Bank FX views in one page, covering the key drivers, clear bias by pair, and the week’s events that move markets.
USD
The USD is still the main story this week. Danske Bank says “USD strength to extend” as the Fed repricing supports the dollar, with EURUSD now expected to fall toward 1.13 in 6 months and 1.12 in 12 months. Lloyds also says the “hawkish Fed supports the US dollar,” while markets now price a US rate hike before the UK.
Scotiabank is more cautious. It says USD gains have been driven by Fed tightening expectations and geopolitical risk, but it sees “few catalysts for additional USD strength from here.” Scotiabank still sees downside risks for the USD if markets price less tension in the Middle East and focus again on US twin deficits.
Live news adds more support to the USD in the short term. InvestingLive reports that the dollar is still pressing higher, while BofA now expects the Fed to hike rates three times this year. That keeps the near-term USD bias firm, especially if US PCE is hot.
For traders, the USD trend is still positive. But it is also crowded. The best setup is still to respect USD strength, while watching for a pullback if US data misses or US-Iran talks improve.
EURUSD
EURUSD remains under pressure. Danske Bank says the “downward trend” is set to continue because US growth and Fed pricing look stronger than the Eurozone outlook. Danske expects EURUSD at 1.15 in 1 month, 1.13 in 6 months, and 1.12 in 12 months.
Lloyds says Eurozone PMIs matter this week because they will show whether lower energy prices are helping activity. But Lloyds also notes that inflation risks remain, so the ECB may still hike again later this year.
Commerzbank is also cautious. It says the USD may benefit if oil rises again because that would lift inflation risk and support US rate expectations. Commerzbank says US-Iran talks still pose downside risk for EURUSD in the short term.
Marc to Market notes EURUSD is struggling near the mid-1.14s, with resistance around 1.1480 to 1.1520. That keeps the pair heavy unless it can break back above that zone.
For traders, EURUSD looks sell-on-rallies while below 1.15. A strong US PCE print would likely keep pressure on the pair.
GBPUSD
GBP is being hit by two forces: a stronger USD and UK political risk. Lloyds says sterling weakened to an 11-week low against the dollar after softer UK inflation and hawkish Fed signals. Lloyds also says markets now expect less BoE tightening than Fed tightening.
Commerzbank is more bearish on GBP. It says UK politics now matter more after pressure grew on Prime Minister Starmer. It warns that a messy leadership change or looser fiscal policy could hurt the pound.
Live news has now moved this story forward. InvestingLive reports that Starmer has announced he will resign as Prime Minister, and that Credit Agricole sees Burnham as a negative outcome for sterling.
Marc to Market says sterling has been resilient so far, recovering near 1.3250 after early weakness. But it says GBPUSD needs to clear the 1.3280 to 1.3315 zone to improve the technical tone.
For traders, GBPUSD is fragile. Political headlines can cause sharp moves, but the broader bias stays lower while the USD is strong and GBP cannot hold above 1.33.
USDJPY
USDJPY remains supported by a strong USD, even after the BoJ hiked rates. Danske Bank says USDJPY has been “gravitating around the 160 level,” with Fed repricing offsetting the BoJ’s 25bp hike to 1.00%. Danske forecasts USDJPY at 161 in 1 month, 157 in 6 months, and 155 in 12 months.
Westpac says the BoJ raised rates by 25bp and signalled more tightening ahead. But it also expects the BoJ to move slowly, with a terminal rate around 1.5% in mid-2027.
Scotiabank says the yen’s reaction to the BoJ hike was muted, which shows traders want a stronger signal from the BoJ. It also notes markets remain concerned about possible official intervention.
Marc to Market says USDJPY is testing the 161.80 area, close to the 162 level, which would be the highest since 1986.
For traders, USDJPY still has upside momentum, but intervention risk rises near 162. Chasing strength at these levels is risky.
