Intro
It’s been a common theme recently for uneventful moves in forex. However, we are close to the start of a new month, meaning the Non-Farm Payrolls (NFP) and US unemployment rate are around the corner.
Also, there are three interest rate decisions (with two on the same day). So, expect some volatility as we explore our sentiment ratings for this week.
Market Overview
Here is a brief sentiment report for all major currencies.
US Dollar (USD): Bearish
USD remains bearish amid US fiscal deficits, credit concerns and erratic trade policy. Safe‑haven demand has faded, and even the dollar’s status as a reserve currency is being questioned. Also, NFP and the unemployment rate are expected to worsen slightly on Friday.
Finally, while the Fed is expected to keep the interest rate unchanged, at least one cut remains a high possibility this year.
Key news to watch: interest rate decision on Wednesday; NFP and unemployment rate on Friday
Euro (EUR): Bullish
The euro has firmed steadily as the ECB holds rates at 2% and scales back expectations for early cuts. Optimism around EU fiscal stimulus and strategic diversification from U.S. assets continues to support the euro.
British Pound (GBP): Neutral
Sterling remains well‑supported by stubborn inflation and strong wage growth, despite slightly disappointing retail sales last week. However, the IMF has flagged fiscal sustainability risks in the UK, alongside potential new wealth or consumption taxes.
Still, investor confidence in the Bank of England and consumer resilience has kept the pound strong.
Japanese Yen (JPY): Neutral
The yen recently strengthened on political uncertainty after Japan’s upper‑house election results. It has also been aided more by the dollar’s weakness than by domestic policy actions.
However, the BoJ’s expected policy shift may support yen strength later, but near‑term direction hinges on incoming US–Japan trade cues.
Key news to watch: interest rate decision on Thursday
Australian dollar (AUD): Neutral
Despite an RBA rate hold, the AUD rebounded briefly. Still, concerns persist about weak labour data and sluggish Chinese resource demand. Commodity headwinds and central bank caution cast a shadow on sustained upside.
Despite short‑lived strength, the medium‑term AUD outlook is muted unless oil and metals recover noticeably.
New Zealand dollar (NZD): Neutral
The NZD has softened as global risk appetite wanes and inflation moderates. Meanwhile, New Zealand’s central bank maintains a steady tone. Export earnings offer some support, but the currency remains vulnerable to broader risk sentiment shifts and protectionist pressures.
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: interest rate decision on Wednesday
Swiss Franc (CHF): Bullish
Despite the Swiss National Bank cutting rates into zero territory last month, the franc remains strong. This is due to safe-haven inflows, improving Swiss trade data, and Switzerland’s economic stability.
However, the SNB retains FX intervention firepower and may step in if the franc’s strength accelerates too much.
