Euro bulls are trying to get some momentum going, but gains remain limited for now. The macro backdrop points to a stagflationary mix in the euro area, with slowing growth, weakening demand, and rising energy prices, while the ECB is becoming more focused on inflation and keeping the door open to further rate hikes. Although markets are pricing in additional tightening, many strategists doubt it will offset the drag from the energy shock, leaving the euro vulnerable in the near term—though longer term, positioning and diversification away from the USD could offer some support.

The yen remains under pressure, trading near multi-decade lows as softer headline inflation is offset by still-elevated underlying price pressures and strong wage growth, keeping the Bank of Japan on a gradual tightening path with a possible April hike still in play. Recent data point to an economy that is expanding but losing momentum, alongside only modest consumption, reinforcing a cautious normalization outlook. While structural forces like outbound investment and carry flows continue to weigh on the yen, rising intervention risks near the 160 level and building tightening expectations leave it vulnerable to periods of sharp rebound amid ongoing volatility.

The Australian dollar has come under some pressure in recent sessions. The latest weakness reflects risk aversion driven by renewed geopolitical tensions, while attention turns to Australia’s February CPI, expected to remain elevated and potentially rise further due to energy price pressures—complicating the RBA’s policy outlook. In the short term, AUD may remain volatile, but dips could attract buyers given support from yields and commodities. Markets continue to price in additional RBA rate hikes, supporting a more constructive medium-term outlook.

The euro is struggling to gain upside momentum as tensions in the Middle East—particularly the unresolved US-Iran conflict—push oil prices above $100, worsening the outlook for the eurozone. Rising energy costs risk adding to inflation while growth is already slowing, keeping the ECB cautious but increasingly hawkish beneath the surface, with markets now debating potential rate hikes as early as April or more likely June. While higher rate expectations offer some support to EURUSD, the currency remains vulnerable to further energy shocks and risk aversion, and is unlikely to rally meaningfully without clearer ECB tightening signals. Recent data also showed a decline in eurozone consumer confidence, highlighting the fragile backdrop.

The yen has managed to find only mild demand thus far, despite ongoing intervention warnings from officials. In the near term, the currency remains highly sensitive to headlines, as the Bank of Japan holds rates steady and waits to assess how geopolitical shocks—especially from the Middle East—impact inflation and growth. Elevated oil prices and Japan’s reliance on energy imports keep the bias tilted toward further yen weakness, though strong wage growth, persistent inflation, and the possibility of a rate hike should help prevent a deeper or sustained decline. Overall, expectations are for only modest yen recovery from current levels.

The Australian dollar is under pressure for a third day, driven by fading optimism around Middle East tensions and renewed USD strength. The outlook remains fragile as softer global growth and geopolitical risks threaten recent gains, though dips may find support from strong commodity prices and yields. Inflation is expected to stay elevated, with rising energy costs potentially complicating the RBA’s policy outlook despite signs of slowing economic activity. Recent PMI data confirms weakening momentum—especially in services—pointing to slower growth ahead, but persistent price pressures mean the RBA still faces a challenging balance.

Amid an ongoing Iran conflict that’s keeping the Strait of Hormuz effectively closed, elevated oil and gas prices are heightening eurozone inflation risks, prompting hawkish signals from ECB officials like Joachim Nagel, who indicated a possible rate hike as early as April if the outlook worsens. At the same time, soaring energy costs pose a growing drag on European growth and recovery efforts. Escalating threats—Trump warning of obliterating Iran’s power plants if the strait isn’t reopened, and Iran vowing retaliation against US and Israeli energy assets—continue to fuel supply disruption fears. Over the next 1-2 weeks, the euro is likely to face downside pressure against the dollar if oil stays high and headlines emphasize risks rather than de-escalation, though potential ECB tightening should cap any sharp falls. Analyst views have shifted more hawkish ahead of the March 20-21 period, with some now eyeing an April hike, while key upcoming Eurozone data includes flash PMIs, consumer confidence, ECB inflation expectations, and German IFO and GfK surveys.

The Japanese yen continues to weaken modestly, with USDJPY pushing back toward 160 despite renewed verbal intervention warnings from top official Mimura, who cited speculative oil price moves tied to Middle East tensions as a key driver of FX volatility and stressed authorities’ readiness to act decisively against excessive swings. This reflects heightened official concern over oil-driven flows pressuring the yen, given Japan’s heavy energy import reliance and limited yield support compared to other G-10 currencies. Following the BoJ’s recent hold at 0.75% with a data-dependent tightening bias, the yen remains highly sensitive to oil prices, inflation, and geopolitical headlines in the near term, with limited recovery expected unless crude falls sharply or the BoJ turns more hawkish; key data like February CPI (likely softened by subsidies) and March PMIs will be in focus this week.

