The euro has found support from a mix of inflation repricing and cautious ECB expectations, as persistent Middle East tensions and risks around Strait of Hormuz disruptions have pushed energy prices higher, reinforcing concern about imported inflation in the euro area. While the ECB is still expected to hold rates steady this week, firmer energy-driven inflation risks and sticky core price pressures have encouraged markets to scale back expectations for an aggressive easing path, lending support to the single currency. At the same time, the energy shock complicates the growth outlook, with upcoming euro area GDP data expected to show softer momentum, reinforcing a stagflation-leaning macro backdrop. That tension between inflation vigilance and growth fragility has kept the ECB cautious and helped underpin the euro even as broader downside risks to the regional economy remain in focus.

The yen has been supported by the BOJ’s hawkish hold, with the bank keeping rates at 0.75% but delivering a 6‑3 split and dissent from three members who wanted a 25 bps hike, while lifting its FY2026 inflation forecast to 2.8%. That has boosted expectations for a more confident path toward further tightening, even as the BOJ still signals caution around the pace of normalization. Support has also come from Tokyo’s reiterated willingness to intervene if the yen weakens abruptly, though Middle East tensions and still‑elevated oil prices are limiting how far the yen can extend gains. With global risk and energy‑price dynamics remaining key watchpoints, the mix of gradual policy normalization, firmer inflation, and geopolitical risk has helped keep the yen bid but capped against a still‑wide U.S.‑Japan yield gap.

The Australian dollar has been supported by a softer U.S. dollar, resilient risk appetite, and the view that the RBA will maintain a relatively hawkish bias against a still-firm domestic inflation backdrop. Support has also come from stabilizing China-linked growth expectations and firm commodity dynamics, with Australia’s terms‑of‑trade outlook remaining constructive despite elevated geopolitical risk. Higher energy prices have reinforced caution about how quickly the RBA can pivot dovish, while the narrowing of expected policy divergence versus the Fed has helped keep Australia’s yield profile attractive. With global growth and geopolitical risks still key watchpoints, the mix of policy support, commodity resilience, and improved external demand sentiment has helped keep the Aussie bid.

The euro has been supported into Monday by a firmer fundamental backdrop in the Eurozone, with markets encouraged by resilience in regional data and optimism around improving domestic demand as focus turns to German consumer sentiment. ECB expectations have also lent support, with policymakers seen moving cautiously on further easing as inflation remains sticky in pockets of the bloc, while relative concerns around US political uncertainty and escalating geopolitical tensions have undermined the dollar’s appeal despite the broader risk-off tone. The euro has also found backing from a constructive view on the Eurozone external balance and reduced concerns over near-term growth deterioration, helping keep the single currency bid.

The yen has been supported into Monday by a softer dollar and growing focus on this week’s Bank of Japan meeting, where markets continue to look for a firm policy signal amid persistent domestic inflation and rising confidence that the BoJ will maintain its gradual normalization path. Higher energy prices have also reinforced expectations that Japanese inflation risks remain tilted to the upside, while geopolitical tensions and stalled US-Iran diplomacy have supported traditional safe-haven demand for the yen. At the same time, some caution around the US outlook ahead of the Fed decision has weighed on the dollar side of the equation, allowing the yen to stay bid as markets lean into narrowing policy divergence and renewed interest in Japan’s improving fundamental backdrop.

The Australian dollar has been supported into Monday by a softer US dollar, resilient risk appetite and continued confidence in a relatively hawkish RBA, with markets still pricing Australia’s inflation backdrop and tight labor market as limiting scope for aggressive easing. Support has also come from constructive sentiment around Australia’s external sector and China-linked demand expectations, which remain important for the growth outlook, while positive risk tone has helped offset geopolitical tensions in the Middle East. With the Fed in focus and the dollar struggling to gain traction ahead of the meeting, narrowing policy divergence and a firmer domestic macro backdrop have helped keep the Aussie bid.

The euro has come under pressure as rising oil prices and renewed dollar strength amplify concerns around the eurozone’s vulnerability to geopolitical and energy shocks, particularly as maritime tensions around the Strait of Hormuz keep supply disruption risks elevated. Softer regional fundamentals have added to the downside bias, with recent PMI data pointing to contraction and weakening services momentum, while Germany’s downgraded growth outlook reinforces concerns that the region is slipping toward a stagflationary mix of weak growth and sticky inflation. Against that backdrop, the European Central Bank remains constrained, with limited scope to offer support as growth deteriorates and energy risks linger, leaving the euro pressured by both deteriorating domestic fundamentals and widening divergence against a dollar supported by higher yields and safe-haven demand.

