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

USD

Bank views remain skewed toward medium-term USD weakness, but with short-term support from yields and data. Commerzbank argues the market is still underpricing political and institutional risks around the Fed. They warn that sustained pressure on Fed independence and rising tariff threats could trigger a sharper USD sell-off if confidence breaks. They also see the USD vulnerable if the Fed cuts more than priced while tariffs keep inflation sticky, pushing real rates lower.

Westpac and Commerzbank’s Asia Daily Update note that US yields moved higher last week and the USD firmed modestly as markets consolidated ahead of earnings season and major data. Scotiabank adds that US macro data continues to catch up after disruptions, which may muddy signals in the near term and keep USD trading headline to headline.

Trading implication: Near-term USD strength is possible on yields and data, but banks see asymmetric downside risks building beneath the surface.

EURUSD

Commerzbank remains firmly bullish EURUSD and sees the pair moving above 1.20 through 2026. Their core argument is that the USD has not priced political risk, while the ECB outlook is stable and unlikely to generate major surprises. They stress that EUR upside does not require strong euro momentum, just a repricing of USD risks.

Westpac’s forecast profile also points to a gradual EURUSD grind higher, while Scotiabank’s global macro view highlights that PMIs and US data matter more than ECB policy near term. Eurozone yields have been relatively stable compared to US yields, reinforcing the USD-driven nature of the move.

Trading implication: Bias remains higher, but progress is likely uneven and driven mainly by US-side catalysts rather than euro strength.

GBPUSD

GBP continues to trade largely as a USD proxy. Marc to Market highlights rising GBP sensitivity to broader USD moves, with UK data important but unlikely to fully override global drivers unless it forces a clear Bank of England repricing.

Scotiabank flags UK jobs, CPI, and retail sales as key releases this week, with wages still running hot near 5 percent year on year. Lloyds expects PMIs to improve modestly, but still characterises the UK growth signal as subdued.

Trading implication: GBP rallies look fragile unless the USD weakens decisively or UK data delivers a clear upside surprise.

USDJPY

JPY remains the most asymmetric risk in FX. Marc to Market warns that intervention risk rises sharply as USDJPY trades in the upper 150s, with downside acceleration likely if the pair slips through the mid-157 area.

Scotiabank highlights that politics may constrain the Bank of Japan near term, with a possible snap election limiting policy flexibility. However, they also note that yen weakness feeds directly into inflation and wage dynamics. Commerzbank’s broader USD risk premium thesis reinforces downside USDJPY risk if confidence shocks hit.

Trading implication: Watch the BoJ meeting closely. Even a mildly firm tone can trigger a fast USDJPY pullback given positioning and intervention sensitivity.

AUDUSD

AUD remains caught between global USD forces and domestic rate support. Westpac notes markets still price an RBA hike later this year, which helps AUD hold dips when risk sentiment is stable. Commerzbank’s Asia Daily Update shows AUD softened slightly alongside higher US yields, while commodities were mixed and oil steadied.

Scotiabank highlights Australian labour market data as a key event, with any rebound in jobs reinforcing the case for policy staying restrictive.

Trading implication: AUD performs best when US yields ease and global growth sentiment stabilises. RBA pricing offers downside protection, not upside momentum.

NZDUSD

NZD is locally driven this week. Westpac expects Q4 CPI at 0.5 percent quarter on quarter and 3.0 percent year on year. Scotiabank also flags New Zealand CPI as a key release that will shape RBNZ expectations.

Trading implication: NZ CPI is the main catalyst. A firm print supports NZD, especially if the USD is already soft.

USDCAD

Scotiabank provides the most detailed CAD analysis this week. They argue the Bank of Canada is likely to stay on hold, warning that cutting too early would risk a policy mistake given limited slack, firm job creation, sticky core inflation, and currency-driven import price pressures. They also argue tariffs on Canada are overstated as a macro risk and that Canada may benefit from trade diversion and a recent China deal.

Marc to Market notes CAD barely reacted to the China headlines, reinforcing that USDCAD remains mostly USD-driven. Westpac adds that oil volatility tied to Iran remains a swing factor.

Trading implication: CAD fundamentals are more resilient than the market narrative suggests, but USDCAD direction still hinges on USD rates and risk sentiment.

Other Pairs (if discussed)

USDCNY: Westpac’s forecast profile shows USDCNY peaking near term before trending lower through 2026.

Asia FX: Commerzbank notes consolidation across Asian FX as markets await earnings and clearer global signals, with China exports still cushioning weak domestic demand.

Emerging Markets: Scotiabank highlights Turkey as the main central bank easing story this week, while most others hold.

Bias Table

Key Event Outlook

United States

US PCE inflation: Scotiabank and Danske highlight PCE as critical for Fed pricing, though catch-up data may muddy signals.

Politics and tariffs: Davos headlines and renewed tariff threats against Europe are key USD tail risks.

Eurozone

ECB account and speakers: ECB minutes and Davos appearances matter mainly for confirming policy stability.

Flash PMIs: Growth momentum matters for EUR sentiment but is secondary to USD drivers.

United Kingdom

Jobs, CPI, retail sales: A full UK data slate with wages still elevated. GBP reaction depends on whether easing expectations shift meaningfully.

Flash PMIs: Expected to improve modestly, not a breakout.

Japan

BoJ meeting: Guidance and forecasts matter more than rates. Politics may constrain flexibility, but yen weakness remains a policy concern.

CPI and wages: Inflation pass through and spring wage talks remain key medium-term inputs.

Australia

Employment data: Key test of labour market resilience. Strong data reinforces the case for rates staying higher for longer.

Global yields: AUD remains sensitive to US rate moves.

New Zealand

Q4 CPI: Primary local driver for NZD and RBNZ expectations.

Canada

CPI and BoC surveys: Headline CPI may dip, but core inflation could rebound. The BoC is seen staying on hold with a high bar for cuts.

Oil and trade: Oil volatility and trade headlines remain secondary to USD dynamics.

Other / Geopolitics

China GDP and PMIs: Matter via global risk and commodity FX.

Middle East and Europe tariffs: Cross-market risks that could rapidly reprice USD and oil.

Sources: Barclays, Commerzbank, Commonwealth Bank, Danske Bank, Lloyds, Marc to Market, Scotiabank, Westpac.

Sources

• Scotiabank Economics — Global Macro and Central Bank Watch, January 2026

• Commerzbank — EURUSD: On a Collision Course, January 2026

• Commerzbank — Asia Daily Update: Consolidation Ahead of Earnings, 19 January 2026

• Commerzbank — Worlds Apart! Rates and Credit Strategy, January 2026

• Commerzbank — Deep Dive on Banks: ECB Buffer Simplification, January 2026

• Barclays Bank — Global Week Ahead, January 2026

• Commonwealth Bank of Australia — Daily FX Alert, 19 January 2026

• Danske Bank — Weekly Focus, 16 January 2026

• Lloyds Bank — Market Insights Weekly, 16 January 2026

• Marc to Market — FX Market Outlook, 19 January 2026

• Westpac — Morning Market Report, 19 January 2026

• Westpac — Weekly FX Forecasts, January 2026