Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.

USD

The dollar starts the week with strong support. Marc to Market says “rising US rates underpin” the greenback, with hotter US CPI and PPI pushing Fed rate expectations higher. Commerzbank makes a similar point, noting the USD rally is mainly about “interest rate expectations” as markets price in a more restrictive Fed path.

Barclays adds that energy-driven inflation has put even Fed hikes back into investors’ minds, while Citi says US labour data remain resilient and capex is broadening beyond big tech. That keeps the US economy looking stronger than most peers.

InvestingLive also notes that markets remain focused on the US-Iran stalemate and the pressure from surging bond yields. That mix of higher yields and weaker risk appetite is USD-positive.

For traders, the USD bias remains positive while oil, yields and geopolitical risk stay elevated. The key risk is a sudden de-escalation in the Middle East, which could pull oil lower, soften inflation fears, and trigger a fast USD pullback.

EURUSD

EUR/USD remains under pressure. Commerzbank says war fears and higher oil prices pushed EUR/USD back toward 1.16, and warns the risks are skewed to the downside if the Strait of Hormuz remains blocked or uncertain. The logic is simple: Europe is more exposed to energy costs, while the US is getting more support from higher rates.

Marc to Market also sees the euro as vulnerable to US yields. It notes that EUR/USD is more sensitive to short-term US rates than German rates, and sees initial support around 1.1580 to 1.1600. A break below that area could open the way toward the April lows near 1.1500.

Commerzbank’s rates team says Bund yields are high, but Eurozone PMIs and Germany’s ifo survey will act as a “reality check.” That means higher European yields may not help the euro much if growth data stays soft.

For traders, EUR/USD looks heavy while US yields rise and energy risks stay high. A relief rally needs lower oil, softer US rates, or better Eurozone activity data.

GBPUSD

GBP/USD is under pressure from three sides: UK politics, higher gilt yields, and a stronger USD. Lloyds says oil and politics are setting the tone, with sterling slipping toward $1.33 as UK gilt volatility rose sharply. Lloyds also notes that UK Q1 GDP was stronger than expected, but expects growth to slow as higher energy prices and tighter financial conditions bite.

Barclays also highlights UK political risk, saying political developments dominated the week and that investors are watching the next inflation and labour market data. Marc to Market says sterling fell every session last week as the dollar recovered and UK political drama worsened.

InvestingLive adds that BoE policymaker Sarah Breeden said there is “no need to rush” the next policy step. That reduces the chance of near-term BoE support for GBP at a time when politics and gilts are already a drag.

For traders, GBP/USD remains vulnerable. A softer UK CPI print may not help much if markets think the inflation drop is temporary and political risk keeps pressure on gilts.

USDJPY

USD/JPY remains supported by wide yield spreads, but intervention risk is rising. Marc to Market says the yen is driven mainly by the broad dollar move and the US 10-year yield. It notes USD/JPY traded around 158.65 before the weekend and that the market may turn cautious as 159 approaches.

Commerzbank notes that USD/JPY rose to 158.70, while Japan’s 30-year yield climbed above 4% for the first time since issuance began in 1999. It also says markets are pricing a high chance of a BoJ hike in June.

Barclays is more hawkish on Japan, saying the BoJ’s focus on upside inflation risk and support for an early hike were clear, while its analysts still call for a June rate hike.

For traders, the path of least resistance is still higher while US yields rise. But USD/JPY near 159 is a warning zone. Any official intervention signal or sharp fall in US yields could trigger a fast reversal.

AUDUSD

AUD/USD is under pressure from weak China data, risk-off sentiment and broad USD strength. Westpac says riskier currencies like AUD and NZD took larger hits, with AUD/USD down around 1.0% as oil, yields and the USD rose. It expects AUD moves this week to be centred on the USD leg and Middle East headlines.

Commerzbank’s China report is clearly negative for AUD sentiment. It says China’s April recovery “stalled,” with industrial production slowing, investment contracting, and retail sales barely growing. InvestingLive confirms the same theme, reporting that China’s April data missed badly.

CommBank notes AUD/USD fell to around 0.7150, while also flagging this week’s Australian labour data and RBA minutes. Westpac expects Australia’s unemployment rate to hold at 4.3%, with inflation still the RBA’s main concern.

For traders, AUD/USD rallies may struggle unless China data improves or risk sentiment turns. The RBA can support AUD at the margin, but global risk and USD direction matter more right now.

NZDUSD

NZD/USD faces a difficult mix: weaker growth, higher inflation, and future RBNZ hikes. Westpac says New Zealand has entered a “far more challenging phase,” with the Iran conflict lifting fuel costs, hurting spending power, and pushing inflation higher. It expects the RBNZ to begin lifting the OCR toward 3%, possibly from September.

BNZ takes a similar but more cautious view. It says the RBNZ “will get it wrong” because the outlook depends on unknowable factors like the war, oil supply and second-round inflation effects. BNZ expects the cash rate to rise eventually, but not in May, because the RBNZ will want more clarity first.

CommBank expects NZ retail card spending to soften outside fuel, with higher petrol prices lifting nominal spending but squeezing discretionary demand. That is not a clean positive for NZD.

For traders, NZD/USD remains vulnerable while risk sentiment is weak and China data disappoints. Higher RBNZ expectations may limit downside, but they are not enough to offset weaker growth and a stronger USD.

USDCAD

USD/CAD has moved higher, but the pair is still broadly range-bound. Scotiabank says CAD has weakened back toward the middle of its 2026 trading range, giving back about half of its April gains. It says the USD is supported by weaker risk sentiment and higher US yields, not by a major shift in CAD fundamentals.

