The euro has recovered most of Tuesday’s losses. ECB President Christine Lagarde signaled that the euro area is better positioned than in 2022–23 to handle an Iran-related energy shock, while emphasizing the ECB will act if rising energy costs threaten to push inflation meaningfully above its 2% target. Markets briefly priced in nearly two rate hikes for 2026 after the oil spike, but expectations have since eased to less than one hike as de-escalation headlines emerged and policymakers reinforced a cautious “wait-and-see” stance. Overall, ECB officials suggest they will tolerate near-term volatility but remain ready to respond if higher energy prices begin feeding into wages and services inflation, leaving policy risks slightly tilted toward tighter settings if the shock proves persistent.

The yen remains under pressure against the dollar, with USDJPY approaching Monday’s 6.5-week high near 158.9. Softer February PPI data — up 2.0% YoY and down 0.1% MoM — suggests some easing in upstream price pressures, though producer inflation remains relatively elevated overall. While the BOJ has only recently lifted rates to 0.75% and continues to signal the possibility of further hikes, Japan’s expansionary fiscal stance, improving growth, and efforts to sustain inflation through wage gains point to ongoing medium-term yen weakness. Near-term direction will largely hinge on oil prices and the Iran conflict, with volatility in energy markets influencing BOJ expectations; however, even if tensions ease and markets price an April hike, structural factors are expected to limit USDJPY downside.

The Australian dollar is the top performer today, reaching a new year-to-date high. The move follows hawkish comments from RBA Deputy Governor Andrew Hauser, who warned that the economy has limited spare capacity and that rising oil prices linked to the Iran conflict could add to inflation pressures. Markets have sharply increased expectations for further tightening, now pricing about a 65% chance of a 25bp rate hike at the March 17 RBA meeting and roughly 58bp of hikes over the rest of the year.

The euro is consolidating Monday’s modest gains following a round of intense setbacks, as markets rapidly reprice the ECB outlook following another energy shock. With oil surging and European gas prices up significantly, traders are now pricing around 1–2 ECB rate hikes this year, pushing German yields higher but reviving concerns about Europe’s energy vulnerability and stagflation risks. While higher yields offer some limited support for the euro, the backdrop of fragile growth, weaker sentiment data, and tightening financial conditions suggests any rallies may be short-lived and heavily dependent on policy expectations and energy price dynamics rather than a strong economic recovery.

The yen remains close to Monday’s roughly six-week low (USDJPY high) as Iran-related supply risks keep oil elevated, highlighting Japan’s worsening terms of trade. Because Japan imports most of its energy from the Middle East, higher oil prices threaten a stagflationary hit—squeezing growth while lifting inflation and eroding already weak real incomes. The yen is therefore caught between opposing forces: rising imported inflation and the possibility of earlier BOJ tightening on one side, and weaker growth, fiscal worries, and safe-haven USD demand on the other. Markets currently see only about a 50% chance of a BOJ hike by April, though some analysts warn USDJPY could drift toward the 160 intervention zone if expectations for tightening fade, while others argue the BOJ may instead bring forward rate hikes as higher oil pushes inflation further above target.

The Australian dollar has held up well into the latest dip. Australia is seeing mixed effects from the latest surge in global energy prices: higher LNG and coal prices are boosting export revenues and supporting the country’s terms of trade, which should provide some near-term support for the AUD. However, rising fuel import costs are pushing up inflation and weighing on household spending, likely slowing domestic growth. As a result, while stronger commodity exports may offer short-term resilience for the currency, softer economic momentum and cautious risk sentiment could limit sustained upside.

The euro extended declines to another yearly low as investors rotated into the dollar amid rising geopolitical tensions. While the pair has since seen dip-buying interest, markets remain sensitive to headlines and event risk, with traders now fully pricing at least one ECB rate hike in 2026 even as policymakers signal policy is already in a “good place.” Recent Eurozone data showed slightly softer Q4 growth but still supported by solid domestic demand, and Europe’s resilience—helped by stronger intra-EU trade and a firmer stance on US tariffs—has made aggressive euro selling harder to justify. Looking ahead, risks remain two-sided: energy price spikes and stagflation fears could cap EUR gains, while expectations for eventual ECB tightening may help limit downside.

