Today’s Key Macro Drivers

The fundamental forces shaping every major pair this session

EUR/USD Daily Analysis EURUSD

Recovering from near one-month lows as Dollar weakness provides structural lift — ECB and EU trade headwinds cap upside

EUR/USD is continuing to build on Friday’s late rebound from the 1.1750–1.1740 zone, marking a recovery from a near one-month low, and is carrying positive momentum into the Asian and early European session on Monday. Spot prices are advancing toward the 1.1835 region, principally supported by broad-based USD weakness in the aftermath of the SCOTUS ruling. Despite the near-term recovery, the pair is navigating a complex fundamental landscape that limits clean directional conviction.

On the USD side, the SCOTUS invalidation of IEEPA tariffs is the dominant force — with up to $175 billion in potential refunds now in play (Penn Wharton Budget Model), the fiscal dynamics are creating a structural selling impulse on the Dollar independent of rate expectations. Trump’s pivot to a 15% Section 122 tariff maintains import protection but under a legally weaker and time-limited framework, reducing the Dollar’s safe-haven appeal on trade grounds. Meanwhile, US Q4 GDP cooling to 1.4% annualised is reinforcing market pricing for a June Fed rate cut, further weighing on the Greenback.

On the Euro side, the picture is more mixed. The ECB has concluded its easing cycle with rates stabilised near 2%, offering structural support. However, uncertainty surrounding ECB President Christine Lagarde’s tenure is creating institutional uncertainty, and ongoing EU exposure to US tariffs — particularly sector-specific Section 232 duties on steel and aluminium that survived the SCOTUS ruling — continues to weigh on Eurozone manufacturing sentiment. This week’s German GDP and Eurozone CPI readings are the critical data risks for this pair.

GBP/USD Daily Analysis GBPUSD

Sterling holding above 1.3500 as UK data resilience meets ongoing tariff-driven Dollar weakness

GBP/USD is trading firmly around the 1.3520 region in early European dealings on Monday, attempting to stabilise following last week’s slide to a four-week low driven by renewed tariff concerns. The pair is drawing simultaneous support from two distinct sources: stronger-than-expected UK economic data and broad USD weakness from the SCOTUS IEEPA ruling. Preliminary February S&P Global PMI figures have exceeded forecasts, while January Retail Sales have returned to positive growth — signalling meaningful UK economic resilience heading into spring 2026.

Market participants are now focused on remarks from Bank of England External Member Alan Taylor and Federal Reserve Governor Christopher Waller later in the session. Taylor’s tone on the UK rate path will be particularly important: a more hawkish tilt from the BoE would provide fresh GBP buying momentum and potentially push the pair above the key 1.3596 resistance zone, while any dovish language would reinforce the current cautious technical picture. The UK’s preferential trade arrangement with the US — which existed prior to the SCOTUS ruling — now faces fresh uncertainty under the new Section 122 tariff framework, which does not automatically preserve bilateral trade deals negotiated under IEEPA authority.

Looking ahead, Friday’s US Producer Price Index (PPI) — with both headline and core projected at +0.3% month-on-month — remains the session’s most significant forward-looking risk event. A stronger-than-expected reading would strengthen the case for the Fed to delay rate cuts, providing potential USD support and capping GBP/USD gains above 1.3596.

AUD/USD Daily Analysis AUDUSD

Third consecutive session of gains as AI commodity supercycle and RBA hawkishness underpin the Aussie Dollar

AUD/USD has extended its rally for a third straight session, changing hands near 0.7100 during European hours on Monday — the Australian Dollar strengthening as a softer US Dollar driven by tariff policy uncertainty continues to provide a powerful tailwind. The pair’s resilience is notable given that it is occurring against a backdrop of elevated geopolitical uncertainty, with US–Iran tensions and global risk aversion factors that would typically weigh on a high-beta, commodity-linked currency like the Aussie.

The AUD is drawing structural support from the Reserve Bank of Australia’s comparatively hawkish policy stance. Domestic Australian data has remained firmer than global peers — local CPI running above consensus has bolstered the view that the RBA will maintain a tighter bias to tackle persistent inflation pressures, in contrast to the Fed’s easing trajectory and the ECB’s stabilisation. This divergence in central bank posture is creating a genuine rate differential tailwind for the Australian Dollar. The AI-linked commodity supercycle — driving surging demand for copper, aluminium, rare earths, and lithium from Australia — remains the structural medium-term driver.

The primary downside risk for today’s session is geopolitical: renewed US–Iran tensions, with the Trump administration having indicated that limited military action remains an option if diplomatic talks fail, could trigger risk aversion that diverts flows away from commodity-linked currencies and into JPY and CHF safe havens. Traders should monitor the Middle East headline risk throughout the European and US sessions carefully.

USD/JPY Daily Analysis USDJPY

Safe-haven Yen demand intensifying as risk appetite deteriorates on Trump’s 15% global tariff announcement

USD/JPY remains under notable selling pressure throughout the European session on Monday, holding onto sharp intraday losses despite a modest rebound from the 154.00 psychological level. The pair is hovering near 154.35, down more than 0.45% on the day, with risks tilted to the downside. Global risk appetite has deteriorated markedly after President Trump moved ahead with a new 15% global tariff (Section 122) following Friday’s Supreme Court ruling — a development that has heightened fears of retaliatory actions and renewed disruptions to global supply chains, dampening demand for risk-sensitive assets and increasing flows into traditional safe havens, most notably the Japanese Yen.

Additional downward pressure on USD/JPY is stemming from a broadly weaker US Dollar. Friday’s PCE data reinforced expectations for a Fed hold in March, but the GDP miss at 1.4% annualised in Q4 2025 is keeping markets pricing meaningful rate cuts later in the year — a dynamic that mechanically compresses the yield differential between US Treasuries and Japanese Government Bonds. Meanwhile, Japan’s subdued Q4 GDP growth — which increases pressure on Prime Minister Sanae Takaichi to consider further fiscal stimulus — is ironically less bearish for the Yen than it might typically be, because safe-haven flows are currently overwhelming fundamental domestic weakness.

Recent data showing Japan’s core inflation cooling to its slowest pace in two years has reduced near-term expectations of Bank of Japan policy tightening. However, the BOJ’s medium-term normalisation trajectory remains intact, and markets are still pricing at least one additional 25bp hike in H2 2026, which provides a structural Yen tailwind that will reassert itself once the current risk-off episode stabilises.