The euro remains under pressure against the dollar as resilient US activity and hawkish Fed commentary keep expectations of further tightening alive. That has outweighed support from the eurozone’s stronger September business surveys and the ECB’s recent rate increase. Higher energy costs are adding to eurozone inflation risks and the case for another ECB hike, but they also threaten growth, leaving the euro vulnerable while investors see the US economy holding up better.

Sterling remains under pressure as UK fiscal concerns add to a broader rise in the dollar. August borrowing came in above expectations, leaving the deficit for the financial year to date ahead of official forecasts and increasing scrutiny of the government’s room to maneuver ahead of October’s Budget. September’s softer UK business surveys have added to growth concerns, especially after stronger US readings reinforced the dollar. The Bank of England’s concern that high energy prices could keep inflation elevated is supporting expectations of a rate hike, but that prospect has offered the pound limited relief while investors weigh the same energy shock’s effect on UK growth and public finances.

The yen has recovered modestly after USDJPY kissed 159, as the risk of Japanese intervention made traders cautious about pushing the pair closer to 160. Hopes for US-Iran diplomacy have also taken some strength out of the dollar by easing oil and inflation concerns. The broader pressure on the yen remains, though: the Bank of Japan’s recent rate increase has done little to close the wide interest rate gap with the US, while expectations of further Fed tightening continue to support US yields and the dollar. For now, intervention risk is limiting yen weakness, but the rate gap remains the main obstacle to a sustained recovery.

The Australian dollar has steadied as traders weigh support from a hawkish RBA against a firm US dollar. Australia’s unemployment rate rose slightly in August, but stronger job growth and higher labor force participation suggest the labor market remains resilient, keeping expectations of a rate hike next week intact. The extension of the US–China trade truce has also helped sentiment toward the Aussie, given Australia’s exposure to Chinese demand, although the Trump–Xi summit offered little progress on the larger disputes. Meanwhile, elevated US yields and expectations of further Fed tightening continue to limit the currency’s gains.

The euro remains under pressure against the dollar despite a strong September eurozone composite PMI reading of 53.1, its highest since April 2023. The survey points to improving activity and gives the ECB room to consider another rate increase, but it has done little to shift the relative policy outlook: the ECB’s deposit rate stands at 2.50%, while the Fed’s range is 3.75%–4.00%. Stronger US survey readings and expectations of further Fed tightening have kept the dollar supported, leaving EURUSD near its lowest level since late July.

The pound has come under pressure as the latest surveys point to a widening gap between UK and US growth. UK services activity slowed to a three-month low in September, while the US services reading beat expectations sharply, reinforcing the dollar’s strength and the case for further Fed tightening. The Bank of England held rates at 3.75% last week, though three members voted for a hike, and faster price increases reported by UK services firms mean inflation remains a concern. For now, softer UK growth alongside a firmer US outlook is weighing on GBPUSD, even as UK price pressures limit the BoE’s room to ease.

The yen has given back much of its recent rally as the dollar benefits from stronger US data and growing expectations of another Fed rate hike. The Bank of Japan raised rates to 1.25% last week, but its divided vote and cautious guidance left investors uncertain about how quickly it will tighten again. That leaves a substantial US–Japan interest rate gap, which continues to weigh on the yen. USDJPY has moved back above 158, bringing the risk of further Japanese intervention into focus after Tokyo’s large yen purchases earlier this summer.

The Australian dollar has been pulled between domestic rate support and a stronger US dollar. Persistent inflation has kept the RBA focused on the risk of further tightening, but softer September business surveys have raised questions about how much more the economy can absorb. At the same time, expectations of further Fed hikes have supported the US dollar and weighed on AUDUSD. Bessent’s reported extension of the US–China trade truce through January 10 offers some relief for the Australian dollar, given Australia’s exposure to Chinese demand, though it has yet to outweigh the pressure from the US rate outlook.

The euro remains under pressure as the dollar draws support from the Fed’s recent rate hike and continued concern about inflation, while geopolitical tensions sustain demand for the US currency. In Europe, heavy losses for Chancellor Merz’s party in German state elections have added political uncertainty, and September’s drop in euro area consumer confidence has raised concerns about the effect of higher energy costs on growth. The ECB’s own rate hike and warning that inflation will remain above target leave room for further tightening, but so far that support has been outweighed by the stronger dollar and weaker European sentiment.

