The euro has been supported by the ongoing fragile US-Iran ceasefire and the associated reopening of the Strait of Hormuz, which has eased immediate oil supply disruption fears and driven a sharp pullback in crude prices. This has reduced stagflation risks for the eurozone by limiting imported inflation pressures while preserving some growth resilience, leading to a relief move in risk assets and a dialing back of expectations for aggressive near-term ECB rate hikes. With no meaningful economic data releases or central bank commentary emerging to alter the narrative, the single currency has also benefited from softer safe-haven flows into the dollar and modestly improved European sentiment, though lingering doubts over the ceasefire’s durability continue to limit upside conviction.

The Japanese yen has strengthened modestly amid the fragile US-Iran ceasefire and reopening of the Strait of Hormuz, which has triggered a sharp decline in oil prices and eased immediate energy supply disruption fears for Japan as a major net importer. Lower crude costs have reduced imported inflation pressures and supported risk sentiment, diminishing safe-haven demand for the dollar while highlighting the yen’s sensitivity to oil and geopolitical developments. With no major economic data releases and limited fresh central bank commentary, growing market expectations for a potential Bank of Japan rate hike as early as April—to address persistent inflation—have provided additional underlying support, though lingering doubts over the ceasefire’s durability continue to cap the yen’s gains.

The Australian dollar has been supported by the fragile US-Iran ceasefire and reopening of the Strait of Hormuz, which has triggered a sharp decline in oil prices and eased immediate energy supply disruption fears. As a major commodity exporter, Australia has benefited from improved global risk sentiment and reduced stagflation risks, weighing on safe-haven flows into the dollar and supporting carry trade appetite. However, lower crude costs have also tempered imported inflation pressures, leading markets to scale back expectations for aggressive near-term RBA rate hikes amid a more balanced growth and inflation outlook, which has helped cap the extent of the Aussie’s upside.