The euro is hovering around its 50-day moving average as markets weigh US tariff threats, trade uncertainty and ongoing US-Iran tensions. In the near term, risks remain tilted against the euro: cooling inflation across the euro area is increasing expectations for ECB rate cuts, and softer data compared to the ECB’s projections could limit euro rallies, especially with the dollar supported by safe-haven flows and relatively high US real yields. While Germany’s economy is showing early signs of cyclical improvement, weak consumer confidence and cautious household spending suggest any recovery will be slow and reliant on investment and exports, leaving it exposed to global trade headwinds.

The yen firmed after hawkish comments from Bank of Japan officials, with board member Hajime Takata saying further rate hikes may be needed as inflation nears target, while Governor Kazuo Ueda stressed a data-dependent but ongoing normalization path. Earlier, the nomination of two more dovish academics to the BOJ board had weighed on the yen and pushed long-dated JGB yields higher, reinforcing expectations that any additional tightening may be delayed rather than derailed. In the near term, negative headlines and lingering skepticism toward Japan’s rebound keep USDJPY biased higher, but underlying macro conditions remain relatively stable and US sensitivity to excessive yen weakness should help cap gains near the 158–159 area. Tactically, this favors selling rallies into multi-month highs rather than chasing an upside breakout, especially ahead of the March 19 meeting between PM Takaichi and President Trump.

The Australian dollar is stabilizing above key support at 0.7007, with potential to rebound toward the 0.7147–0.7158 area as long as this level holds. Recent Australian capex data showed modest growth, beating expectations but slowing sharply from the previous quarter, highlighting softer business investment overall despite ongoing support from large infrastructure projects. The broader backdrop remains supportive for AUD, as the RBA’s more hawkish stance and still-elevated inflation contrast with expectations for eventual Fed easing, helping limit downside near 0.70. In the near term, price action will depend on whether markets focus on persistent inflation and tight labor conditions—which support further RBA tightening later this year—or signs inflation is cooling. For now, the bias remains constructive above 0.7007, with scope for further gains toward 0.72–0.73 if upside momentum builds, while a break below support would shift risks back toward 0.6897.