Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.
USD
The US dollar has a mixed but still supported setup. Commerzbank notes that US payrolls rose by 115k in April, above expectations, and says there is “no reason for the Fed to cut interest rates soon” because inflation is still the bigger problem. Scotiabank also warns that US inflation pressure is broadening, saying “the second round is already here” ahead of this week’s CPI and PPI data.
Barclays adds that solid US labour data are making markets place more weight on the risk of a hawkish Fed pivot if inflation keeps building. BofA sees the US tariff shock fading as the effective tariff rate has dropped, but still expects core inflation to stay sticky. Citi also points to strong US earnings and capex, especially AI-linked investment, as a sign that US growth momentum remains firm.
For traders, the USD is not an easy short while US inflation risk is rising and the Fed is on hold. But risk-on sentiment, better equity markets, and questions over the durability of Trump’s tariff agenda may limit dollar upside.
EURUSD
EUR/USD is being pulled between ECB tightening risk and Eurozone growth concerns. Commerzbank says the euro should hold up while markets believe the ECB can respond to inflation risks. But it also warns that the longer the energy shock lasts, the bigger the strain on the Eurozone economy becomes.
Danske Bank expects the ECB to hike in June and July, while also noting that Eurozone wage growth is pointing lower for 2026. Barclays says Eurozone survey indicators show rising risks that price pressure is broadening through indirect effects, which could push the ECB toward tighter policy to protect inflation expectations.
For traders, EUR/USD can stay supported if the ECB remains hawkish and the dollar weakens on risk appetite. The main risk is that higher energy prices begin to damage growth more clearly, which would cap EUR upside.
GBPUSD
GBP has held up better than expected despite UK political pressure. Commerzbank says Labour’s heavy local election losses did not trigger an immediate pound selloff because Prime Minister Starmer signalled he would not resign. But Commerzbank warns that “the critical phase is just beginning” as leadership pressure could rise in coming weeks.
Lloyds expects UK Q1 GDP to rise 0.5% q/q, stronger than the Eurozone, but warns that policymakers will focus on whether this strength can last. Barclays says final PMIs showed robust services but weak construction activity, leaving the UK growth picture uneven.
For traders, GBP/USD can stay firm while UK data hold up and BoE rate cuts remain off the table. But political risk, weaker construction, and softer growth later in the year are clear headwinds.
USDJPY
USD/JPY remains supported by high US yields, weak yen fundamentals, and Japan’s energy import problem. Marc to Market says recent yen intervention appears aimed at stopping USD/JPY from moving back above 160, while US Treasury Secretary Bessent’s Japan visit keeps yen weakness in focus.
Nomura says Japan has moved out of deflation, with CPI above 2% for four straight years and strong spring wage deals. Barclays has revised Japan growth lower and inflation higher because of its oil price outlook, but says its BoJ rate-hike call remains intact because the BoJ has already shifted more attention toward inflation risks.
For traders, USD/JPY can remain supported unless the BoJ turns more hawkish or intervention becomes larger. But the higher the pair moves toward 160, the more intervention risk matters.
AUDUSD
AUD is supported by risk appetite, commodities, and a still-hawkish RBA. Westpac says the RBA has already delivered three hikes and still expects two more, but has pushed the timing to August and September rather than June and August. Westpac sees second-round inflation from fuel and related costs as the key reason the RBA may need to tighten again.
CommBank notes that AUD/USD rose toward 0.7244 after stronger US equities and a softer USD, while local focus now turns to the Australian Federal Budget, wages, lending, and household spending. Westpac’s commodity forecasts show AUD/USD around 0.71 in June 2026, rising toward 0.74 through 2027, helped by firm commodity assumptions.
For traders, AUD/USD has a mild positive bias while risk stays firm and RBA hike pricing remains alive. The main risks are a renewed Iran shock, weaker China demand, or a Budget that adds inflation pressure and complicates the RBA path.
NZDUSD
NZD has been helped by risk appetite, but the domestic story is more mixed. Westpac says New Zealand’s labour market was improving before the Iran shock, with unemployment slipping to 5.3%. But it also notes there is still clear slack and wage pressure remains subdued.
BNZ says NZD/USD rose above 0.5965 last week as markets looked through Middle East tensions and focused on a possible deal. BNZ expects NZD strength later in the year to depend on the RBNZ beginning a tightening cycle. BNZ also expects Q2 CPI to jump, with April fuel prices feeding into selected price data.
For traders, NZD/USD has a mild upside bias if risk sentiment stays calm. But it still needs stronger domestic growth or clearer RBNZ tightening signals to break higher with confidence.
USDCAD
CAD remains one of the weaker majors. Scotiabank says CAD was the only major currency to fall against the USD last week, hurt by weak Canadian jobs data, wider US-Canada swap spreads, and swings in oil and risk appetite.
Scotiabank sees USD/CAD trading in a 1.3627 to 1.3817 range this week and says spot is testing resistance around 1.3710 to 1.3720. A clear break could open 1.3750 to 1.3800, while support sits around 1.3640 and 1.3550 to 1.3575.
