Intro
It was another calm week in the forex market (as predicted), with the euro rising by more than 1% against the AUD, NZD, USD, and GBP.
However, this week should be a bit more action-packed with interest rate decisions for four currencies
So, let’s explore our sentiment ratings for each major currency in forex.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
The USD faces pressure due to high federal deficits, rising debt-to-GDP ratios, Trump’s tariffs, a contracting economy, and declining consumer sentiment. Recent inflation readings came in softer than anticipated.
Additionally, political pressures on a cautious Federal Reserve have raised fears about its independence.
Speaking of which, the Fed is expected to hold the interest rate (near 99% chance). However, at least one more cut is expected later on in the year.
Key news to watch: Initial Jobless Claims and Federal Funds Rate on Wednesday.
Euro (EUR): Bullish
The euro has stabilized, partly due to the European Central Bank’s dovish stance, which appears to be nearing its limit. Although the ECB has already cut rates, stable inflation and improving economic growth suggest that the easing cycle may be nearing a pause.
Confidence in the eurozone is gradually recovering, and EUR/USD has rebounded strongly above the 1.15 level.
British Pound (GBP): Bullish
The British pound reflects a mixed macro picture. The UK economy contracted recently, while wage growth has decelerated. The Bank of England is expected to hold rates steady at 4.25% this week.
Sterling’s performance has been supported in part by risk-on global sentiment and relative calm in equity markets.
Key news to watch: inflation rate YoY and interest rate decision on Wednesday
Japanese Yen (JPY): Neutral
The Bank of Japan (BoJ) held its policy rate at 0.5% in May. Exports are pressured by trade tension, but further BoJ tightening is anticipated. There are also ongoing global trade policy ambiguities linked to the US economy.
However, gradual yen strengthening is forecasted as US yields decline and the BoJ diverges from the Fed. Some pair forecasts suggest USD/JPY easing to ~138 by early 2026.
Key news to watch: interest rate decision on Tuesday; inflation rate YoY on Friday
Australian dollar (AUD): Bearish
The Australian dollar faces pressure from weak Q1 GDP growth, soft domestic consumption, and moderating inflation. The Reserve Bank of Australia (RBA) recently cut its rates to 3.85% and is expected to cut them again in July due to sluggish economic growth.
However, the Australian dollar has benefited from improving risk appetite, a weaker U.S. dollar, and support from rising commodity prices.
New Zealand dollar (NZD): Bearish
The New Zealand dollar is weighed down by subdued domestic growth and expectations that the Reserve Bank of New Zealand will remain dovish. While higher commodity prices and global risk sentiment offer some support, the NZD lacks clear bullish drivers.
The kiwi is increasingly sensitive to China-related data, given New Zealand’s trade exposure.
Canadian dollar (CAD): Neutral
CAD is caught between rising oil prices and the drag from weak domestic manufacturing and dovish policy expectations. While the Bank of Canada hasn’t made aggressive policy moves recently, there’s speculation that rate cuts could come in late Q3,
For now, oil remains CAD’s primary tailwind, but the fundamental backdrop offers little bullish enthusiasm.
Swiss Franc (CHF): Bearish
The Swiss franc is beginning to soften, with the Swiss National Bank very likely to reduce the interest rate this Thursday.
Inflation has fallen below target, and the SNB is growing concerned about deflationary risks and currency overvaluation. Although CHF retains its safe-haven appeal, aggressive easing could limit future upside.
Key news to watch: interest rate decision on Thursday.