The yen has remained under pressure as rising Middle East tensions and elevated oil prices worsen Japan’s terms-of-trade outlook, reinforcing a fundamental headwind for a major energy importer and weighing on the currency. At the same time, expectations for an imminent Bank of Japan rate hike have been pushed back as policymakers adopt a more cautious stance amid geopolitical uncertainty, narrowing support for the yen even as markets still look for a hawkish signal later this year. The move in USDJPY toward 160 has also kept intervention risk in focus, with Japanese officials stepping up rhetoric to lean against excessive currency weakness, while firmer US yields and resilient dollar demand have added to policy divergence pressures, leaving the yen caught between external headwinds, delayed tightening expectations, and intermittent support from intervention concerns.

The Australian dollar has softened as renewed geopolitical caution has weighed on broader risk sentiment, pressuring high-beta currencies as investors rotate more defensively amid uncertainty around the Middle East ceasefire and rising energy risks. At the same time, focus is building on upcoming inflation data, with Australia’s Q1 CPI seen as a key test for the Reserve Bank of Australia policy outlook, where a firm print could reinforce expectations for a more hawkish stance and offer support to the currency. For now though, external headwinds—including a firmer US dollar, cautious global sentiment, and concern around China-linked growth demand—are dominating, leaving the Aussie trading defensively even as domestic policy expectations remain an important medium-term anchor.

The euro is trading heavy across the board, pressured by a combination of deteriorating growth expectations and elevated geopolitical risk, with Germany’s downgrade to its outlook reinforcing concerns about the region’s economic momentum. At the same time, the European Central Bank remains sidelined amid persistent uncertainty, limiting policy support for the currency, while Middle East tensions continue to weigh on sentiment and amplify downside risks through energy channels. Price action has also been shaped by large option expires anchoring key levels in EURUSD and other crosses, helping to contain volatility but reinforcing a soft tone, with only EURCHF showing relative resilience amid signs of potential Swiss National Bank involvement to curb franc strength.

The yen has been trading in a choppy, mixed fashion today, with macro headwinds still dominating. Higher oil prices and ongoing disruptions around the Strait of Hormuz continue to weigh by worsening Japan’s terms of trade, while intermittent geopolitical headlines—such as talk of a US–Iran ceasefire extension—have offered only brief support via a softer dollar. Today’s stronger-than-expected Japan flash manufacturing PMI, which showed the fastest expansion in several years, has had limited positive impact, as the strength appears driven more by front-loaded production tied to supply-chain concerns than underlying demand. Overall, the yen remains on the back foot, with energy dynamics and persistent policy divergence between the Fed and the Bank of Japan continuing to drive the narrative.

The Australian dollar has been trading defensively, weighed by a combination of geopolitical risk and shifting domestic dynamics, with the Iran conflict driving heightened currency volatility and prompting a sharp increase in hedging activity among Australian corporates and super funds. This surge in hedging demand reflects growing concern about downside AUD risk, particularly given Australia’s sensitivity to global commodity prices and external shocks. While domestic data has shown some resilience, including improved PMI readings, the broader tone is being capped by cautious global sentiment and expectations that the Reserve Bank of Australia will remain measured in its policy stance. At the same time, ongoing strength in the US dollar and uncertainty around China-linked demand continue to limit upside momentum, leaving the AUD pressured and highly reactive to shifts in global risk appetite.

The euro has remained on the back foot as a stronger dollar draws support from firm US data—most notably a solid upside surprise in retail sales—while heightened geopolitical tensions around Iran and the Strait of Hormuz drive a more cautious global tone. On the euro side, fundamentals remain fragile, with European Central Bank President Christine Lagarde highlighting downside risks tied to energy supply shocks, reinforcing concerns about the region’s growth outlook and leaving the currency sensitive to incoming data, including the upcoming Eurozone PMI readings for clearer direction.