AUDUSD
AUDUSD is stuck between hawkish RBA risk and strong USD pressure. Westpac says the RBA held rates at 4.35% but made clear that hikes are still possible. It says the RBA is more worried about inflation than weak growth, especially with signs of cost pass-through into prices.
Danske Bank is more bearish on AUDUSD. It says tighter global financial conditions and fading RBA tightening expectations are weighing on the pair. Danske expects AUDUSD at 0.70 in 1 month, 0.69 in 6 months, and 0.68 in 12 months.
Scotiabank is more positive. It says AUD has delivered fresh multi-year highs and has adjusted its AUD forecast slightly higher because gains came earlier than expected.
CBA says AUDUSD is around 0.7012, with Australian CPI on Wednesday and labour force data on Thursday the key local events. It expects headline CPI at 4.1% and trimmed mean at 3.5%.
For traders, AUDUSD is balanced but vulnerable. A hot CPI print could support AUD, but a strong USD and weaker China tone would cap rallies.
NZDUSD
NZDUSD remains soft. BNZ says the fall in oil prices has reduced the negative tail risk for the global economy and NZD, but it also warns that lower petrol prices could lift confidence and demand, keeping inflation pressure alive. BNZ still expects the RBNZ to hike 25bp at its July meeting.
BNZ also says NZDUSD looks technically vulnerable, with support near the early-April low around 0.5680. It says the next major domestic trigger is the RBNZ Monetary Policy Review on 8 July.
Danske Bank’s forecasts are also soft. It sees NZDUSD at 0.58 in 1 to 3 months, then back near 0.57 in 6 to 12 months.
For traders, NZDUSD remains a weak link in G10. The pair needs either a softer USD or a clearer RBNZ tightening signal to recover.
USDCAD
USDCAD has broken higher as US-Canada yield spreads widen. Scotiabank says CAD has weakened in 31 of the last 37 sessions since May 1, with the 2-year US-Canada spread widening by about 50bp. It says this spread move is the main reason CAD is weak.
Scotiabank still sees medium-term value in CAD, but says CAD is unlikely to recover unless Fed pricing corrects. It also says the USD trend is strong but overbought, with support near 1.40 and upside risk toward 1.43 to 1.45 if the rally extends.
Danske Bank is more bullish USDCAD. It says USD/CAD has rebounded toward 1.40 and that the loonie has decoupled from oil. Danske forecasts 1.40 in 1 month, 1.43 in 6 months, and 1.46 in 12 months.
For traders, USDCAD remains buy-on-dips while above 1.40. But it is stretched, so a softer US PCE print or stronger Canadian CPI could trigger a pullback.
Other Pairs
CHF remains favoured by Danske Bank. Danske says the environment still supports a stronger franc and targets EURCHF at 0.90 over 6 to 12 months.
Scandies remain under pressure. Danske says it is bullish EUR/Scandies because lower energy prices have hurt energy-linked FX, while tighter USD rates have also weighed on NOK and SEK.
Nomura highlights a longer-term Asia shift. It expects China, Malaysia, South Korea, Australia and Singapore to benefit from supply-chain change, AI, energy security, and rare earth diversification. Nomura also expects Japan to re-emerge through higher prices, wages, and rates, and sees USDJPY at 145 by end-2027.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Bullish short term | Hawkish rate pricing, firm data, safe-haven demand, strong yields |
| EURUSD | Bearish | Stronger USD, weak Eurozone growth, heavy technical tone below 1.15 |
| GBPUSD | Bearish | UK political risk, softer inflation, stronger USD, 1.33 resistance |
| USDJPY | Bullish but stretched | Wide yield gap, strong USD, slow BoJ tightening, intervention risk near 162 |
| AUDUSD | Neutral to bearish | RBA hike risk supports AUD, but USD strength and tighter global conditions cap upside |
| NZDUSD | Bearish | Weak technicals, low NZ rates, soft risk tone, RBNZ July meeting is key |
| USDCAD | Bullish | Wider US-Canada yield spreads, strong USD trend, weak CAD momentum |
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Key Event Outlook
United States
US PCE is the main event. Danske Bank, BNZ, Lloyds and Marc to Market all highlight May PCE as the key test for Fed pricing this week. Lloyds expects headline PCE at 4.1% and core at 3.4%, while BNZ says PCE may show a hotter inflation signal than CPI.