The pound remains under pressure against the dollar, with the contrast between the two central banks still the main driver: the Fed raised rates last week and signaled further tightening, while the Bank of England held rates steady as it weighs inflation risks against weaker growth. Middle East uncertainty has also supported demand for the dollar. Stronger UK retail sales have offered sterling some support, and the recent fall in oil prices has eased inflation concerns, but neither has reversed the broader move. Attention now turns to the UK and US flash PMIs for a clearer read on growth and the outlook for rates.

The yen remains under pressure despite last week’s Bank of Japan rate hike, as cautious BoJ guidance and the Fed’s hawkish stance keep the US-Japan interest rate gap in focus. The recent decline in oil offers some relief for Japan’s import bill, but has yet to outweigh the dollar’s support from US rate expectations. The Takaichi–Trump meeting reinforced cooperation on investment and economic security without providing an immediate currency catalyst, while the risk of Japanese intervention remains a restraint on further yen weakness.

The Australian dollar has come under pressure as September’s preliminary PMIs pointed to slower growth: manufacturing slipped into contraction at 49.3, while services eased to 51.4 and the composite index fell to 50.8. A firmer US dollar has added to the pressure after the Fed’s latest rate hike. The decline in the Aussie has been tempered by a hawkish RBA, however. Governor Bullock said upside inflation risks may be materializing and that the bank will weigh them when deciding whether to raise rates again. The currency is therefore caught between softer Australian activity and the prospect of further tightening on both sides of the Pacific.

The euro has edged higher against the US dollar, supported by improved risk sentiment as markets remain hopeful that possible US-Iran talks could ease geopolitical tensions and reduce pressure from elevated energy prices. However, the currency continues to face headwinds from rising political uncertainty in Germany following the CDU’s historic regional election setback, which has raised concerns about Chancellor Merz’s leadership and the government’s ability to advance its fiscal agenda. The relative interest-rate backdrop also remains challenging, with increasingly hawkish Fed commentary reinforcing expectations that US rates may need to rise further to contain persistent inflation. Meanwhile, concerns among ECB officials that higher energy and commodity prices could keep euro-area inflation elevated provide some support for the euro, but for now, the combination of German political risk and a more hawkish Fed is limiting the currency’s upside.

The pound remains under pressure against the US dollar, with the fundamental bias still negative amid widening policy divergence between the Federal Reserve and Bank of England. The Fed’s hawkish stance and signal that another rate increase could follow this year contrast with the BoE’s cautious hold and gradual easing bias, leaving sterling at a relative yield disadvantage. Escalating Middle East tensions have also supported safe-haven demand for the dollar, although falling oil prices and lower US Treasury yields have limited its strength and helped contain the pound’s losses. Attention now turns to the upcoming UK and US flash PMIs for fresh evidence on the relative economic outlook, while Fed commentary and geopolitical developments should remain important drivers of GBPUSD.

The yen has come back under pressure after the Bank of Japan’s rate hike to 1.25%, as the absence of clear guidance pointing to another near-term increase disappointed investors and left Japan’s policy outlook comparatively less hawkish. At the same time, expectations for further Federal Reserve tightening have risen amid persistent US inflation concerns and hawkish Fed commentary, widening the perceived US-Japan rate differential and lifting USDJPY toward 158. However, yen selling has been tempered by growing intervention risk after Japanese authorities reportedly conducted rate checks, signalling that they may be prepared to step into the market if the currency weakens further, particularly as USDJPY approaches the psychologically important 160 level.

The Australian dollar has remained supported by increasingly hawkish RBA expectations, with Governor Michele Bullock stressing that monetary policy must prevent supply shocks from generating persistent second-round inflation effects. Surging energy prices have intensified the upside risks to inflation, leaving markets pricing a very high probability of a 25-basis-point RBA rate hike next week and the possibility of further tightening thereafter. This has helped AUDUSD hold above 0.7100, although gains have been limited by a still-firm US dollar as the Federal Reserve signals that additional rate increases may be needed and markets price a meaningful chance of another Fed hike in October. Overall, the Australian dollar continues to benefit from the RBA’s relatively hawkish outlook, but its near-term direction will depend on whether the central bank delivers the tightening now largely reflected in market pricing.

