Intro
USD continued its losing streak despite a small boost in employment figures. Meanwhile, the Swiss franc and euro maintained their dominance even though the week was calm.
We expect a similar week, at least because there are no high-impact news events. However, as always, expect any surprises that may be steered by ongoing long-term fundamentals. That’s what we will cover in our latest sentiment report.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
The US dollar has endured a brutal 2025, plunging just over 10% against the euro this year. This drop has been largely driven by mounting fiscal concerns, trade policy uncertainty, and shifting market expectations regarding Federal Reserve action.
With mixed economic signals and inflation still lingering, the Fed remains cautious. Markets now anticipate at least one interest rate cut this year.
Key news to watch: Initial Jobless Claims on Thursday.
Euro (EUR): Bullish
The decline in the US dollar has helped the euro tremendously. However, another bullish factor is the inflation in the Eurozone, which is steadily heading towards the European Central Bank’s 2% target.
Although the ECB recently cut rates, improving economic growth suggests that the easing cycle may be nearing a pause. Still, the euro’s upside may be capped by risks in trade, external demand, and imported inflation.
British Pound (GBP): Neutral
Pound sterling continues to tread water. While holding up well against the dollar, internal economic challenges persist and continue to weigh on GBP. The UK faces persistent inflationary pressure and sluggish growth.
Overall, the British pound is stuck in a neutral range, waiting for direction from either domestic data or broader shifts in risk sentiment.
Japanese Yen (JPY): Neutral
Global risk-off sentiment, in response to geopolitical tensions, continues to support the yen’s safe haven status.
The Bank of Japan has begun very gradual policy normalization, but it still lags far behind other central banks.
Still, the yen’s strength has been aided more by the dollar’s weakness than by domestic policy actions. If global risk sentiment continues to deteriorate or USD slips further, JPY could gain further ground.
Australian dollar (AUD): Neutral
Sluggish Chinese economic data, which has a direct impact on Australia’s export sector, has weighed down on the Australian dollar.. Domestically, the Reserve Bank of Australia has shifted toward a more dovish tone, with markets anticipating at least one rate cut later this year.
However, strong iron ore demand and broader optimism tied to a Middle East ceasefire have supported the risk-on environment, favouring high-beta currencies like the AUD.
Key news to watch: interest rate decision on Tuesday.
New Zealand dollar (NZD): Neutral
The New Zealand dollar has been a quieter performer compared to Australia. Inflation is moderating, but growth remains patchy. The Reserve Bank of New Zealand may follow the Australian central bank’s lead with easing later this year
While domestic economic data hasn’t been alarming, the NZD remains vulnerable to broader shifts in risk sentiment, dairy export trends, and China’s economic health.
Canadian dollar (CAD): Bullish
The Canadian dollar has demonstrated greater resilience than many expected, thanks to strong oil prices and performance in commodity exports.
Also, the Bank of Canada’s more hawkish tone compared to the ECB or Fed gives CAD some relative appeal.
While not outright bullish across the board, sentiment around the loonie is less neutral, especially if energy prices remain elevated.
Key news to watch: unemployment rate on Friday.
Swiss Franc (CHF): Bullish
The Swiss franc is one of the quiet winners of the current macro landscape. It continues to benefit from its reputation as a safe-haven currency amid the ongoing global economic uncertainty.
Even after the Swiss National Bank’s 25-basis-point rate cut not long ago, the Swiss franc has held firm, supported by its safe-haven characteristics and the region’s economic stability.