The yen has been driven primarily by softer domestic fundamentals and external pressures, with USDJPY staying bid overall as Japan’s latest trade data showed strong export growth (+11.7% YoY) but an underwhelming surplus and a sharper rise in imports, highlighting the drag from higher energy costs. Rising oil prices linked to Middle East tensions are a key negative for Japan’s terms of trade, reinforcing structural yen weakness given the country’s heavy reliance on imported energy. At the same time, expectations that the Bank of Japan will remain cautious and lag global tightening continue to weigh, especially against a backdrop of resilient US data and higher yields abroad, keeping policy divergence firmly in focus and limiting any safe-haven support for the yen despite elevated geopolitical risks.

The Australian dollar has been supported by relatively firm domestic fundamentals, particularly persistent inflation pressures and a more hawkish Reserve Bank of Australia outlook, with CPI still elevated and markets leaning toward a prolonged period of restrictive policy. That said, momentum has been tempered by signs of a cooling growth pulse and sensitivity to global risk sentiment, especially as geopolitical tensions and commodity price volatility cloud the outlook. While resilient labor market dynamics have offered some support, the currency remains highly exposed to swings in risk appetite and China-linked demand, leaving it trading more defensively amid mixed global growth signals.

The euro has been supported by a softer US dollar backdrop, helping EURUSD push up toward the 1.1800 area, as easing geopolitical tensions between the US and Iran—on news both sides are set to resume negotiations—have encouraged a more constructive risk tone and reduced safe-haven demand for the dollar. At the same time, US data has leaned dollar-negative, with the recently softer-than-expected US Producer Price Index readings reinforcing expectations for a less aggressive Fed policy outlook, even as labor market signals remain resilient via the ADP National Employment Report. On the eurozone side, firmer German producer prices have offered some modest fundamental backing for the euro, contributing to the relative outperformance as markets continue to balance improving regional data against a still-cautious growth outlook.

The Japanese yen has been under pressure, with USDJPY pressured higher as markets scale back expectations for near-term tightening from the Bank of Japan, particularly amid concerns that rising energy costs could weigh on Japan’s already fragile growth outlook. Geopolitical tensions have also played a role, with renewed strain between the US and Iran supporting the US dollar through safe-haven demand, further dragging on the yen. Domestically, a strong earthquake off Japan’s east coast and reports of a tsunami have added an element of uncertainty, though confirmation of no damage to key infrastructure, including nuclear facilities, has limited direct economic fallout. Overall, the yen remains driven by a combination of dovish central bank expectations, external geopolitical developments, and relative dollar strength.

The Australian dollar continues to hold up well overall despite renewed geopolitical uncertainty around US–Iran tensions, as it’s helped along by offsetting, constructive domestic fundamentals. Ongoing disruptions to global energy supply have lifted inflation expectations, reinforcing the case for further tightening from the Reserve Bank of Australia, especially alongside a still-robust labor market that has markets leaning toward another rate hike at the upcoming meeting. At the same time, mixed signals around ceasefire negotiations and the approaching deadline for de-escalation have kept risk sentiment fragile, limiting upside in the Aussie despite a relatively supportive macro backdrop, with attention now turning to Thursday’s PMI data for clearer direction on growth momentum.

The euro is trading with a softer tone to start Monday, weighed primarily by external geopolitical risks rather than any fresh eurozone specific catalysts, as escalating tensions in the Middle East and higher oil prices act as a terms-of-trade negative for the region’s energy-importing economies. On the domestic front, the lack of new data or hawkish signals from the ECB is leaving the currency without support, especially as policy expectations remain anchored around a cautious and gradual easing path. Meanwhile, steady policy from China and a broadly firmer US dollar backdrop amid risk aversion are adding to downside pressure, with the euro also reflecting some sensitivity to global trade uncertainty given the bloc’s export-heavy profile.

The yen remains on the back foot to start the week, driven by a mix of geopolitical and structural headwinds that are offsetting its traditional safe-haven appeal. Escalating tensions in the Middle East and the ongoing disruption in the Strait of Hormuz are particularly negative for Japan, given its heavy reliance on imported energy, with higher oil prices worsening the country’s trade balance and growth outlook. This dynamic is limiting yen demand even as broader risk sentiment deteriorates. At the same time, the Bank of Japan’s still accommodative policy stance continues to contrast with relatively tighter global settings, keeping yield differentials unfavorable. On the policy front, rhetoric from Tokyo has intensified, with officials signaling heightened concern over FX volatility and hinting at a rising risk of intervention as USDJPY pushes toward key levels, though for now this has only slowed, not reversed, the yen’s weakness.