The euro has edged higher against the US dollar, benefiting from a retreat in US Treasury yields and oil prices that has taken some momentum out of the recent dollar rally. While the Fed delivered a hawkish message, markets are pricing a more aggressive tightening path than policymakers themselves have projected, leaving the dollar vulnerable if upcoming guidance or data fails to reinforce those expectations. The euro is also finding support from the ECB’s continued inflation concerns after its latest rate hike, with policymakers warning that geopolitical tensions and elevated energy costs could keep price pressures above target for an extended period. With euro-area inflation still elevated and ECB communication remaining hawkish, expectations for additional tightening later this year continue to provide an underlying source of support for the single currency.

The pound has steadied above 1.3350 after extending a modest recovery on the back of the Bank of England’s hawkish hold. The BoE left rates unchanged at 3.75% in a 6-3 vote, but three policymakers favored an immediate 25-basis-point hike and the broader message suggested another increase is becoming increasingly likely if inflation remains elevated. This has restored some support from UK yield spreads, while improving confidence in the fiscal outlook has also helped sentiment. Sterling’s upside remains constrained by the Federal Reserve’s own rate hike and the possibility of further US tightening, leaving markets focused on the latest UK retail sales data for additional direction.

The yen has come under renewed pressure despite the Bank of Japan raising interest rates by 25 basis points to 1.25%, the highest level in 31 years. The hike was already widely priced in, leaving investors focused on whether the BoJ would signal a faster pace of tightening, and the initial guidance appears to have fallen short of those expectations. While the Bank warned that inflation could exceed its 2% target and acknowledged that yen weakness is adding to price pressures, the still-wide interest-rate gap with the United States remains a significant headwind, particularly after the Federal Reserve raised rates and maintained a hawkish inflation stance. Attention now turns to Governor Ueda’s press conference for clearer guidance on the timing of further hikes, with the yen likely to remain vulnerable unless he pushes back against expectations for another extended pause.

The Australian dollar has strengthened as markets lean further into the prospect of additional RBA tightening. Governor Bullock warned that inflation risks are materializing, with elevated oil prices, persistent domestic price pressures and a still-tight labor market potentially forcing another rate hike as soon as September. Deputy Governor Hauser reinforced the RBA’s commitment to returning inflation to target, while one major bank now expects two further hikes and a terminal rate of 4.85%. The Aussie has also benefited from a modest improvement in global risk sentiment, although its gains remain tempered by the Fed’s own hawkish stance and the rising probability of another US rate increase in October.

The euro has come back under pressure, with EURUSD slipping toward the mid-1.1400s as the policy narrative has shifted back in favor of the dollar. The Fed delivered its widely expected 25bp hike, its first increase in three years, but importantly kept the door open to additional tightening as officials remain concerned about persistent inflation, reinforcing expectations that another hike could follow later this year. On the European side, the ECB also raised rates last week, but the message has been more cautious, with President Lagarde emphasizing a data-dependent approach and refusing to pre-commit to further tightening. While elevated energy costs are expected to keep Eurozone inflation high, there is still limited evidence that the supply-driven shock is broadening into more persistent underlying price pressures. The resulting contrast between a Fed signaling scope for further hikes and an ECB pushing back against aggressive market tightening expectations has narrowed the euro’s relative policy support and helped drive the latest pullback.

The pound has come under renewed pressure, falling below 1.3400 against the dollar as the combination of a hawkish Federal Reserve and uncertainty ahead of today’s Bank of England decision weighs on the currency. The Fed’s rate hike and signal that further tightening remains likely have driven a broader dollar rally, while the BoE is widely expected to leave rates unchanged at 3.75%, putting the emphasis firmly on the Bank’s guidance and voting split. UK inflation accelerated to 3.1% in August from 2.9%, largely reflecting higher energy and motor fuel costs, but underlying pressures were more contained, with core inflation holding at 2.6% and services inflation steady at 3.4%. This leaves the BoE facing a difficult balance between renewed energy-driven inflation risks and signs of cooling in the labor market and broader economy. Markets have substantially increased expectations for further BoE tightening, with a November hike heavily priced, meaning sterling’s reaction today is likely to depend on whether policymakers validate those expectations or push back against the increasingly hawkish rate path.

