USD

Bank views remain split but lean toward a softer USD after the recent bounce. Scotiabank argues the Fed should look past noisy inflation data and focus on a cooling labour market, which keeps the easing bias intact. Lloyds and Commerzbank also highlight slowing jobs momentum and a softer trend in labour indicators, which should cap USD upside unless growth re-accelerates.

Marc to Market flags that the USD can extend a near-term correction higher if US CPI prints hot or if risk sentiment sours, but treats this as tactical rather than a fresh structural bull trend. Nomura takes a longer view that sticky inflation risks can slow the pace of easing, even if the next move is still lower in rates over time.

Trading take: expect two-way USD swings around CPI, but banks generally see USD strength as harder to sustain unless inflation clearly re-heats and the Fed turns more cautious.

EURUSD

EUR sentiment has improved modestly. Danske Bank expects euro area growth to hold close to trend and inflation to stay near target, keeping the ECB on hold through 2026. That reduces the risk of a dovish ECB surprise and helps EUR on dips.

Lloyds points to steadier European activity and easing inflation as supportive for EUR, even if data remains uneven. The main pushback is still the rate gap versus the US in the near term, which can limit upside during US data-driven USD spikes.

Trading take: banks broadly prefer buying EURUSD dips, with stronger upside potential once US rate cuts move closer.

GBPUSD

GBP remains fragile across bank research. Lloyds and Danske Bank emphasise weak UK growth and soft monthly activity prints, keeping downside risks in focus. Danske Bank also notes the BoE has turned more cautious after the latest cut, suggesting limited urgency for rapid follow-up easing.

With growth momentum weak, GBP rallies look vulnerable when risk sentiment turns or when USD catches a bid on data. Inflation is cooling, but banks do not see it as enough to change the growth story quickly.

Trading take: GBPUSD is still a sell-rallies market in most bank playbooks unless UK activity surprises materially to the upside.

USDJPY

JPY remains the standout medium-term theme. Danske Bank highlights Japan as one of the few major economies still tightening, while Nomura also stresses that higher Japanese rates and firmer inflation dynamics can keep the BoJ on a hiking path. That should slowly narrow yield spreads as the Fed moves toward cuts later in the year.

Near term, banks still warn that USDJPY can spike higher on US yield jumps and risk-off headlines. But the balance of risks shifts lower over time if the Fed eases and Japan keeps normalising policy.

Trading take: watch US yields for short-term direction, but banks see the medium-term skew pointing to a lower USDJPY path.

AUDUSD

AUD has stabilised, but the upside is capped. Westpac and Commonwealth Bank note the RBA has stepped away from an easing bias, which helps AUD sentiment at the margin. However, China demand risks and softer commodity signals still limit follow-through.

Danske Bank flags improving manufacturing momentum in parts of Asia as a mild positive. Even so, the broader tone from banks is that AUDUSD remains range-bound until China data and commodities show a clearer upturn.

Trading take: rallies likely struggle without a China tailwind, but downside may be cushioned if the RBA stays patient and risk mood holds up.

NZDUSD

NZD remains policy-driven and sensitive to risk sentiment. BNZ and Westpac highlight that the RBNZ is firmly on hold after earlier easing, with growth still soft and inflation cooling. That reduces the odds of a hawkish surprise and limits NZD upside on rates.

External drivers still matter most, especially global risk tone and AUD moves. Banks generally see NZDUSD drifting rather than trending strongly.

Trading take: treat NZD as a range market unless global risk conditions shift sharply.

USDCAD

CAD remains more USD-driven than oil-driven. Scotiabank notes that oil has barely reacted to recent geopolitical events, reducing the usual support channel for CAD. That leaves US data and Fed pricing as the key driver of USDCAD direction.

Bank of Canada pricing looks steady, broadly tracking the Fed. Without a strong oil trend or a big Canadian data surprise, banks see USDCAD as a function of USD swings.

Trading take: focus on US CPI, US yields, and broad USD moves rather than Canada-only drivers this week.

Other Pairs

CHF remains stable as the SNB stays on hold. Scandi FX has been mixed, with SEK supported by improved activity and rate expectations, while NOK remains sensitive to inflation and currency weakness. EM FX sentiment is steady for now, but still vulnerable to US rate volatility and geopolitical headlines.

Bias Table

Key Event Outlook

United States

US CPI is the main event. Several banks warn the print may be noisy again, but it can still move USD and rates. Scotiabank argues the Fed will likely put more weight on labour market cooling than one inflation release. Retail sales and regional manufacturing surveys will help confirm whether growth is slowing.

Eurozone

Euro area Sentix and industrial production are in focus. Banks expect no change in the ECB stance. If data remains resilient, it should support EUR on dips and keep the market anchored to a steady ECB story.

United Kingdom

UK November GDP and activity data matter for GBP. Another weak print would reinforce the soft growth narrative. BoE speakers can shape near-term pricing, but banks still see GBP as fragile until activity improves.

Japan

Data is lighter, but BoJ expectations remain key. Markets will watch for confirmation that wages and inflation keep policy on a tightening path. Any push higher in Japanese yields can support JPY and pressure USDJPY.

Australia

Australia is quieter on data. AUD will likely trade off China updates, commodities, and the global risk mood, alongside broad USD moves.

New Zealand

Business surveys and PMI-style indicators will shape NZD in the near term. Banks expect the RBNZ stance to stay steady, keeping NZD sensitive to offshore risk swings.

Canada

Housing and manufacturing updates are on deck, but banks see limited odds of shifting BoC expectations quickly. CAD should remain mostly a USD story this week.

Other / Geopolitics

Geopolitical risks remain elevated, but banks note markets have largely absorbed recent events with limited spillover into oil and FX. Any escalation that hits risk appetite could lift USD and JPY and weigh on risk FX, even if only temporarily.

Bank Desk Weekly FX Report

What the banks are saying, the fundamental bias, and key events.

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