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.