The yen has regained some ground after coming under pressure in the wake of the Fed decision, with USDJPY pulling back toward 156 after reaching a near two-week high. The dominant domestic driver remains expectations for the Bank of Japan, which is widely expected to raise rates by 25 basis points to 1.25% on Friday, the highest level in 31 years, as policymakers respond to persistent inflation risks from elevated energy prices and the weaker yen. More importantly, markets are increasingly focused on whether Governor Ueda signals that further tightening could follow, with expectations for a faster normalization path helping to provide underlying support for the yen. At the same time, the currency remains caught between this increasingly hawkish BoJ outlook and renewed dollar strength after the Fed raised rates and signaled scope for another increase this year. Rising US yields and continued Middle East tensions have further supported the dollar, limiting the yen’s recovery. Japanese officials have also reiterated their readiness to respond to excessive currency volatility, adding another layer of support against renewed sharp yen depreciation.

The Australian dollar has been holding up reasonably well despite a renewed US dollar bid following the Fed’s widely expected rate hike, with domestic rate expectations continuing to provide an important source of support. The RBA has already delivered three consecutive hikes this year and markets continue to price a meaningful chance of another increase at the upcoming meeting as inflation pressures remain elevated. That hawkish backdrop was reinforced by the IMF, which said the RBA should remain prepared to tighten further given upside inflation risks, while also calling for greater fiscal restraint to help the disinflation process. For now, the Aussie is therefore caught between competing forces, with a hawkish Fed and broader US dollar strength limiting the topside, while expectations for additional RBA tightening are helping to cushion the currency against more significant weakness.

The euro has been trading on the defensive against the dollar, with EURUSD slipping back toward the mid-1.1500s as markets brace for the Federal Reserve decision. The dominant driver has been a renewed widening in the perceived policy gap between the Fed and ECB, with the Fed widely expected to raise rates by 25 basis points and markets increasingly focused on the possibility of another hike later this year as US inflation remains sticky. This contrasts with the euro’s own supportive backdrop after the ECB’s recent rate increase and relatively hawkish messaging, which has kept expectations for additional tightening alive but has struggled to offset the latest repricing in US rates. As a result, near-term euro direction remains heavily tied to the Fed, with particular attention on Chair Warsh’s guidance and whether policymakers validate the market’s increasingly hawkish expectations or push back against the prospect of further tightening

Sterling has been trading on the defensive into a heavy week of central-bank risk, with the pound slipping below 1.3500 against the dollar as markets position for a likely Fed rate hike and Thursday’s Bank of England decision. The latest UK inflation report did little to materially shift the domestic policy outlook, with headline CPI rising as expected to 3.1% year-on-year in August from 2.9%, while core inflation held steady at 2.6%, reinforcing the picture of renewed price pressure without a significant acceleration in underlying inflation. The BoE is still widely expected to leave rates unchanged at 3.75% on Thursday, particularly after Governor Bailey recently pushed back against the idea that another rate hike is inevitable, although persistent inflation keeps the possibility of further tightening later in the year alive. For now, this leaves the pound caught between lingering expectations for tighter UK policy and near-term support for the dollar from a more hawkish Fed outlook.

The yen has remained under pressure against the dollar in recent sessions, with USDJPY pushing to a one-week high as rising US Treasury yields and expectations for another Federal Reserve rate hike have reinforced the dollar’s yield advantage. At the same time, downside pressure on the yen has been contained by a sharp hawkish repricing of the Bank of Japan outlook, with markets expecting the BoJ to raise rates at Friday’s meeting and increasingly focused on whether policymakers signal further tightening beyond September. Japan’s latest trade figures have added to the policy debate, with higher energy costs driving imports sharply higher and highlighting the inflationary impact of elevated oil prices on an economy heavily dependent on imported fuel. For now, USDJPY is caught between competing forces, with elevated US yields and Fed tightening expectations weighing on the yen, while expectations for continued BoJ normalization provide an important offset ahead of this week’s closely watched Fed and BoJ decisions.

