has pulled back after briefly pushing above 160. The yen remains weak overall despite increasingly strong warnings from Japanese officials, with Vice Finance Minister Mimura signaling that intervention could be approaching if speculative activity in FX and commodities continues, reinforcing earlier hints from Finance Minister Katayama. At the same time, the BoJ sees the economy recovering moderately with support from policy measures, but flags risks from geopolitical tensions and higher energy prices. Inflation is expected to gradually rise toward target, with the central bank leaning toward cautious rate hikes while authorities take steps to contain price pressures.

The Australian dollar is hovering near a two-month low and remains under pressure as heightened geopolitical tensions boost demand for the US dollar and weigh on risk-sensitive currencies. At home, the government has introduced temporary fuel cost relief measures and is considering further steps to ease supply chain stress. Meanwhile, expectations for additional Reserve Bank of Australia rate hikes remain in place, with upcoming meeting minutes likely to highlight internal debate over timing, even as policymakers aim to keep inflation expectations anchored. Despite this tightening outlook, the AUD continues to lag amid rising energy prices and broader risk aversion tied to the Middle East conflict.

The euro is heading toward a modest weekly decline, drifting further below its 200-day average as persistent demand for the US dollar—amid ongoing Middle East tensions—continues to weigh. ECB officials, including Christine Lagarde, have struck a more cautious tone, warning that the conflict poses a meaningful global economic shock through energy disruptions and cautioning against overly optimistic market expectations. Policymakers such as Villeroy have also pushed back on early rate cut bets, highlighting inflation risks from higher energy costs and signaling that further tightening remains possible if needed. Despite this more vigilant stance, elevated oil prices and a strong dollar continue to pressure the euro by weighing on growth and real incomes.

The yen is modestly weaker on the day and remains softer on the week, continuing to underperform even as the dollar edges lower. Japan’s Finance Minister Katayama intensified verbal intervention, warning of “bold steps” as the currency hovers near key weakness levels and noting authorities have even explored intervening in oil markets to address energy-driven pressure on the yen. Still, markets remain focused on mixed signals around US-Iran diplomacy, where expectations of a prolonged conflict are underpinning safe-haven demand for the dollar and weighing on the yen.

The Australian dollar is modestly stronger, recovering from a two-month low earlier in the day, though it remains on track for a roughly 1.6% weekly decline amid sustained demand for the US dollar. Reserve Bank of Australia Governor Kent noted that rising oil prices are complicating policy by pushing inflation higher while weighing on growth, with particular concern around second-round effects on inflation expectations. More broadly, the AUD continues to lag G10 peers as ongoing Middle East tensions drive oil prices higher, reinforcing safe-haven demand for the dollar and expectations for tighter US policy into 2026.

The euro remains under pressure, weighed down by rising energy costs and a weaker trade outlook. ECB officials, including Villeroy, are pushing back against expectations for rate cuts, emphasizing the need to contain inflation risks—especially from higher energy prices feeding into wages—while keeping policy flexible. With oil surging and inflation forecasts rising, the ECB is prioritizing price stability even as growth slows, leaving the euro vulnerable amid this mix of economic strain and persistent inflation concerns.

The yen edged slightly higher in Asian trading, supported by a rise in Japan’s 2-year yields to a multi-decade high and growing expectations for additional rate hikes this year, which have helped counter pressure from high energy prices. While services inflation came in slightly stronger, it hasn’t meaningfully shifted expectations for the Bank of Japan’s gradual policy path. Instead, markets remain more focused on mixed signals around US-Iran talks, with ongoing tensions reinforcing the likelihood of a prolonged conflict and continued support for the US dollar.

The Australian dollar is under mild pressure on Thursday. Reserve Bank of Australia Governor Kent warned that rising oil prices are creating a difficult policy trade-off, pushing inflation higher while slowing growth, with the biggest concern being longer-term inflation expectations. Meanwhile, with tensions unresolved in the US-Iran conflict, the AUD remains under pressure as the US dollar continues to see strong demand across global markets.

Euro bulls are trying to get some momentum going, but gains remain limited for now. The macro backdrop points to a stagflationary mix in the euro area, with slowing growth, weakening demand, and rising energy prices, while the ECB is becoming more focused on inflation and keeping the door open to further rate hikes. Although markets are pricing in additional tightening, many strategists doubt it will offset the drag from the energy shock, leaving the euro vulnerable in the near term—though longer term, positioning and diversification away from the USD could offer some support.

The yen remains under pressure, trading near multi-decade lows as softer headline inflation is offset by still-elevated underlying price pressures and strong wage growth, keeping the Bank of Japan on a gradual tightening path with a possible April hike still in play. Recent data point to an economy that is expanding but losing momentum, alongside only modest consumption, reinforcing a cautious normalization outlook. While structural forces like outbound investment and carry flows continue to weigh on the yen, rising intervention risks near the 160 level and building tightening expectations leave it vulnerable to periods of sharp rebound amid ongoing volatility.

The Australian dollar has come under some pressure in recent sessions. The latest weakness reflects risk aversion driven by renewed geopolitical tensions, while attention turns to Australia’s February CPI, expected to remain elevated and potentially rise further due to energy price pressures—complicating the RBA’s policy outlook. In the short term, AUD may remain volatile, but dips could attract buyers given support from yields and commodities. Markets continue to price in additional RBA rate hikes, supporting a more constructive medium-term outlook.