The Euro paused its upward trend against the USD after weak German data raised concerns about the Eurozone’s largest economy, though it remains above the 50-day moving average. Expectations lean toward the ECB holding rates steady in September, while the Fed is increasingly likely to cut rates, potentially supporting Euro bulls due to diverging central bank policies. Meanwhile, President Trump’s proposed US-Russia summit to discuss a peace deal could push European nations, especially those near Russia, to increase defense spending, possibly via joint bonds, which may raise Eurozone bond yields. The ECB’s recent bulletin suggests stable inflation but slower growth, with risks from tariffs and geopolitics, and upcoming data on employment, industrial production, and GDP will provide further economic insights.

The Bank of Japan’s July meeting summary revealed a hawkish tilt among board members, with growing concerns about inflation risks over growth, potentially setting the stage for a rate hike before year-end if U.S. tariffs have minimal impact and domestic inflation remains steady. Uncertainty persists around U.S. tariff policies, as Japan awaits a timeline for ending tariff stacking and reducing auto tariffs, which could ease conditions for BOJ rate hikes but keeps Japanese markets cautious. Political instability in Japan, with calls for Prime Minister Ishiba’s resignation after the LDP’s election losses, may heighten market volatility and weaken the yen. Key upcoming data, including the U.S. CPI report and Japan’s Q2 GDP, could influence USDJPY movements by shaping expectations for the Federal Reserve and BOJ policy directions.

One major Australian bank predicts the Reserve Bank of Australia will cut the cash rate from 3.85% to 3.60% at its next meeting, supported by recent inflation and labor data showing the economy is on track. The bank expects minimal changes to RBA’s forecasts, though economic growth might be slightly higher due to stronger housing investment. Markets anticipate at least two rate cuts this year, with a terminal rate just above 3%, and global uncertainties, like tariffs, are less likely to affect RBA’s outlook. Upcoming Chinese economic data could influence Australia’s economy.