Scotiabank’s economics team is also focused on Canadian inflation. It warns that Canadian CPI could overshoot the BoC’s forecast due to gasoline, commodity prices and pass-through effects. Strong CPI would raise expectations that the BoC may have to lean against inflation later this year.

The CAD story is mixed. Higher oil should help CAD, but the broader USD rally is winning for now. Scotiabank sees near-term USD/CAD resistance around 1.3800 to 1.3815, with stronger resistance in the upper 1.38s to low 1.39s.

For traders, USD/CAD can stay supported short term, but chasing too high looks risky if Canadian CPI surprises higher or oil strength starts to help CAD more clearly.

Other Pairs

Commerzbank says CNY is likely to stabilise after recent gains, even though China’s domestic data were weak. It notes that the Trump-Xi meeting reduced political risk at the margin, while China’s current account surplus and reserve accumulation continue to support the currency.

For INR, Commerzbank is cautious. It says INR is the worst-performing Asian currency this year, hurt by foreign equity outflows and higher oil import costs. As long as oil stays high, INR is likely to remain under pressure.

For EM FX more broadly, the picture is uneven. High-yielders may still attract carry demand, but higher oil, stronger USD and weaker risk appetite argue for selectivity.

Bias Table

Key Event Outlook

United States

The main US event is the FOMC minutes. Scotiabank says the minutes may show how many officials were uncomfortable with any hint of an easing bias, after several officials opposed softer language at the last meeting. CommBank also expects the minutes to lean hawkish given the recent dissent and later comments from FOMC members.

Markets will also watch housing starts, jobless claims, regional Fed surveys and S&P Global PMIs. Marc to Market says the high-frequency reports are secondary after the recent jobs and inflation data, but they can still create headline risk.

For FX, stronger PMIs or hawkish minutes would support the USD. Softer data could slow the rally, but a clear USD reversal likely needs lower oil or lower yields.

Eurozone

Eurozone PMIs are the key event. Commerzbank says they will act as a “reality check” for markets after Bund yields pushed to multi-year highs. The focus will be on services and price components, because energy pass-through is now the key inflation risk.

Lloyds expects Eurozone survey data to remain soft, with the composite PMI around contraction territory. If PMIs remain weak, the euro may struggle even if ECB hike pricing stays firm.

For FX, EUR/USD needs better growth data or lower US yields to stabilise. Weak PMIs would keep pressure on the pair.

United Kingdom

The UK has a heavy data week: labour market data, CPI, PMIs, retail sales, GfK confidence and public finances. Lloyds expects April CPI to fall to around 3.0% from 3.3%, helped by temporary household energy effects, but warns the drop may reverse later as energy costs feed through.

Wages are also important. Lloyds expects private sector regular pay growth to ease, which would reduce pressure on the BoE to act quickly. But UK politics remain the bigger market risk, especially if gilt volatility continues.

For FX, GBP may struggle if CPI falls and the BoE sounds patient. A stronger wage print or resilient PMIs could offer short-term support, but political risk remains a drag.

Japan

Japan has Q1 GDP and April CPI. Marc to Market says the market is pricing a high chance of a BoJ hike next month, while Barclays says its analysts still expect a June rate hike.

Commerzbank notes that Japan’s long-end yields have surged, with the 30-year yield moving above 4%. InvestingLive also reports that Japan may issue fresh debt to fund an extra budget, which keeps the bond market in focus.

For FX, stronger CPI could support BoJ hike expectations and help JPY. But USD/JPY will likely stay driven by US yields unless intervention risk becomes more direct.

Australia

Australia has RBA minutes, consumer sentiment and labour force data. Westpac expects employment to rise only modestly and unemployment to hold at 4.3%. It says inflation is the RBA’s most pressing concern, so labour data would need to surprise clearly to shift the policy outlook.

CommBank says the RBA minutes may show how the Board assessed the impact of the conflict in Iran and why the May decision was more split than the prior meeting.

For FX, AUD may get some support if labour data are strong or the RBA minutes sound hawkish. But China weakness and risk-off sentiment remain the larger drivers.

New Zealand

New Zealand has retail card spending, Q1 retail sales, trade data, PPI and the build-up to the RBNZ meeting. BNZ says the RBNZ is likely to wait in May, but the cash rate will eventually need to rise because policy is too stimulatory for the inflation backdrop.

Westpac expects New Zealand growth to remain weak as fuel costs hit household spending. It also expects inflation to stay above 3% until mid-2027, creating a difficult trade-off for the RBNZ.

For FX, NZD is likely to stay choppy. Weak activity data hurts the currency, but rising RBNZ hike expectations may limit downside.

Canada

Canada’s April CPI is the key release. Scotiabank says CPI could rise sharply and challenge the BoC’s view that inflation would peak around April. It points to gasoline, commodity prices, and possible pass-through into core inflation.

Scotiabank’s FX team says strong CPI would support expectations that the BoC may tighten later this year. That could help CAD, especially if oil remains high.

For FX, a hot CPI print could cap USD/CAD and make fading USD strength more attractive. A soft print would leave USD/CAD supported by broad USD momentum.

Other / Geopolitics

The Middle East remains the main cross-market risk. InvestingLive says the market focus remains on the US-Iran stalemate, while Commerzbank says war fears have lifted oil prices and pushed rate expectations higher.

The Trump-Xi meeting lowered the temperature but did not solve the bigger issues. Barclays says there were no tangible outcomes on reopening the Strait of Hormuz, while Commerzbank says the summit stabilised relations but did not deliver a full reset.

For FX, oil remains the swing factor. If oil rises further, USD and commodity inflation trades stay supported, but risk currencies remain under pressure. If oil falls on a peace or shipping breakthrough, the USD could give back some of its recent gains quickly.

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