Euro price action has been dominated by political headlines, particularly around renewed US–Greenland tensions. Conflicting signals from Washington, NATO, Denmark, and Greenland itself suggest the issue could linger, risking fresh transatlantic friction that may revive de-dollarization flows and favor euro assets as an alternative safe haven. Separately, ECB officials said policy is “in a good place” but not on autopilot, with many favoring a prolonged hold on rates amid a fragile recovery, weak consumption, and limited domestic inflation pressure. While some policymakers see downside risks from factors like US tariffs, others warn that wage growth and sticky services inflation could still pose upside risks.

USD/JPY ticked up after the BOJ left rates unchanged at 0.75%, with markets focused less on the decision and more on Governor Ueda’s messaging around yen weakness, inflation risks, and the timing of the next move. With a snap election looming, Ueda is expected to avoid firm guidance, carefully balancing concerns that further yen depreciation could accelerate hikes against political sensitivities and bond-market stress. While growth forecasts may be revised higher and inflation data show headline pressures easing on subsidies, underlying inflation remains firm, keeping expectations intact for another BOJ rate increase around mid-year despite today’s steady stance.

The Australian Dollar is tracking near a 15-month high around 0.6850, underpinned by a much stronger-than-expected December jobs report and improving January flash PMIs, both of which have lifted expectations for an RBA rate hike. Employment rose sharply, led by full-time jobs, while unemployment fell to 4.1%, reinforcing the view of genuine labor-market strength. As a result, markets have repriced February hike odds from roughly 25–30% to around 50–60%, with a move fully priced by May, though the RBA is still expected to remain broadly gradual. The next CPI print is now decisive: a firm outcome could turn a February hike into the base case and extend the AUD’s upside, while recent PMIs already point to a clear re-acceleration in domestic growth, led by services.