For traders, CAD looks vulnerable unless oil rallies in a clean risk-positive way. The problem is that oil strength from war risk can also hurt global sentiment, which is not always CAD-positive.
Other Pairs
Commerzbank warns that US-China tensions are another pressure point for the dollar. It says China’s pushback against US sanctions could create a legal grey area and encourage some firms to avoid the US dollar and US payment systems. Commerzbank calls this another “pinprick” against USD dominance.
Barclays says the Trump-Xi meeting could bring some tactical trade wins, but probably no major breakthrough. This matters for AUD, CNH, and broader risk sentiment because China headlines remain a key driver of global FX.
Danske Bank notes that Norges Bank hiked by 25bp to 4.25% and says the June decision is close to 50/50. That keeps NOK supported when oil is firm, but exposed if energy prices fall on a durable Iran deal.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Neutral to mildly bullish | Strong jobs, sticky inflation, Fed hawkish risk |
| EURUSD | Neutral to mildly bullish | ECB tightening risk, inflation pass-through, weak growth risk |
| GBPUSD | Neutral | Services strength, political pressure, BoE uncertainty |
| USDJPY | Bullish, but intervention risk | Yield gap, energy import shock, BoJ hike risk, intervention threat |
| AUDUSD | Mildly bullish | RBA hike risk, commodities, China talks, risk sentiment |
| NZDUSD | Mildly bullish | Risk appetite, RBNZ hike risk, Q2 inflation jump |
| USDCAD | Mildly bullish | Weak CAD data, oil volatility, technical resistance |
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Key Event Outlook
United States
US CPI on Tuesday is the main event. Scotiabank expects headline CPI to rise sharply and says the focus should be on whether energy costs are spreading into core prices. Lloyds says the key question is whether the Fed keeps looking through the shock or starts reacting to higher inflation.
PPI follows Wednesday, then retail sales and jobless claims Thursday, and industrial production Friday. Strong inflation with steady jobs would support US yields and the dollar. Softer data would revive the idea that the Fed can wait and may weigh on USD.
Eurozone
Eurozone Q1 GDP and industrial production are due Wednesday. Danske Bank says recent Eurozone data have been light, but final PMIs showed manufacturing holding up while sentiment remains weak.
ECB speakers matter because the market is trying to judge whether energy inflation leads to more hikes. If officials focus on second-round inflation, EUR can stay firm. If they focus on weaker growth, EUR upside may fade.
United Kingdom
UK Q1 GDP is due Thursday. Lloyds expects a strong 0.5% q/q print, but also expects March GDP to fall as Iran war uncertainty and weaker production weigh on activity.
A strong GDP print may support GBP in the short term. But traders should watch whether the market treats it as backward-looking, especially with political pressure on Starmer still rising.
Japan
Japan has leading indicators, bank lending, PPI, money supply, and policy headlines around yen weakness. Marc to Market says Bessent’s Japan visit and recent yen intervention will keep USD/JPY sensitive to official comments.
JPY traders should watch 160 in USD/JPY. The higher the pair goes, the more intervention risk matters.
Australia
Australia has the Federal Budget, Q1 wages, lending data, and household spending. Westpac expects the Budget to benefit from higher commodity prices but says structural spending and energy security are key themes.
CommBank expects Q1 wage growth to stay firm, which matters for RBA inflation risk. AUD should react most to anything that changes RBA hike pricing. Strong wages or fiscal inflation risk would support AUD rates, but a risk-off Iran shock would still hurt AUD.
New Zealand
The RBNZ inflation expectations survey, migration, PMI, and selected price indexes are the key releases. BNZ expects inflation expectations to rise after the energy shock and says selected prices should show sharp petrol and diesel increases.
NZD traders should watch whether inflation expectations stay anchored. If they rise too much, markets may bring forward RBNZ hike pricing and support NZD.
Canada
Canada has the BoC Summary of Deliberations on Wednesday, wholesale sales Thursday, and manufacturing sales Friday. Scotiabank says CAD has underperformed after weak jobs data and that USD/CAD resistance around 1.3710 to 1.3720 is important.
A hawkish BoC tone could help CAD, but weak activity data would keep USD/CAD supported.
Other / Geopolitics
The biggest event risk is still Iran. Scotiabank says it remains sceptical that any US-Iran deal will be reached or prove durable. Commerzbank says the risk of extreme scenarios has risen, with either a breakthrough that lowers oil or a prolonged Strait of Hormuz closure that keeps energy prices volatile.
Barclays says hopes for an opening of the Strait of Hormuz continue to “yo-yo”, while the inflationary impact from petroleum product shortages is building. It sees the Trump-Xi meeting as a chance for tactical trade wins, but not a major breakthrough. For FX, oil, inflation expectations, and US-China headlines remain the main cross-market risks.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
Sources
- Danske Bank Research
- BNZ Markets Outlook
- Scotiabank Global Foreign Exchange
- Lloyds Market Insights Weekly
- Westpac Economics
- CommBank Research
- Commerzbank Research
- Barclays Weekly Insights
- BofA Market Strategies & Insights
- Marc to Market
- Nomura Connects
- Scotiabank Economics Publications
- Citi Weekly Market Update
- InvestingLive Live Feed