This matters because markets have shifted sharply toward Fed hikes. A hot PCE print would support USD and weigh on EURUSD, GBPUSD, AUDUSD and NZDUSD. A softer print could trigger a USD pullback.
US PMIs, durable goods, final Q1 GDP, jobless claims and Fed speakers also matter. Fed speakers are important because Chair Warsh has reduced forward guidance, so traders will focus more on data and less on Fed promises.
Eurozone
Eurozone flash PMIs are the key focus. Lloyds expects only a modest improvement, with the composite PMI rising to 49.1. That still points to weak growth. The price components will matter because the ECB is watching whether inflation pressure is staying sticky.
ECB President Lagarde also speaks to the European Parliament. Commerzbank says her testimony matters because markets want to know whether the ECB still sees enough cost pressure to hike again.
For EUR, weak PMIs and firm US PCE would keep EURUSD under pressure.
United Kingdom
UK politics is now the biggest GBP driver. InvestingLive reports Starmer has announced he will resign, which adds leadership and fiscal risk for sterling.
UK flash PMIs are also important. Lloyds expects the UK composite PMI to rebound to 50.8 from 49.7, but says the survey will need to show whether May’s slowdown was temporary or more serious.
For GBP, politics likely dominates. A messy leadership race or looser fiscal talk would hurt sterling. A cleaner handover and better PMIs could steady GBPUSD.
Japan
Japan’s focus is on BoJ communication and Tokyo CPI. BNZ says Japan’s Summary of Opinions and speeches from BoJ officials Himino and Tamura will be the first policy steer after last week’s BoJ hike. Tokyo CPI is due Friday, but subsidies may hold it down.
For JPY, the key issue is whether the BoJ sounds serious enough to slow USDJPY. If not, traders may keep testing 162 and intervention risk will rise.
Australia
Australia has a big week. CPI is due Wednesday, followed by labour force, household spending and job vacancies on Thursday. BNZ says May CPI is expected to rise to 4.4% y/y, while trimmed mean inflation is expected at 3.5%.
Westpac says the RBA is ready to hike again if needed. That makes CPI very important for AUD. A hot print would lift RBA hike pricing and support AUDUSD. A soft labour market print would work the other way.
New Zealand
New Zealand has a quiet local calendar. BNZ says the next real domestic trigger is the RBNZ review on 8 July. Until then, NZD will follow USD, global risk, Australian data and Middle East headlines.
For NZDUSD, a stronger USD keeps downside pressure alive, especially if 0.5680 breaks.
Canada
Canada CPI is due Monday, with BoC Governor Macklem speaking Tuesday and the BoC Summary of Deliberations due Wednesday. Scotiabank expects headline CPI to rise 0.8% m/m and lift annual inflation to 3%, but says core measures look better behaved.
For CAD, the CPI print matters, but US-Canada yield spreads remain the bigger driver. A stronger CPI print may slow USDCAD, but a hot US PCE print would likely keep the pair supported.
Other / Geopolitics
US-Iran talks remain a major cross-market risk. InvestingLive reports that further US-Iran technical talks are set to continue in Switzerland, while Marc to Market says oil reversed lower after reports of progress from both sides.
Danske Bank says Brent is unlikely to return to the pre-war USD60 to USD70 range, even after the deal, and now expects Brent around USD80 for the rest of 2026.
For FX, better talks would reduce safe-haven demand and may soften the USD. Fresh tension, higher oil, or Hormuz disruption would support USD and weigh on risk-sensitive currencies.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
