What’s going on here?
The euro slipped this week as traders turned their attention to China-related currencies like the Australian and New Zealand dollars, while all eyes are on upcoming central bank decisions in the US and Europe.
What does this mean?
ING reports that EUR/USD is lagging behind other major currencies, reflecting fresh weakness for the euro. Solid inflation numbers and policy support have boosted the Australian and New Zealand dollars, with investors betting on these currencies as stand-ins for China’s growth. Even upbeat German business data, including recent PMIs and the Ifo survey, couldn’t give the euro a lift. The European Central Bank’s upcoming meeting is expected to be a non-event, shifting market focus to Wednesday’s US Federal Reserve announcement, where jobs data could stir up currency swings. ING expects the euro to stay neutral for now, with only a slim chance of a breakout for the dollar.
Why should I care?
For markets: Crosscurrents keep investors guessing.
With the euro on the back foot and investors rotating into the Australian and New Zealand dollars, markets are on high alert for policy clues from central banks. Central and Eastern European currencies, like the forint and zloty, are looking stretched – which means they’re more sensitive to any surprises, especially if the dollar jumps higher. Investors should expect some turbulence as major economies release new GDP figures and signal their next interest rate moves.
The bigger picture: Central banks remain in the driver’s seat.
Global currency flows are being steered by a mix of regional headlines, like Germany’s mixed economic signals, and global stories, including renewed interest in Asia-linked currencies. While big moves from the European Central Bank or US Federal Reserve aren’t expected this week, their decisions will still shape euro sentiment and broader trends in Central Europe. Keep an eye on Hungary’s GDP and fresh policy updates for signals of where the next currency shifts could appear.
