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

USD

Banks agree the USD bounce late last week followed a mix of political headlines and strong US data, but views are more cautious beyond the very near term. Citi and Danske Bank note that while growth remains solid, the Fed is likely to stay on hold for now, keeping rate support intact. In his February Monthly, Marc to Market argues that the dollar’s longer-term outlook is less secure, as political uncertainty, shifting policy expectations, and valuation headwinds could cap sustained gains. For traders, the USD may remain supported on dips, but rallies are likely to face resistance unless US data continues to outperform.

EURUSD

Banks continue to see EURUSD strength as mainly a USD story. Danske Bank points out that euro area growth surprised slightly to the upside late last year, but not enough to change the ECB’s policy stance. Lloyds expects the ECB to hold rates this week and avoid signalling discomfort with euro strength. With policy firmly on hold, EURUSD remains driven by moves in the dollar rather than euro-specific news.

Market type analysis: EURUSD has moved into a bull normal market type and is retesting the 1.186 area. Holding above this level would support further gains, while a break lower would suggest a period of consolidation.

GBPUSD

Lloyds expects the Bank of England to leave rates unchanged this week and to keep pointing to a slow and cautious easing path, with April still the most likely timing for the next cut. UK data has been mixed, which supports the Bank’s cautious approach. Recent GBP gains have mostly followed USD weakness, leaving upside limited without a clearer improvement in domestic fundamentals.

Market type analysis: GBPUSD remains in a bull normal market type but has stalled near resistance around 1.38. Momentum is still positive, but the lack of follow-through points to consolidation.

USDJPY

Banks continue to focus on yield spreads and domestic Japanese risks, but there is growing debate about whether the broader USDJPY uptrend is losing momentum. Marc to Market’s February Monthly highlights that the sharp rally in USDJPY last year has left the pair vulnerable to deeper pullbacks as US rate expectations stabilise and Japanese yields edge higher. While the Bank of Japan remains cautious, the balance of risks has become less one-sided than before, increasing the chance of choppy price action rather than a straight-line move.

Market type analysis: USDJPY remains in a bear normal market type after the sharp sell-off. The bounce so far looks corrective. It would be good to see a bearish candlestick pattern from before selling the pair.

AUDUSD

Westpac and Lloyds note that markets are pricing a high chance of an RBA rate hike this week after firmer inflation data. However, guidance is likely to matter more than the decision itself, with global risk sentiment and USD moves still the main drivers. Outside of precious metals, commodity signals have been mixed, limiting follow-through in AUD strength.

Market type analysis: AUDUSD is in a bull fast market type but has formed an evening star near the 0.70 level. This suggests the rally may pause and move sideways for a period.

NZDUSD

BNZ highlights improving domestic data and early signs that the labour market is stabilising, which supports the NZD over the medium term. That said, recent gains have closely tracked USD weakness rather than local developments, leaving the NZD vulnerable if the dollar firms again.

Market type analysis: NZDUSD remains in a fast bull market type, but a bearish engulfing candle just below the June high near 0.6120 points to consolidation.

USDCAD

Banks note that USDCAD has become more sensitive to shifts in US policy and growth expectations than to oil prices alone. Marc to Market’s February Monthly stresses that Canada’s exposure to US political decisions and trade policy remains a key risk, especially if US growth cools later in the year. While near-term moves are still driven by the USD, the medium-term picture points to higher volatility rather than a clear trend, with USDCAD likely to react quickly to changes in US data and policy signals.

Market type analysis: USDCAD printed a strong bullish reversal off a key support level after becoming oversold in a fast market type. This suggests a period of sideways trading, with scope for a broader recovery.

Gold

Banks and market commentators agree the sharp fall in gold late last week was driven by heavy position unwinding rather than a sudden change in the macro backdrop. NAB’s Ray Attrill says investors rushed to exit crowded long positions after President Trump nominated Kevin Warsh as the next Fed Chair, which helped steady confidence in the Fed and supported a rebound in the US dollar. Strong US data released on Friday added to the move, further reducing demand for gold as an inflation hedge. While geopolitical risks remain, the scale and speed of the sell-off point to profit-taking and forced liquidation as the main drivers.

Market type analysis: Gold had been in a fast-bull market type and moved into an extreme phase before breaking sharply lower on Friday. Market type theory suggests this price action is usually followed by a sideways volatile market type. 

Bias Table

Key Event Outlook

United States

ISM surveys, ADP, and Friday’s nonfarm payrolls are the main focus. Banks expect data to support a continued Fed pause. Strong data would reinforce USD support, while weaker numbers could quickly reverse last week’s gains.

Eurozone

Flash CPI and the ECB meeting dominate the week. Banks expect no policy change and neutral messaging. Any pushback against euro strength could slow EUR gains.

United Kingdom

The BoE is expected to hold rates. Attention will be on the vote split and any guidance on the timing of the next cut.

Japan

Domestic politics, yield moves, and official FX comments remain the main risks for JPY volatility.

Australia

The RBA decision is the key event. A hike framed as cautious or one-off may limit AUD upside, while more open-ended guidance would be supportive.

New Zealand

Labour market data will shape near-term NZD sentiment ahead of the next RBNZ meeting.

Canada

With little domestic data, CAD will take its lead from USD moves, oil prices, and overall risk sentiment.

Other / Geopolitics

US political developments, trade rhetoric, and the after-effects of last week’s precious metals sell-off remain key cross-market risks for FX.

Sources

• Barclays – Weekly Insights

• Danske Bank – Weekly Focus: USD Slide Continues

• Danske Bank – ECB Preview: Stronger Euro? No Problem

• Scotiabank – Global FX Strategy Weekly

• Lloyds Bank – Market Insights Weekly

• Westpac – Weekly FX Strategy

• Westpac – Morning Report

• Commonwealth Bank of Australia (CommBank) – FX Month in Review

• BNZ Markets – BNZ Monthly Outlook

• Citi Research – Weekly Market Update: Markets Confirm Strong Recent Economic Data

• Marc to Market – Week Ahead: Standpat Fed, Bank of Canada

• Commerzbank – Kevin Warsh Likely to Be Trump’s Pick as Fed Chair

• Dow Jones Newswires – Gold Lower as Markets Price in Warsh-Led Fed

• InvestingLive – Gold Extends Decline to 10%, Silver Heads for Worst Day Ever

• InvestingLive – Keep a Close Eye on the Silver ETFs: AGQ Down 66%