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 remains the main short-term winner from the oil shock. Danske Bank says the surge in energy prices has tightened financial conditions, lifted inflation expectations, and supported the USD through both safe haven demand and the US terms-of-trade advantage as a net energy exporter.
Westpac is less convinced the Fed will need to turn fully hawkish. It says the FOMC still sees the Middle East inflation hit as more temporary and keeps one cut in 2026 in its base case, even as bond yields rise. Marc to Market adds that war and the expected policy response are now the two main FX drivers, but warns the move in rate pricing may already be too aggressive.
For traders, the message is clear. USD is still supported by oil, uncertainty, and relative energy resilience, but some banks think markets may already be overpricing the shift toward tighter policy.
EURUSD
Danske Bank is clearly bearish near term. It says Europe is taking a negative energy terms-of-trade shock, real rate differentials have moved in favour of the USD, and tighter financial conditions are helping the dollar. It now looks for EUR/USD to move lower in the next one to three months.
Westpac agrees that the energy shock is a real problem for Europe, even if the ECB has tried to sound calm. It notes that euro area inflation could rise much further if supply disruption worsens, while growth slows as the shock drags on. Lloyds also expects softer PMIs and weaker confidence across Europe.
The broad bank view is that EUR/USD stays under pressure while oil remains high and Europe stays exposed. Longer term, some still see recovery once the energy shock fades, but for now the bias remains lower.
GBPUSD
Sterling has held up better than the euro, but the bank view is still cautious. Danske says the UK remains a net energy importer, the economy is still fragile, and the current account deficit leaves GBP exposed when risk appetite weakens.
Westpac says the BoE turned more united and more cautious this week, with members shifting from debating cuts to openly discussing the risk that higher inflation may outweigh weaker growth. Lloyds adds that February CPI is now old news, and the real issue is whether the oil shock keeps inflation sticky for longer.
For traders, GBP/USD looks less weak than EUR/USD, but still vulnerable if oil stays high and the UK growth backdrop softens further.
USDJPY
Banks remain constructive on USD/JPY. Danske says Japan’s heavy energy import dependence means the oil shock is a bigger problem for Japan than for the US, while the BoJ has kept its gradual hiking path intact. It expects the pair to remain elevated in the near term.
Marc to Market makes a similar point from the price side. It says USD/JPY is still closely tied to US yields and oil, and believes the market has not given up on a move through 160. Commerzbank also flags higher global yields and renewed upside pressure on the pair.
The trader takeaway is simple. Yield spreads still favour the dollar, oil still hurts Japan more than the US, and 160 remains the key level to watch.
AUDUSD
Westpac says the RBA stood out this week by actually raising rates, taking the cash rate to 4.10% in a split decision. It says the move reflected both domestic capacity pressure and higher inflation expectations after the petrol shock, and it still keeps a May hike as the base case.
Danske says AUD has been one of the stronger G10 currencies this year because it benefits from both a positive terms-of-trade shock and relative monetary policy support. Still, the day-to-day market action has been rougher, with Westpac’s morning note showing AUD underperforming in the latest risk-off move.
So the split is clear. Strategically, banks see AUD supported by policy and commodities. Tactically, it can still get hit when markets go full risk-off.
NZDUSD
NZD is where local banks are most cautious. BNZ says the RBNZ cannot stop the near-term inflation hit or the growth drag from higher oil prices, so it is likely to sit tight first and only respond later if inflation expectations begin to rise more persistently.
Westpac also leans against the market’s aggressive OCR pricing. It expects Governor Breman to stress that New Zealand still has spare capacity and that a temporary oil shock is less likely to become persistent inflation in an economy operating below full capacity.
BNZ’s FX team is more negative on the currency itself. It says markets still look too complacent about the damage this conflict could do, and that risks for NZD/USD remain skewed to the downside while the Strait of Hormuz stays closed.
USDCAD
Scotiabank says CAD has been resilient rather than strong. It notes that the currency is still sitting near the lower end of its local range, that the BoC and Fed were both cautious, and that USDCAD fair value remains lower than spot. Technical resistance above 1.37 has held repeatedly, leaving the pair broadly neutral for now.
Danske is a little more USD/CAD-positive over time. It says CAD has benefited from higher energy prices, but broader USD safe haven demand has limited the upside for the loonie. It expects the BoC to stay on hold even though markets have priced hikes.
The common view is that oil is helping CAD, but not enough to overpower the USD. That leaves USDCAD range-bound in the short run, with an upside bias if global risk sentiment worsens again.
Other Pairs
NOK remains one of the few European currencies benefiting from the energy shock, though Danske warns it could reverse quickly if the conflict de-escalates and growth weakens. SEK has once again behaved like a high-beta risk currency rather than a safe haven. For CHF, Danske remains constructive, arguing that Switzerland’s softer inflation backdrop, better energy mix, and safe haven role still support the franc.
Bias Table
| Pair | Bias | Key Drivers |
|---|---|---|
| USD | Bullish | Safe haven demand, positive energy terms of trade, tighter financial conditions |
| EURUSD | Bearish | Europe’s energy shock, weaker growth outlook, real rate gap favouring USD |
| GBPUSD | Mild bearish | Sticky inflation but fragile growth, BoE caution, external deficit |
| USDJPY | Bullish | Japan’s energy import exposure, wide yield gap, 160 back in focus |
| AUDUSD | Neutral to mild bullish | RBA hiking, LNG support, but vulnerable to risk-off moves |
| NZDUSD | Bearish | Oil shock hurts growth, inflation rises, RBNZ likely cautious first |
| USDCAD | Neutral to mild bullish | Oil supports CAD but USD safe haven demand dominates |
Key Event Outlook
United States
Construction spending, PMIs, import prices, jobless claims, and final Michigan sentiment are the main releases this week. Fed speakers also matter. For FX, stronger activity and firmer inflation signals would keep USD supported, while a softer Fed tone could slow the move.
Eurozone
Eurozone flash PMIs and the German IFO survey will give one of the first clean reads on how much the energy shock is hitting confidence and activity. Weak numbers would reinforce the bearish EUR view.
United Kingdom
UK flash PMIs, CPI, retail sales, and consumer confidence are all due. The market is watching to see whether services inflation stays sticky and whether the BoE’s more cautious tone becomes even more hawkish.
Japan
Japan’s CPI and BoJ minutes are the key events. The market wants to know whether domestic inflation and wages remain firm enough to support the BoJ’s slow hiking path while USD/JPY sits near the highs.
Australia
Australia’s February CPI is the key domestic release. It matters because it shows inflation momentum heading into the energy shock, not after it. A sticky print would help keep RBA tightening expectations in place.
New Zealand
Governor Breman’s speech is the main local event. The tone will matter more than any policy hint. If the RBNZ sounds more worried about inflation than growth, NZD could squeeze higher briefly. If it stresses spare capacity and downside growth risk, the broader bearish NZD view stays intact.
Canada
Canada has no major data, so BoC Senior Deputy Governor Rogers’ speech becomes the focus. Markets want to see whether the BoC validates hawkish pricing or keeps stressing caution.
Other / Geopolitics
This is still the main market driver. If the conflict broadens and energy infrastructure remains disrupted, USD, CHF, and to some extent NOK should stay supported, while EUR, NZD, SEK, and most risk-sensitive currencies remain under pressure.
Bank Desk Weekly FX Report
What the banks are saying, the fundamental bias, and key events.
