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 weakened after the US Supreme Court ruled that the president cannot use emergency powers under the IEEPA law to impose sweeping global tariffs without Congress. This matters because tariffs were a core part of US trade policy. The ruling created uncertainty over how future trade measures will be implemented and whether new tariffs will stick.

Marc to Market says the initial reaction hurt the dollar, but key technical support levels held. That means the broader dollar uptrend is not fully broken yet, and the USD case is not 100% bearish.

Commerzbank adds that recent geopolitical tension between the US and Europe, including US pressure linked to Greenland and related tariff threats, has increased political risk in markets. When trade policy looks unpredictable, investors demand a risk premium to hold dollars.

Danske Bank keeps a broader bearish USD view. They argue that softer inflation and narrowing real rate gaps are slowly reducing the dollar’s yield advantage.

Trading take: The medium-term bias is for a softer USD.

EURUSD

EURUSD’s rally earlier this month was driven mainly by USD weakness rather than strong euro fundamentals.

Commerzbank says US political risk pushed up the USD risk premium. In simple terms, investors became less comfortable holding dollars due to unpredictable trade policy. That helped lift EURUSD.

However, they also warn the ECB is not turning more hawkish. The ECB is comfortable with current rates and is not signaling fresh tightening. That limits how far EURUSD can rise without new USD weakness.

Danske Bank expects EURUSD to grind higher over time as US rate support fades and global investors diversify away from USD assets.

Marc to Market sees the pair in a short term correction after the strong January rally.

Trading take: Medium-term bias is higher.

GBPUSD

The pound remains sensitive to rate cut expectations.

Lloyds says recent UK data has increased the probability of spring rate cuts. If the Bank of England moves earlier than the Fed, that reduces the pound’s rate support.

Danske Bank also sees relative weakness in GBP, pointing to softer UK growth momentum and a fiscal backdrop that limits policy flexibility.

Marc to Market notes GBP has struggled to sustain rallies even when the dollar weakens, which shows underlying softness.

Trading take: GBP trades as a rate cut story. Any dovish tone from the BoE keeps pressure on the currency.

USDJPY

USDJPY is being driven by one question: will the Bank of Japan raise rates sooner if the yen weakens again?

InvestingLive reports that former BoJ policymaker Sakurai said a renewed yen slide could justify a March rate increase. That matters because Japan has only recently exited ultra-loose policy. If the BoJ signals that currency weakness itself could trigger rate hikes, the market has to rethink the policy path.

In simple terms, a weaker yen now increases the probability of higher Japanese rates. Higher Japanese yields narrow the US–Japan rate gap. When that gap narrows, USDJPY tends to fall.

At the same time, US yields remain well above Japanese yields. As long as US inflation stays firm, the Fed is not rushing to cut. That keeps underlying support in USDJPY on dips.

Marc to Market notes that USDJPY found buying interest near the low 152 area, showing positioning is balanced rather than aggressively short.

Trading take: USDJPY rallies now carry policy risk. A stronger move higher increases the chance of a BoJ response, which limits upside. A sustained move lower requires US yields to fall, not just yen headlines.

AUDUSD

The Australian dollar is trading off two main drivers: inflation expectations and China exposure.

Westpac argues that Australia’s inflation path remains uneven. That keeps the Reserve Bank cautious. Markets are not pricing aggressive hikes, but they are also not pricing rapid cuts. That steady rate backdrop prevents AUD from losing yield support.

BNZ highlights that this week’s January CPI print is the key event. If inflation surprises higher, markets will push back expectations for rate cuts. Higher rate expectations support AUD because investors receive more yield for holding it.

AUD is also sensitive to China. When Chinese growth expectations improve or commodity demand strengthens, AUD tends to benefit. When China data disappoints, AUD usually weakens.

Danske Bank groups AUD among cyclical currencies that have benefited from recent USD softness and improving global risk sentiment.

Trading take: Keep your eyes peeled on CPI. A firm print supports the aussie.

NZDUSD

The Reserve Bank of New Zealand recently removed its easing bias and signaled the policy rate has likely bottomed.

BNZ says the OCR is now seen troughing at 2.25%, with some chance of hikes later this year. That is a shift from earlier expectations of further cuts.

Higher or stable rate expectations support NZD because they improve the kiwis appeal as a carry trade. 

Trading take: NZD has better rate support than it did previously. Main risk is global risk-off, not domestic policy.

USDCAD

Scotiabank highlights two clear drivers for CAD right now: oil prices and rate differentials.

Oil is currently supported by geopolitical tension between the US and Iran. Higher crude prices support the Canadian dollar because energy exports are a major part of Canada’s economy. When oil rises, Canada earns more foreign income, which strengthens CAD.

At the same time, US-Canada rate differentials have narrowed. As expectations for aggressive Fed cuts have faded, the US yield advantage has stopped widening. A narrower rate gap reduces upward pressure on USDCAD.

Canada GDP is the key domestic risk this week. A weak print would reinforce the view that the Bank of Canada may remain cautious or lean toward easing, which would weigh on CAD.

Marc to Market adds that USDCAD remains technically firm and could push higher if resistance levels break.

Trading take: Oil strength and narrower rate gaps support CAD, but soft growth data would tilt the bias back toward gradual USDCAD upside.

XAUUSD (Gold)

Gold has been supported by trade uncertainty and geopolitical tension.

When tariff risks rise or political tensions increase, investors often buy gold as a hedge against uncertainty.

Marc to Market notes gold made new weekly highs amid tariff headlines and Iran tensions.

If bond yields rise sharply, gold can struggle because it does not pay interest. But as long as policy uncertainty remains elevated, dips are being bought.

Trading take: Gold remains supported. 

Bias Table

Key Event Outlook

United States

Consumer confidence and PPI are key this week.

If inflation data comes in hot, it reduces expectations for Fed cuts. That would support the USD and push yields higher.

If data is soft, it reinforces the view that the Fed can ease later this year.

Eurozone

German IFO and inflation prints matter for ECB expectations.

If inflation surprises higher, it limits the chance of ECB easing. That supports EUR.

United Kingdom

BoE testimony is the main event.

If policymakers push back against early cuts, GBP can bounce. If they lean dovish, GBP weakens.

Japan

Tokyo CPI is important for BoJ policy.

A strong print increases the chance of further rate hikes and supports JPY.

Australia

January CPI is the key release.

Stronger inflation increases RBA rate expectations and supports AUD.

New Zealand

No major RBNZ event this week.

NZD will track global risk and rate expectations.

Canada

GDP is the key release.

Weak growth increases easing risk and pressures CAD.

Other / Geopolitics

Trade policy remains the wild card.

Tariff uncertainty and geopolitical tensions can quickly shift risk sentiment, affecting USD, JPY, and gold most directly.