The Australian dollar is holding up relatively well on Monday after an initial gap lower, with dip-buying emerging as supportive domestic fundamentals offset a more cautious global backdrop. While renewed US–Iran tensions and a firmer US dollar at the open briefly pressured AUD, the move has been limited by shifting expectations around US monetary policy, with reduced odds of further Fed tightening capping USD upside. At the same time, the RBA’s comparatively hawkish stance continues to underpin the currency, reinforcing yield support for AUD. That said, the currency remains sensitive to broader risk sentiment and global trade dynamics, meaning gains are being tempered as markets weigh geopolitical uncertainty against still-solid carry appeal.

The euro has been supported against the US dollar by easing geopolitical tensions in the Middle East, as optimism around resumed US-Iran ceasefire negotiations in the coming days and a fragile truce have reduced safe-haven demand for the greenback, even amid the ongoing US blockade of Iranian ports in the Strait of Hormuz and related Chinese criticism. This risk-on sentiment has helped lift the euro toward levels not seen since February. On the data side, softer-than-expected US Producer Price Index figures—showing annual headline inflation – have reinforced a bearish bias for the dollar by tempering expectations for aggressive Federal Reserve tightening. In the eurozone, the European Central Bank is maintaining a data-dependent stance ahead of its April meeting, with policymakers leaning toward holding rates unchanged while markets price in roughly two quarter-point hikes later this year; President Christine Lagarde has emphasized agility without any bias toward immediate tightening, even as elevated energy costs from regional instability continue to cloud the euro area’s growth and inflation outlook. Strong US private-sector job creation via the ADP report has offered some counter-support to the dollar, but overall fundamentals have favored modest euro resilience.

The Japanese yen has faced downward pressure against the US dollar, with USDJPY trading near 159.50, as declining expectations for a Bank of Japan rate hike at the April 28 policy meeting have undermined the currency amid ongoing uncertainty from Middle East tensions. BoJ officials, including Governor Ueda, have signaled a cautious, data-dependent approach, cooling bets on near-term tightening despite earlier hawkish hints, while Japan’s heavy reliance on imported oil leaves the economy vulnerable to any escalation around the Strait of Hormuz. Finance Minister Katayama’s comments on discussions with US Treasury Secretary Scott Bessent regarding foreign exchange have revived fears of potential intervention, providing some support to the yen and capping the pair’s upside from recent lows. At the same time, optimism over a fragile US-Iran ceasefire, the Israel-Lebanon truce, and receding hawkish Fed expectations have weighed on safe-haven dollar demand, though lingering geopolitical risks and concerns over Japan’s energy costs have prevented sharper yen appreciation.

The Australian dollar has strengthened against the US dollar, recently pushing AUDUSD above 0.7100 and toward year-to-date highs near 0.7200, supported by improving risk sentiment from optimism around US-Iran ceasefire negotiations and the Israel-Lebanon truce, which have reduced safe-haven demand for the greenback amid a fragile Middle East truce. Domestically, the Reserve Bank of Australia maintains a hawkish tilt despite a narrow 5-4 vote on its latest 25 basis point hike to 4.10%, with officials emphasizing sticky inflation—headline CPI at 3.7% year-on-year, trimmed mean at 3.3%—and capacity constraints that could keep rates higher for longer, even as markets price in further tightening later this year while remaining data-dependent on global developments. Resilient Australian fundamentals, including a widening trade surplus, firm GDP growth, and a still-solid labor market with unemployment steady near 4.3%, have reinforced the currency’s appeal as a commodity-linked play. China’s economy, acting as a stabilizer rather than a strong growth engine with Q4 expansion at 4.5-5.0% and mixed retail sales, continues to provide moderate support for Australian exports, though softening external demand and producer price deflation temper the upside. Lingering geopolitical risks around the Strait of Hormuz and elevated energy prices add caution by sustaining some imported inflation pressures for the Aussie economy.