The Australian dollar is down today, slipping below its 50-day moving average amid a strong US dollar and falling Asian equities, though its broader bullish structure remains intact. Powerful tailwinds from surging Australian 10-year bond yields (above 5%, multi-year highs) and rising commodity prices—fueled by Middle East tensions and higher oil/gas—are boosting the AUD’s rate advantage, improving terms of trade, and attracting inflows. Despite occasional risk-off pressure, the medium-term outlook stays constructive thanks to elevated carry, a hawkish RBA bias (with markets pricing in further hikes, possibly as soon as May), and commodity support. Over the next 1–2 weeks, AUDUSD should trade with a mild upside tilt within the 0.69–0.72 range, with dips well bought on high domestic yields and RBA tightening expectations, while upside remains capped by periodic USD strength and geopolitical headlines—favoring buying shallow pullbacks over chasing rallies ahead of key Australian data like March PMIs and February CPI.

Euro bulls are trying to reassert. The ECB kept rates unchanged at 2.00% and is taking a cautious, data-dependent approach as the Iran conflict pushes up energy prices, raising inflation risks while weighing on growth. While the ECB believes it is better prepared than in 2022 and expects inflation to rise temporarily before returning to target, markets are pricing in rate hikes—creating a disconnect. For now, the euro is finding some support, but near-term direction will be driven by rate expectations, energy price volatility, and geopolitical headlines.

The yen is slightly weaker in thin holiday trading, as Japan observes the Vernal Equinox. A meeting between President Trump and PM Takaichi highlighted ongoing tensions in the US-Japan alliance—particularly around military coordination and burden-sharing—despite progress on economic and energy cooperation. Meanwhile, the Bank of Japan kept rates unchanged but signaled a potential hike as soon as April, with policymakers increasingly focused on inflation risks tied to oil and yen weakness. With rising wages, above-target inflation, and the threat of FX intervention near 160, the outlook for USDJPY is becoming more balanced, making aggressive yen bearish positioning less attractive ahead of the next BOJ meeting.

The Australian dollar is heading for a roughly 1.6% weekly gain, remaining close to last week’s near four-year high. Recent labor data shows a still-tight but gradually cooling jobs market, with strong employment growth driven entirely by part-time roles and a rise in participation pushing unemployment slightly higher. Overall, conditions remain firm enough to keep pressure on the RBA to stay hawkish, with markets expecting further rate hikes amid persistent inflation risks. This backdrop should help support the AUD on dips, though softer full-time hiring may limit more aggressive upside.

The euro is edging slightly higher after yesterday’s drop, which was driven by safe-haven demand for the dollar amid rising Middle East tensions and a less dovish Fed outlook. While February inflation surprised to the upside, it was largely due to temporary factors like Italy’s Winter Olympics, with underlying price pressures still contained—giving the ECB reason to stay cautious. At the same time, renewed energy price spikes tied to geopolitical risks are worsening Europe’s trade outlook and reviving inflation concerns, creating a challenging mix of slower growth and higher prices. Although markets are pricing in tighter ECB policy, the euro remains under pressure as investors weigh higher rates against rising stagflation risks and energy dependence.

The yen strengthened modestly in Asia but remained near the 160 level after the Bank of Japan kept rates unchanged at 0.75% in an 8–1 vote, with one member again pushing for a hike due to inflation risks. The BoJ maintained its accommodative stance while noting uncertainty around Middle East tensions and oil prices, and said future tightening will depend on growth and inflation trends. Rising fuel costs—driven by yen weakness and heavy reliance on imported energy—are adding pressure, even as subsidies aim to limit the impact. Inflation is expected to dip below 2% in the near term before gradually returning to target, with markets now focused on Governor Ueda’s remarks and political developments for further direction.

The Australian dollar edged higher, recovering slightly after the prior session’s sharp drop as markets absorbed a mixed jobs report. While employment rose, the gain was driven by part-time roles and accompanied by a higher unemployment rate, signaling some cooling but not enough to alter expectations for further RBA tightening. Markets still see a strong chance of another rate hike, supporting the AUD alongside Australia’s yield advantage over other major economies. Overall, the currency outlook remains constructive in the near term, though increasingly sensitive to global growth risks, commodity trends, and shifts in central bank policy.