The yen weakened further against the dollar in Monday’s Asian session, with USDJPY pushing towards 159. The currency is being pulled by competing forces: strong broad dollar demand and energy-import pressures weighing on the yen, while expectations for narrowing Fed–BOJ policy divergence and rising Japanese yields offer potential support. Japanese officials are increasingly acknowledging that yen weakness is feeding into inflation, and while markets doubt verbal intervention alone will have much impact, the move toward 160 keeps the risk of action alive. At the same time, stronger wage growth and persistent inflation pressures are reinforcing the case for continued BOJ policy normalization, with markets assigning meaningful odds to a possible rate hike as soon as April.

The Australian dollar fell earlier today, as global risk sentiment weakened amid escalating geopolitical tensions and a sharp rise in oil prices. Markets have responded by sharply repricing the RBA outlook, with roughly a 30% chance of a 25bp hike at the 17 March meeting and about 65bp of tightening priced for the rest of the year, reflecting growing inflation risks from higher energy costs. Australian bond yields have surged while policymakers warn that rising fuel prices could push inflation expectations higher. At the same time, softer domestic data and cautious household spending highlight a fragile economic backdrop, though some analysts still see scope for a more hawkish RBA path supporting the AUD over the medium term.

The euro has fully reversed the January rally and has fallen about 1.7% this week. At the same time, the ECB increasingly sees the escalating US-Iran conflict as an upside risk to euro-area inflation through higher energy prices, though officials still view markets as orderly and are not signaling an immediate policy shift. Policymakers broadly suggest they will tolerate temporary energy spikes but could act if inflation expectations begin to drift, leaving near-term euro pricing more sensitive to energy and inflation-expectations data than to growth surprises. Meanwhile, the February ECB minutes confirmed a unanimous decision to hold rates near the 2% inflation target with “full optionality,” an outlook now being tested by rising geopolitical risks.

The yen traded mostly steady in Asia and is only modestly weaker against the dollar year-to-date, though renewed energy security concerns are emerging after Japan was warned of limited support to offset disruptions around the Strait of Hormuz. Given Japan’s heavy reliance on imported energy, higher fuel costs could complicate fiscal expansion plans and add to inflation pressures, with at least one refiner already cancelling March exports amid expectations of higher prices. USDJPY remains pulled between Japan’s energy vulnerability and the Fed-BOJ policy gap, versus safe-haven demand and the risk of official intervention if the yen weakens too quickly. Still, scope exists for yen strength if carry trades unwind and domestic yields rise, while ongoing wage growth and expectations of gradual BOJ tightening continue to support the medium-term outlook for the currency.

The Australian dollar is modestly bid today, recovering roughly half of Thursday’s near 1% drop, though it remains capped below 0.7100. Recent data point to a softer backdrop, with Australia’s January trade surplus narrowing to A$2.6b as exports fell and imports rebounded, while trade with China rose sharply, highlighting Australia’s heavy reliance on China even as the surplus with its largest partner shrinks. Domestically, a modest 0.3% rebound in January consumption—driven mostly by services and essentials—signals cautious households, suggesting demand momentum is cooling and raising the bar for further RBA tightening despite February’s rate hike.

The euro remains under pressure after a sharp two-day drop erased the January rally, despite a modest bounce. The decline reflects a stagflation-style energy shock tied to the Iran conflict, which has driven oil and European gas prices sharply higher while euro-area inflation has already surprised to the upside. Because Europe is highly dependent on imported energy priced in dollars, rising fuel costs act as a direct economic “tax,” weakening the euro even as they complicate ECB policy by keeping inflation elevated and growth uncertain. As long as energy prices stay high and central banks remain cautious, the balance of risks still favors further downside.

The yen is trying to hold onto recent gains on the back of  concerns about potential intervention. Japan’s Finance Minister Katayama reiterated that both Japan and the US could take “decisive action” under the G7 stable currency framework, with recent rate-check activity reminding markets that coordinated signalling can quickly trigger a yen squeeze. Short-dated options show rising demand for yen protection, suggesting traders are hedging near-term event and intervention risk rather than positioning for a broader yen bull trend. While risk aversion and falling US Treasury yields could support the yen, the Bank of Japan is still cautious about tightening policy given global uncertainties, meaning a sustained JPY rally may require either deeper risk-off conditions or a disorderly move in USDJPY toward the 160 “danger zone.”

The Australian dollar is under a little pressure, putting it on track to snap a six-week run of gains. January data was mixed, with the trade surplus narrowing to A$2.6b from A$3.4b as exports slipped 0.9%, while imports rose 0.8%, suggesting firmer domestic demand. Household spending rose 0.3% on the month but the annual pace of 4.6% came in below expectations. With Q4 GDP confirming solid economic momentum and steady private investment, dips toward the 0.69–0.70 area—particularly if driven by geopolitical headlines or yield swings—may offer opportunities to selectively accumulate AUD ahead of the mid-March RBA meeting, though escalating global growth concerns could still pressure the currency in the near term.

