The Euro has resumed its uptrend, extending to a three-year peak at 1.1474. The single currency is gaining as a haven asset amid a flight from U.S. assets, while the dollar’s yield advantage weakens, diverging from the German 10-year and U.S. 10-year yield spread. Meanwhile, the EU’s pause on U.S. tariffs and pursuit of diversified trade partnerships signal a strategic shift amid U.S. policy uncertainty. The ECB is expected to cut rates by 25 basis points on April 17, with markets pricing in 78bps of cuts this year, reflecting disinflationary pressures from U.S. tariffs. Key standouts on Monday’s calendar come from US consumer inflation expectations and Fed speak.

The Pound remains in demand, driven by broad based US Dollar selling and robust UK economic data. The latest round of impressive UK data includes a 0.5% month-on-month GDP increase, reversing a prior 0.1% decline. Meanwhile, industrial production surged to 1.5% from -0.9%, and manufacturing hit a 2022 peak at 2.2%, up from -1.1%, signaling strong economic momentum. Key standouts on Monday’s calendar come from US consumer inflation expectations and Fed speak.

Then Yen has emerged as a top-performing G10 currency, driven by safe-haven demand amid escalating U.S.-China trade tensions. Japanese household inflation expectations have surged to a 9.6% average over the next five years, the highest since June 2006, potentially reviving BOJ rate hike expectations if U.S.-Japan trade talks on April 17, involving U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, lead to pressure for a stronger yen to address trade imbalances. Markets may increase yen longs ahead of the talks, anticipating Japan could secure a favorable deal, especially as OIS markets currently expect a BOJ rate hike pause but could shift if tariff negotiations spotlight the yen. Key standouts on Monday’s calendar come from US consumer inflation expectations and Fed speak.

The Australian dollar faces headwinds as a yuan proxy amid U.S.-China trade tensions, with the yuan fixing at its weakest since September 2023. Many analysts expect China to avoid a sharp devaluation, prioritizing global stability, reducing the likelihood of revisiting its COVID-era low of 0.5510. RBA Governor Bullock has resisted pressure for a 50bps rate cut in May, citing the need to assess global demand and supply impacts from U.S. tariffs, but OIS markets still price in a certain cut, driven by economic growth concerns outweighing inflation risks, as seen in past crises. Contrarian strategists argue the Australian Dollar may be oversold, with China’s potential stimulus expansion expected to be discussed Thursday, likely to boost demand for Australian commodities, while the RBA remains cautiously optimistic about China’s infrastructure and monetary measures offsetting trade war effects. Key standouts on Monday’s calendar come from US consumer inflation expectations and Fed speak.