The eurohas held above its March 13 low but remains capped below its 200-day average, reflecting a still-fragile outlook. The sharp drop in German ZEW expectations highlights weakening euro-area growth sentiment, with rising energy costs and inflation uncertainty further clouding the outlook and weighing on domestic demand. At the same time, softer ECB tightening expectations versus a relatively resilient US backdrop tilt rate differentials against the euro. While short-term rebounds are possible on improved risk sentiment or a more cautious Fed, the near-term bias remains subdued, with the pair likely to stay headline-driven and upside limited over the next couple of weeks.

USDJPY is hovering just below 160 as the Bank of Japan is expected to keep rates unchanged this week, with markets focused more on guidance than action. While growth forecasts have improved and domestic demand is stabilizing, softer exports and a return to a trade deficit highlight external headwinds. Rising oil prices and yen weakness complicate the outlook, potentially delaying—but not ruling out—further tightening, with April still seen as a possible window. For now, authorities appear comfortable with current FX levels, leaving Governor Ueda’s communication as the key driver for near-term yen direction.

The Australian dollar is modestly stronger, holding above key technical support, as recent RBA rate hikes signal a still-hawkish stance and help support the currency domestically. However, growth momentum is softening and expectations are for slower GDP ahead. More importantly, AUD remains heavily influenced by global risk sentiment—while higher rates should be supportive, geopolitical tensions and demand for the US dollar as a safe haven are offsetting those gains. In the near term, AUD may hold up better against other currencies, but a sustained rise against the USD will likely require an improvement in overall market sentiment.

The euro remains under pressure from rising imported energy costs and continued safe-haven support for the dollar. While higher oil and gas prices may lift near-term inflation, they also risk slowing growth, leaving the ECB cautious—likely leaning on stronger communication rather than immediate policy tightening. As a result, any support from ECB rhetoric may limit downside but is unlikely to drive sustained euro strength, especially with Europe more exposed to elevated energy prices, keeping the near-term bias tilted to the downside.

The yen remains well offered with USDJPY still sitting just below the key 160 level that has previously raised intervention concerns. The yen remains under pressure as its safe-haven appeal is diluted by a strong dollar, rising oil prices that hurt Japan’s trade balance, and a persistent yield disadvantage, with the BOJ expected to stay on hold for now. While official warnings may slow the move, they are unlikely to reverse the trend without a broader dollar decline or lower oil prices, leaving the yen vulnerable in the near term despite stretched valuations.

The Australian dollar remains well supported by stronger commodity prices and a relatively hawkish central bank. The RBA raised rates by 25bps to 4.10%, as expected, highlighting persistent inflation and risks tied to Middle East uncertainty, with policymakers signaling inflation could stay elevated and risks skewed to the upside. A narrow 5–4 vote reflects internal division, but the move reinforces a renewed tightening bias and commitment to price stability. While this supports near-term AUD resilience, gains may be limited if a prolonged oil shock weakens global demand.

The euro has rebounded slightly from Friday’s 7.5-month low of 1.1411, potentially ending a four-day losing streak. The euro remains caught between rising oil prices—which hurt the eurozone’s growth outlook while lifting inflation due to its reliance on imported energy—and markets rapidly pricing in possible ECB tightening. Traders now see a strong chance of a 25 bp rate hike by mid-year, especially if oil stays elevated, while ECB officials have adopted a more hawkish tone in their messaging. However, many economists still expect the deposit rate to remain around 2% for years, arguing the oil shock may be temporary and insufficient to justify tighter policy. As a result, EURUSD’s direction will likely hinge on whether the ECB ultimately validates market expectations with a rate hike or instead prioritizes growth risks and holds policy steady.

The yen is holding near a 1.5-year low against the dollar despite warnings from Japan’s finance minister that authorities are closely monitoring the currency and may intervene if needed. The dollar has strengthened on safe-haven demand amid rising Middle East tensions and higher oil prices, while stronger U.S. inflation data has reduced expectations for near-term Fed rate cuts. USDJPY is hovering around the mid-159s, close to its highest levels since 2024, as Japan’s dependence on energy imports makes it particularly sensitive to the oil surge. With the Bank of Japan meeting this week, policymakers face a difficult balance: staying dovish risks further yen weakness, while turning hawkish could push already rising government bond yields higher.

