Daily Forex Analysis

The euro advanced near $1.12 as the dollar softened, even as ECB rate cut bets remained firmly priced in. The yen strengthened for a fourth straight day despite a contraction in Japan’s Q1 GDP.

The euro regained ground near 1.1200, supported by reserve status momentum and a weaker dollar, while the Japanese yen strengthened on growing pressure to eliminate U.S. car tariffs.

Soft U.S. inflation data weakened the dollar and lifted risk sentiment. EUR/USD climbed toward 1.1200, supported by falling U.S. CPI, while USD/JPY slipped toward 147 as the yen rebounded. 

Markets opened Tuesday with a cautious tone as traders reviewed the recent US-China trade agreement and awaited key US inflation data.

The U.S. dollar strengthened on Monday following positive signals from U.S.-China trade talks in Geneva, pressuring the euro to near $1.1240 and the pound to $1.3275. The yen weakened to a one-month low past 146 as safe-haven demand faded. 

EUR/USD edged higher near 1.1230, supported by a weaker dollar but capped by ECB rate cut expectations. The yen slipped past 145 as a preliminary US-UK trade deal and Fed hawkishness lifted the greenback.

The EUR/USD pair hovered above 1.1300 with reduced political uncertainty in Europe. The Japanese yen firmed to 143.6 per dollar as global trade tensions renewed precious metals interest and BoJ minutes signaled cautious openness to further hikes.

The euro edged down to $1.1338 on Wednesday, pressured by political uncertainty in Germany and caution ahead of the Federal Reserve’s rate decision.