The Australian dollar has come under pressure in recent sessions, with broad US dollar strength and the sharp rise in US Treasury yields outweighing what remains a relatively supportive domestic rates backdrop. Expectations for a Federal Reserve rate hike have surged ahead of Wednesday’s decision as persistent inflation and elevated oil prices reinforce the case for tighter US policy, weighing on the Aussie and broader risk sentiment. At home, however, the RBA remains firmly focused on inflation after holding the cash rate at 4.35%, with stubborn underlying price pressures keeping the prospect of further tightening firmly in play. Markets are assigning a high probability to another RBA hike at the late-September meeting, while the recent jump in Australian bond yields provides some underlying support for the currency. For now, the Aussie is caught between increasingly hawkish RBA expectations on one side and a stronger dollar, higher global yields and softer risk appetite on the other, leaving the Fed decision and its guidance on the path for rates as the dominant near-term driver.

The euro has come under pressure below 1.1600, with the dollar benefiting as hotter underlying US inflation and firm producer prices pushed markets toward expecting another Federal Reserve rate hike this week. The ECB’s recent quarter-point increase and broadly hawkish messaging have kept expectations for further European tightening elevated, particularly after updated forecasts showed inflation remaining above target for longer. However, that support has been overshadowed by the more immediate repricing of Fed policy, leaving relative rate expectations tilted in favor of the dollar ahead of Wednesday’s decision.

The pound has been consolidating above 1.3500 against the dollar, supported by stronger-than-expected UK growth in July and lingering expectations that elevated energy costs could eventually require tighter Bank of England policy. However, Governor Bailey has pushed back against the idea that rate hikes are inevitable, while the BoE is widely expected to leave rates unchanged this week. This has limited sterling demand ahead of Tuesday’s UK employment report and Wednesday’s inflation data, which will shape the outlook for domestic policy. On the other side of the pair, rising expectations for a Federal Reserve rate hike and escalating Middle East tensions have supported the safe-haven dollar, leaving GBPUSD caught between resilient UK fundamentals and a firmer US currency.

The yen has edged lower against the dollar at the start of the week as firmer expectations for a Federal Reserve rate hike and escalating Middle East tensions support the greenback through higher US yields and safe-haven demand. Still, the Japanese currency remains close to a seven-month high, underpinned by a sharp hawkish repricing of the Bank of Japan outlook. Markets broadly expect the BoJ to raise rates later this week and will be focused on whether officials signal a faster pace of tightening, potentially including another move in December, as underlying inflation approaches target and policy remains below neutral. With both central-bank decisions approaching, USDJPY remains caught between near-term dollar strength and the prospect of a further narrowing in US-Japan rate differentials.

The Australian dollar has started the week on the defensive as rising expectations for a Federal Reserve rate hike, elevated US yields and renewed Middle East tensions support the US dollar and weigh on risk-sensitive currencies. Higher oil prices are also unsettling global markets, although the Aussie’s losses have been limited by increasingly hawkish RBA expectations after recent Australian inflation data showed persistent underlying price pressures. The prospect that higher fuel costs could keep domestic inflation elevated has reinforced the case for further RBA tightening, providing an important counterweight to softer consumer sentiment and broader risk aversion. Near-term direction will largely hinge on the Fed decision and upcoming Australian employment data, with the policy outlook on both sides of the pair remaining the dominant driver.

The euro is holding broadly steady after the ECB delivered a widely expected quarter-point rate hike and maintained a hawkish bias, warning that the Middle East-driven energy shock will keep inflation above target for an extended period. The ECB also raised its growth forecasts, highlighting the euro-area economy’s resilience, while upward revisions to the inflation outlook reinforced expectations that further tightening may be required. However, the currency has received only limited support because stronger US producer inflation has increased expectations for a Federal Reserve rate hike, supporting the dollar ahead of today’s critical US CPI release. A softer inflation print would likely favor the euro by tempering Fed tightening bets, while another upside surprise could strengthen the dollar and keep EURUSD under pressure.