The Australian dollar is regaining momentum as markets widely expect the RBA to deliver a second consecutive rate hike to 4.10%. Rising energy prices linked to Iran tensions are likely to push Australian inflation back above 4% in Q2, increasing pressure on the RBA to maintain a tightening bias and making its forward guidance on inflation risks and policy outlook especially important. For the AUD, the mix of a more hawkish RBA and a global risk-off environment creates conflicting forces—rate expectations and a tight labor market offer support, while geopolitical tensions boost the USD and weigh on risk-sensitive currencies.

The euro is on track for a fourth straight day of losses, remaining below its 200-day moving average since breaking down on 3 March. The war has pushed oil prices up nearly 30% and European gas more than 50%, leading markets to price in roughly 20–25 bps of ECB tightening by July and about 40 bps by year-end, even though the central bank is widely expected to keep rates unchanged at next week’s meeting. While some policymakers warn that higher energy costs could lift inflation and bring rate hikes sooner than expected, the ECB—led by Christine Lagarde—is likely to maintain a cautious, data-dependent tone amid elevated uncertainty and softer growth risks. In the near term, this backdrop points to the euro staying range-bound with a downside bias, with rallies likely capped near the 200-day moving average unless US data or geopolitical developments materially shift the outlook.

The yen is hovering near its weakest levels since July 2024, with USDJPY approaching the 160 area after recently hitting a fresh YTD high, raising renewed concerns about potential intervention. BOJ Governor Kazuo Ueda warned that a weaker yen could intensify imported inflation, especially as oil prices rise, while stressing that policymakers will monitor how FX moves impact the inflation outlook. The latest gains in USDJPY are being driven by a stronger dollar and surging energy costs, which are worsening Japan’s terms of trade and reinforcing a stagflation-like backdrop that pressures real incomes. With Brent crude back above $100 and Japan heavily reliant on imported energy, the environment continues to weigh on the yen, while markets increasingly believe the previous intervention “line in the sand” near 158–159 has shifted closer to 160–162. For now, policymakers appear more focused on preventing disorderly volatility than defending specific levels, and with oil elevated and US data firm, risks remain tilted toward a near-term push into the 160s.

The Australian dollar is extending Thursday’s roughly 1.1% drop but still looks set to finish the week higher. Expectations for tighter policy are supporting the currency, with major banks now forecasting a 25bp RBA hike to 4.1% on March 17 and markets pricing about a two-thirds chance of the move, with some even anticipating another hike in May if energy-driven inflation persists. Strong demand from investors seeking higher Australian yields has also boosted AUD positioning.

The euro is back under pressure into Thursday, though price action remains largely range-bound. The macro backdrop has turned slightly more supportive for the euro as the Iran war revives inflation concerns just as the ECB believed conditions were stabilizing. Comments from Peter Kazimir warning that upside inflation risks now “clearly dominate” have prompted markets to price in the possibility of an ECB rate hike by mid-year, with talk of further easing fading. Meanwhile, Isabel Schnabel reiterated that policy is currently in a “good place” but flagged the conflict as an upside inflation risk through energy prices, suggesting policymakers will likely stay on hold for now. Even with potential oil supply relief from coordinated reserve releases, persistent energy volatility and rising inflation expectations point to a higher euro inflation risk premium and a comparatively less dovish ECB than the Fed in the quarters ahead.

The major pair is holding just below the January 14 YTD high of 159.45 as the yen continues to struggle. Japan’s decision to release 80 million barrels from its strategic reserves as part of a coordinated IEA effort highlights policymakers’ focus on containing energy-driven inflation amid Middle East tensions, though the yen remains weighed down by Japan’s heavy reliance on imported energy. Business sentiment has softened slightly but remains expansionary, while higher oil prices and stagflation pressures are reinforcing expectations for more fiscal support. At the same time, strong demand at the latest 5-year JGB auction and softer rate-hike expectations have capped yields, keeping policy divergence and carry dynamics tilted against the yen, with markets still comfortable holding USDJPY despite intervention warnings.

The Australian dollar is cooling off today, giving back Wednesday’s gain that had taken the currency to its highest level against the Buck since June 2022. Still, expectations for a near-term RBA rate hike continue to provide support into dips. Consumer inflation expectations rose to 5.2% in March, the highest since July 2023, while CPI remains above the RBA’s target and risks remain skewed higher amid the recent oil supply shock. With inflation projected to stay elevated for longer and major banks now anticipating a 25bp hike next week, markets are pricing roughly a 70% chance of tightening, helping underpin AUD strength alongside strong commodity prices and a widening Australia–U.S. yield spread.