The euro has been supported by a combination of external dollar weakness and a relatively steady eurozone backdrop, pushing EURUSD through 1.1800. On the geopolitical front, improved risk sentiment—driven by expectations of further US-Iran negotiations and hopes of avoiding near-term escalation—has reduced safe-haven demand for the dollar, indirectly lifting the euro. This has been reinforced by softer-than-expected US producer price data, which came in well below consensus and tempered Fed tightening expectations, weighing on the USD despite still-solid labor market readings and persistent energy-driven inflation pressures. On the European side, the absence of major negative surprises, alongside steady inflation dynamics around 2.5% and a broadly patient/neutral stance from the ECB, has helped the euro hold firm. Markets appear comfortable that policymakers can remain data-dependent while assessing external shocks, allowing EUR strength to be driven primarily by the shift in relative macro expectations versus the US.

The yen has shown tentative resilience, with USDJPY easing back toward the lower end of its recent range amid a softer US dollar and persistent intervention jitters from Tokyo. Improved geopolitical sentiment—fueled by hopes for progress in US-Iran diplomacy and potential de-escalation steps, including rare Israel-Lebanon talks—has reduced safe-haven demand for the dollar, while a partial retreat in oil prices from recent highs has further tempered expectations for aggressive Fed tightening. At the same time, renewed verbal warnings from Finance Minister Katayama regarding excessive volatility and speculative moves have reinforced market expectations of potential intervention, providing intermittent support to the yen. However, any meaningful or sustained JPY appreciation remains capped by Japan’s acute vulnerability to energy supply disruptions around the Strait of Hormuz, where ongoing restrictions continue to weigh on import costs, the trade balance, and the broader economy despite efforts to tap reserves and diversify routes.

The Australian dollar has strengthened notably amid a clear improvement in global risk sentiment, with easing geopolitical tensions and a partial retreat in oil prices from recent highs supporting demand for higher-beta currencies and extending the AUDUSD run to a fresh yearly high. The move has been reinforced by a softer US dollar backdrop, as cooling inflation signals and a more cautious Fed tone have tempered expectations for aggressive further tightening, even as policymakers stay alert to lingering oil-driven inflation risks. On the domestic side, Australia’s labor market continues to display resilience, with unemployment holding steady at 4.3% in the latest March data, reinforcing the view that the Reserve Bank of Australia can maintain a tightening bias and helping anchor rate differentials in the Aussie’s favor.

The euro has been supported by a combination of broad-based US dollar weakness and shifting expectations around relative central bank policy, with markets increasingly pricing a less hawkish Federal Reserve alongside a more persistent tightening bias from the ECB in response to ongoing inflation pressures, particularly those linked to energy. As geopolitical risks tied to the Iran situation are seen as peaking, the dollar’s safe-haven appeal has diminished, allowing EURUSD to push higher, while the euro has also benefited from the view that Europe may be more responsive in addressing inflation compared to the US. At the same time, evolving energy dynamics and the potential for a changing relationship between oil and the dollar have reinforced the euro’s relative appeal. Looking ahead, Eurozone industrial production data and ECB President Christine Lagarde’s speech will be worth keeping an eye on for further clues around the growth outlook and policy trajectory.

The Bank of Japan’s ultra-accommodative stance, reinforced by Governor Ueda’s cautious tone on normalization and emphasis on the need for sustained wage growth, continues to anchor Japanese yields and preserve the attractiveness of yen-funded carry trades, particularly against a still relatively high US rate environment. At the same time, the yen’s traditional sensitivity to risk aversion has diminished, with markets viewing geopolitical tensions as less likely to escalate into a severe disruption, thereby limiting haven inflows. Stable energy conditions have also helped reduce downside pressure from Japan’s terms of trade, but have not been enough to offset the broader yield differential dynamic, leaving the yen largely driven by external rate expectations and lacking a strong domestic catalyst.

The Australian dollar has been driven by a mix of improving global sentiment and a softer US dollar, with easing geopolitical tensions around the Middle East helping to support higher beta currencies and lift AUD toward recent highs. At the same time, the domestic backdrop remains mixed, with inflation still running above target and the RBA maintaining a cautious but relatively hawkish stance, even as signs of slowing momentum emerge across business activity and parts of the labor market. Notably, the currency has been able to shrug off Tuesday’s weak round of Australian confidence data, suggesting external factors are currently dominating. China has also played a role, offering a stabilizing but less dynamic growth impulse as softer trade trends point to weaker external demand.