The euro has extended a sharp two-day decline, as the US-Israel conflict with Iran enters its fifth day. The move reflects a stagflation-style energy shock for Europe, with gas and oil prices surging amid Qatar LNG disruptions and Iran-related supply risks, pushing inflation higher while darkening the growth outlook. Although markets have shifted from expecting ECB easing to pricing a possible 2026 hike, the inflation surge is viewed as temporary and energy-driven, limiting support for the euro while risk-off sentiment and delayed Fed cuts favor the dollar. With European bonds under pressure and energy prices elevated, EURUSD remains biased to the downside unless geopolitical tensions and energy risks ease quickly.

The yen has held relatively steady on the day thus far. Japan’s February PMIs pointed to the fastest private-sector growth since May 2023, driven by solid services activity, stronger manufacturing output, and the biggest rise in new orders in about three years. Still, the currency remains under pressure due to Japan’s reliance on energy imports and the wide policy gap between the Fed and BOJ. While officials are watching markets closely and keeping the option of intervention on the table—especially if USDJPY moves toward 160.

The Australian Dollar has pulled back toward Tuesday’s 3.5-week low as rising global yields and caution around the Iran conflict weigh on higher-beta currencies. Australia’s Q4 2025 GDP rose 0.8% QoQ and 2.6% YoY, beating expectations and highlighting resilient domestic demand heading into the March RBA meeting. While policymakers are also watching inflation risks from higher oil prices, the RBA’s hawkish stance—emphasizing that every meeting is “live” and leaving the door open to a March hike—continues to provide underlying support for the Aussie. As a result, dips toward the 0.69–0.70 area may offer opportunities to accumulate AUD, particularly on crosses, even if broader risk sentiment and USD strength cap near-term upside.

The euro is extending its recent decline as renewed Middle East tensions have revived the dollar’s safe-haven appeal and pressured energy-importing currencies like the euro. The euro has slipped back under 1.17, giving up much of its early-year rally, with Europe seen as more vulnerable to higher oil and gas prices than the more energy-independent United States. Recent ECB comments signal no urgency to shift policy, reinforcing a near-term rate differential that favors the dollar. Unless Gulf tensions ease quickly, risks remain tilted toward further downside in EURUSD, though any de-escalation could trigger a rebound.

The yen is edging higher but USDJPY is still hovering in the 157s, as rising oil prices and a firm dollar offset typical safe-haven demand. BoJ Deputy Governor Himino struck a cautious tone, stressing that policy will depend heavily on Middle East developments and offering no signal of a near-term hike, while softer labor data reinforce a gradual approach. With Japan’s reliance on imported energy making the currency sensitive to higher oil prices, any yen gains are likely to be limited, keeping risks tilted toward renewed USDJPY upside toward 158 if US data stay firm. Although markets still expect modest tightening later this year, the near-term rate differential remains yen-negative, and further weakness could heighten rhetoric or intervention risks ahead of the upcoming US-Japan meeting.

The Australian dollar is relatively flat despite softer regional equities, supported by stronger-than-expected Q4 company profits, which climbed 5.8% versus a 1.9% forecast and showed broad-based strength across mining and services. While RBA Governor Michele Bullock warned that higher oil prices could lift inflation expectations, she stressed it’s too early to assess the net impact, noting that a sustained energy shock could also slow global growth. Overall, the data point to resilient domestic demand and firmer nominal income, reinforcing a hawkish RBA tilt and favoring AUD strength on crosses—particularly against low-yielders—even if broader USD strength caps AUDUSD upside.

The euro has come under notable pressure as dollar strength weighs amid elevated geopolitical tension. The euro was already under pressure after softer Eurozone inflation, raising the risk that further weakness in upcoming CPI data could revive expectations for ECB rate cuts. Near-term price action will be likely be driven more by risk sentiment and oil price swings than by economic releases. Overall, markets expect choppy trading, with downside risks if tensions escalate or inflation disappoints, while stabilization in geopolitics and data could allow modest upside.

The yen has softened against the dollar despite a broader risk-off backdrop, even as stronger manufacturing PMI data points to improving domestic conditions and rising business confidence. While geopolitical tensions and safe-haven demand may offer intermittent support, structural factors—including capital outflows ahead of Japan’s fiscal year-end, elevated oil prices, and still-accommodative BOJ policy relative to the Fed—continue to limit sustained yen strength. Although gradual BOJ tightening and firm inflation dynamics support the yen over the medium term, near-term gains are likely to remain shallow amid wide rate differentials, cautious policy guidance, and persistent external pressures, leaving the currency vulnerable to continued two-way volatility.

