The Euro is steady after four straight days of losses, holding near the roughly four-year high of $1.2081 reached in late January. ECB President Lagarde struck an optimistic tone, emphasizing incentives over taxes and suggesting that US trade tensions could accelerate European reforms, while noting continued capital inflows into Europe. The ECB also announced plans to expand repo access to more central banks starting in Q3 2026, supporting euro liquidity and reinforcing its global role. Markets now turn to upcoming data, including Sweden’s January unemployment rate and Eurozone industrial production for December.

The pair is on track to snap a five-day losing streak, though it remains close to last Thursday’s two-week low of 152.24. Japan’s preliminary fourth-quarter GDP disappointed due to weak business spending, while the GDP deflator held firm at 3.4% year-over-year, pointing to ongoing inflation pressures. BoJ member Tamura indicated the 2% inflation target could be achieved as soon as spring if wage growth continues, highlighting growing pressure on Governor Ueda to proceed with policy normalization. Overall, the medium-term outlook increasingly reflects gradual BoJ tightening alongside a less aggressively hawkish Federal Reserve.

The Aussie dollar is modestly higher, recovering some of Friday’s losses and holding near last week’s roughly three-year high of 0.7147. The currency remains supported by the RBA’s hawkish stance and solid domestic data, with markets pricing in about an 80% chance of a rate hike in May and a strong possibility of another later this year. Attention now turns to the upcoming RBA meeting minutes and Thursday’s jobs report, which will be key in shaping expectations for the policy outlook.