The euro has been quietly consolidating, hovering near a four-week low as a firmer dollar and pre-NFP positioning weighed on sentiment. Eurozone data, however, remain relatively supportive: unemployment fell to 6.3% in November, job creation continued into December, growth in Q4 was the strongest since 2023, and inflation expectations stayed anchored just above 2%, suggesting the ECB is likely to keep rates on hold for longer. German factory orders also surprised to the upside, while geopolitical tensions rose after criticism from President Macron toward Washington and fresh Russian strikes on Ukraine.

The yen is under mild pressure but still holding within a narrow weekly range despite softer-than-expected wage data, as investors await fresh direction from upcoming US labor figures. The BOJ’s latest regional report reassured markets that Japan’s economy is still recovering and that further gradual rate hikes remain likely, supported by expectations of another strong round of wage increases. However, potential Chinese restrictions on rare-earth exports to Japan could weigh on manufacturing and slow the BOJ’s tightening path, reinforcing forecasts from major banks that the yen may weaken toward 160 per dollar or beyond over the medium term.

The Australian dollar has been under pressure, extending its pullback from a 15-month high, as weaker-than-expected November trade data and softer gold prices weighed on sentiment. The smaller trade surplus signals softer demand for key exports like iron ore, coal and LNG, while markets have slightly scaled back expectations for an RBA rate hike in early 2026. That said, the broader backdrop remains supportive for the AUD, with strong commodity prices, a rising Bloomberg Commodity Index, and the RBA signaling that rate cuts are likely over — a stance that contrasts with expected Fed easing and could help the AUD regain upside momentum.