The Australian dollar is weaker, pressured by safe-haven demand amid escalating US-Israel-Iran tensions, though supportive domestic data and strong commodity prices are providing some offset. If the conflict remains contained, volatility should ease and AUD could gradually recover, especially if Australian GDP and household spending surprise to the upside and reinforce signs of stabilizing growth. However, a deeper escalation that disrupts oil flows would likely strengthen the USD further and weigh on AUD, even if Australia’s commodity exposure offers some resilience, while only a rapid de-escalation would allow AUD to meaningfully re-rate higher in the near term.

The euro has been mostly trading sideways in recent sessions, as markets weigh US tariff threats, trade policy uncertainty, and ongoing US-Iran tensions. Germany’s growing trade deficit with China—driven by concerns over Chinese industrial overcapacity and an undervalued yuan—is adding structural pressure on the euro by undermining European manufacturing competitiveness and increasing the risk of strained EU-China relations. At the same time, weaker inflation readings have put the ECB on the defensive, and any further slowdown in upcoming data could revive rate-cut expectations, adding additional downside risk for the currency.

The yen strengthened modestly following Tokyo CPI data that showed inflation cooling at the headline level but remaining firm underneath, reinforcing expectations that the Bank of Japan will continue gradual rate hikes, potentially as soon as April. While policymakers remain cautious and political pressure favors accommodative policy, markets are increasingly positioning for further normalization, which should be supportive for the yen over time. Still, softer core inflation and wide global rate differentials suggest the yen is more likely to see two-way volatility rather than a sustained one-direction move, even as domestic demand shows signs of improvement.

The Australian dollar is up on the day and continues to build a stronger base above the early-February lows, supported by the RBA’s relatively hawkish stance and resilient domestic fundamentals. While January private credit growth slowed on a monthly basis, annual growth remains firm, and broader data—including solid business investment and inflation still above target—reinforce expectations that policy will stay restrictive for now. This rate advantage versus a more easing-leaning Fed should help underpin the AUD and limit near-term downside, with any further RBA rate hikes more likely later in 2026 as incoming inflation and growth data confirm the outlook.

The euro is hovering around its 50-day moving average as markets weigh US tariff threats, trade uncertainty and ongoing US-Iran tensions. In the near term, risks remain tilted against the euro: cooling inflation across the euro area is increasing expectations for ECB rate cuts, and softer data compared to the ECB’s projections could limit euro rallies, especially with the dollar supported by safe-haven flows and relatively high US real yields. While Germany’s economy is showing early signs of cyclical improvement, weak consumer confidence and cautious household spending suggest any recovery will be slow and reliant on investment and exports, leaving it exposed to global trade headwinds.

The yen firmed after hawkish comments from Bank of Japan officials, with board member Hajime Takata saying further rate hikes may be needed as inflation nears target, while Governor Kazuo Ueda stressed a data-dependent but ongoing normalization path. Earlier, the nomination of two more dovish academics to the BOJ board had weighed on the yen and pushed long-dated JGB yields higher, reinforcing expectations that any additional tightening may be delayed rather than derailed. In the near term, negative headlines and lingering skepticism toward Japan’s rebound keep USDJPY biased higher, but underlying macro conditions remain relatively stable and US sensitivity to excessive yen weakness should help cap gains near the 158–159 area. Tactically, this favors selling rallies into multi-month highs rather than chasing an upside breakout, especially ahead of the March 19 meeting between PM Takaichi and President Trump.

The Australian dollar is stabilizing above key support at 0.7007, with potential to rebound toward the 0.7147–0.7158 area as long as this level holds. Recent Australian capex data showed modest growth, beating expectations but slowing sharply from the previous quarter, highlighting softer business investment overall despite ongoing support from large infrastructure projects. The broader backdrop remains supportive for AUD, as the RBA’s more hawkish stance and still-elevated inflation contrast with expectations for eventual Fed easing, helping limit downside near 0.70. In the near term, price action will depend on whether markets focus on persistent inflation and tight labor conditions—which support further RBA tightening later this year—or signs inflation is cooling. For now, the bias remains constructive above 0.7007, with scope for further gains toward 0.72–0.73 if upside momentum builds, while a break below support would shift risks back toward 0.6897.