The euro slipped back below 1.18 after hawkish Fed minutes but remains supported above its 50-day moving average, suggesting only a modest near-term softening rather than a shift in trend. The euro faces some headwinds from increasingly dovish ECB signals, elevated positioning, and already strong valuation levels, which may limit upside for now. Still, many analysts view recent weakness as a correction within a broader 2026 uptrend driven mainly by expected dollar softness, with ECB policy likely to remain steady and rate differentials relatively stable in the near term.

The yen has weakened due to hawkish Fed minutes, rising US yields, and firmer oil prices, which increase Japan’s import costs. However, the medium-term outlook still leans modestly supportive for the yen, as expectations of gradual BOJ tightening, narrowing US-Japan rate differentials, and crowded short-yen positioning create conditions for potential strength, especially on dollar pullbacks. Fiscal concerns and JGB volatility could cause intermittent weakness, but improving capex data, policy normalization expectations, and closer US-Japan coordination reinforce a constructive bias for the yen overall, with near-term volatility likely around key policy developments and levels in USDJPY.

The Australian dollar has held onto its recent gains near 0.7100 and remains February’s top-performing G10 currency, though stretched positioning suggests limited room for further near-term upside. Analysts expect any pullbacks driven by weaker data or risk aversion to be temporary, with medium-term support coming from the RBA’s relatively hawkish stance as strong labor costs and still-tight employment conditions keep inflation risks elevated. Recent labor data reinforced this view, showing solid full-time job growth and steady unemployment, but signs of slowing employment momentum point to gradual cooling later in 2026. Overall, the AUD remains supported in the short term by yield differentials and policy divergence, though future gains may depend on whether economic strength can be sustained.