The euro is little changed after a two-day drop that pushed it below 1.1900, with price action still driven as much by the dollar as by euro-specific factors. While ECB President Lagarde struck a steady tone on the eurozone inflation outlook, sentiment remains weighed down by political uncertainty in France, Germany’s fiscal constraints, and reports that Bank of France Governor Villeroy de Galhau may step down earlier than expected. Attention now turns to speeches from ECB officials for policy clues, with markets pricing nearly 60 bps of rate cuts by year-end and a modest chance of a March move.

The yen is modestly stronger against the dollar, with USDJPY hovering just above a fresh two-week low near 152.27, even after solid US labour data. The pair remains under pressure amid renewed verbal intervention from Japanese officials, optimism around firmer domestic growth following PM Takaichi’s election mandate, and the backdrop of gradually normalizing Bank of Japan policy. Meanwhile, Japan’s producer inflation slowed to 2.3% year-on-year in January—the weakest pace in 20 months—suggesting easing price pressures that could give the BoJ greater flexibility to adjust policy in the months ahead.

The Australian dollar is edging higher near a three-year high, supported by the RBA’s increasingly hawkish tone. Governor Michele Bullock reiterated that inflation in the “threes” is unacceptable and said rates could rise further if price pressures persist, echoing recent warnings from other RBA officials. With the cash rate now at 3.85% and economists expecting at least one more hike, inflation expectations climbing, and the labor market still tight, markets are focused on upcoming data and fresh commentary from Assistant Governor Sarah Hunter for clues on the next policy move.