The pound is holding broadly steady around 1.3500 against the dollar, caught between expectations of further Bank of England tightening and renewed support for the greenback from firm US inflation data. Rising energy costs and persistent UK inflation have encouraged markets to price another BoE rate increase before year-end, although Governor Andrew Bailey has pushed back against the idea that tightening is inevitable, stressing that policy will depend on incoming economic data and geopolitical developments. Attention now turns to US CPI, which could strengthen the dollar if inflation surprises higher, while upcoming UK growth, employment and inflation figures will shape expectations ahead of next week’s BoE decision, where a hawkish hold is widely anticipated. Elevated gilt yields and uncertainty surrounding the government’s October budget remain potential constraints on sterling, but the broader trend in sentiment toward the currency remains constructive.

The yen is remains well supported on dips on the back of a sharp hawkish repricing of Bank of Japan policy expectations. Japanese producer inflation remained elevated in August, reinforcing evidence of persistent domestic price pressures and strengthening the case for further tightening. Recent comments from BoJ officials have added to expectations for a rate hike at next week’s meeting, with markets also seeing a strong possibility of another move before year-end. However, yen gains remain constrained by resilient US inflation and growing expectations for a Federal Reserve rate hike, which continue to support the dollar and keep US-Japan rate differentials wide. Attention now turns to the US CPI report, which will determine whether USDJPY extends its recovery or renewed BoJ-driven yen demand takes control.

The Australian dollar has softened, pressured mainly by renewed US dollar strength after hotter US producer-price inflation increased expectations for a Federal Reserve rate hike in September. Attention now turns to the US CPI report, which will be the final major inflation reading before next week’s Fed decision and could determine whether the US dollar extends its advance. Domestic policy expectations remain supportive for the Aussie, however, with RBA officials Sarah Hunter and Andrew Hauser warning that persistent inflation could require additional tightening. Markets are consequently assigning a high probability to an RBA rate increase this month, helping to limit the currency’s downside despite the stronger US dollar backdrop.

The euro is holding firm above 1.1600 as markets await today’s ECB decision, with a quarter-point rate hike widely expected after surging energy prices pushed Eurozone inflation further above target. The immediate focus will be on the ECB’s updated forecasts and whether President Lagarde signals that persistent inflation risks could justify additional tightening, although concerns about weak regional growth may limit how firmly she commits to further moves. Meanwhile, EURUSD remains sensitive to the US side of the equation, with today’s producer inflation report and Friday’s CPI release set to shape expectations for the Federal Reserve and the broader direction of the dollar.

The pound has extended its advance against the US dollar, supported primarily by broad dollar weakness and gradually firming expectations for additional Bank of England tightening later this year. UK housing data offered some encouragement, with the RICS survey reaching a five-month high and pointing to early signs of stabilization, although the recovery remains fragile. Markets expect the BoE to leave rates unchanged at next week’s meeting but are pricing a greater chance of incremental hikes into year-end. Near-term direction remains heavily dependent on upcoming US producer and consumer inflation data, which will shape expectations for the Federal Reserve after strong employment figures boosted the probability of another rate increase.

The yen has eased from a seven-month high against the dollar as traders lock in profits and turn cautious ahead of key US inflation data. The broader fundamental backdrop remains supportive, however, with markets fully pricing a Bank of Japan rate hike in September and assigning a strong probability to another move in December following hawkish signals from policymakers, solid wage growth and an upward revision to Japanese economic growth. Meanwhile, expectations for another Federal Reserve rate hike, elevated energy-driven inflation risks and escalating US-Iran tensions have helped the dollar recover modestly. Even so, the increasingly hawkish BoJ outlook should continue to underpin the yen and limit the scope for a sustained USDJPY rebound.

The Australian dollar has eased up a bit from recent highs as markets turn cautious ahead of key US inflation data, with the upcoming PPI and CPI reports set to shape expectations for next week’s Federal Reserve decision. Strong US employment data has revived the prospect of another Fed rate hike, supporting the US dollar, while escalating Middle East tensions have weighed on risk-sensitive currencies such as the Aussie. Nevertheless, downside pressure remains limited by an increasingly hawkish Reserve Bank of Australia outlook, after officials Sarah Hunter and Andrew Hauser signaled further tightening may be required if inflation remains persistent. This has encouraged expectations for additional RBA rate hikes and continues to provide underlying support for the Australian dollar.