Intro
A slight uptick in Australia’s interest rate contributed to the Aussie being the strongest currency last week. Meanwhile, the Japanese yen continues to struggle noticeably.
We expect another typical week with no multiple major economic events (but anticipate any surprises driven by current long-term fundamentals). Also, our sentiment ratings for each currency remain unchanged, which we’ll explore in a moment.
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 and Trump’s return to the tariff stage.
Additionally, it has been under sustained pressure due to mounting expectations of Fed rate cuts. Markets are also now pricing in weaker U.S. consumer demand and a possible slowdown in job creation.
Key news to watch: Inflation Rate YoY on Tuesday and Initial Jobless Claims on Tuesday.
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.
Key news to watch: Inflation Rate YoY on Wednesday and Unemployment Rate on Thursday.
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
The Reserve Bank of Australia delivered a rate hike last week, offering some much-needed bullishness. However, China’s sluggish demand for iron ore and weak trade data pose medium-term risks to the Australian economy. Markets still anticipate at least one rate cut this year.
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: Inflation Rate YoY on Tuesday.
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.
Key news to watch: Inflation Rate YoY on Friday.
