An hour earlier, January data on private sector lending volumes will be released, offering insight into domestic demand. Annual growth is expected to edge up from 3.0% to 3.1%, providing modest support to the euro. However, the main driver of the currency’s strength remains the correction in the U.S. dollar, triggered by new trade initiatives from the White House. After the U.S. Supreme Court ruled that the 10.0% import tariffs introduced by Donald Trump were unlawful and that he lacked authority to invoke the International Emergency Economic Powers Act (IEEPA) without congressional approval, the U.S. president announced a tariff adjustment from 10.0% to 15.0% for all countries under the Trade Act of 1974. In response, the European Parliament said it intends to suspend legislative work on approving a trade agreement with the United States. According to Bernd Lange, chairman of the Committee on International Trade, the “customs chaos” and growing uncertainty from the Republican administration make it difficult to rely on previously reached agreements, and a comprehensive legal assessment will take time.
GBP/USD
The British pound is showing near-flat dynamics, holding around the 1.3560 level. Investor activity remains relatively subdued, despite the pair posting its strongest daily gain in several weeks on Wednesday, while the fundamental backdrop has changed little. Market participants continue to assess the prospects of further rate cuts by the U.S. Federal Reserve and the Bank of England. Expectations for near-term monetary easing by the UK regulator strengthened after the release of key inflation data. According to the Office for National Statistics (ONS), the consumer price index slowed to 3.0% year-on-year from 3.4% in December, marking its lowest level since mid-2025. Against this backdrop, traders now price in around an 80.0% probability of a 25-basis-point rate cut at the March 19 meeting, although Governor Andrew Bailey described both the scale and the decision itself as an “open question.”
Meanwhile, the U.S. dollar remains under pressure from trade uncertainty following the introduction of new global tariffs by the Republican administration. Reduced imports and stronger domestic supply chains increase demand for the national currency for settlements, but trade barriers may also fuel volatility amid expectations of retaliatory measures. U.S. personal consumption expenditure price data released late last week prompted markets to slightly scale back expectations for near-term easing by the Federal Reserve. The core PCE index accelerated from 2.8% to 3.0% year-on-year, exceeding forecasts of 2.9%, while monthly growth jumped from 0.2% to 0.4%, compared with preliminary estimates of 0.3%. The broader index also rose from 0.2% to 0.4% month-on-month and from 2.8% to 2.9% year-on-year.
AUD/USD
The Australian dollar is showing modest gains against the U.S. dollar, extending its bullish impulse and updating local highs from February 12, while approaching previous peak levels. The pair is currently trading near 0.7135 as investors digest consumer inflation data. The trimmed mean CPI for January, calculated by the regulator, increased from 3.3% to 3.4% year-on-year, slightly above neutral analyst expectations, while the headline measure remained at 3.8%, contrary to forecasts for a slowdown to 3.7%.
Commenting on the data, Reserve Bank of Australia Governor Michele Bullock confirmed that the economy remains in a relatively strong position, while stressing that all key indicators will be considered when adjusting monetary policy settings. The labor market continues to send mixed but generally supportive signals for maintaining a restrictive stance: 17.8K jobs were created in January, slightly below forecasts, while the unemployment rate held at 4.1%, pointing to gradual cooling rather than stress. Inflation expectations also warrant attention, with the Melbourne Institute survey showing a rise to 5.0% in February, the highest level since August 2023. In the coming weeks, the key driver for AUD/USD will be market reaction to Australia’s fourth-quarter GDP data and developments around changes in U.S. trade policy, where any resolution of the current uncertainty could trigger a directional move beyond the established range.
USD/JPY
The U.S. dollar is correcting after a strong bullish start to the week that pushed the pair to local highs last seen on February 9, and is now testing the 156.00 level for a downside break as traders await new catalysts. In focus will be U.S. jobless claims data, with initial claims for the week ending February 20 expected to rise from 206.0K to 215.0K, while continuing claims are projected to show minimal change from the previous 1.869 million.
At the same time, investors are reassessing the outlook for monetary policy amid shifting drivers and the external economic environment. According to the CME FedWatch Tool, the probability of a June rate cut has fallen to 40.0% from 50.0% a week earlier, while mid-summer is now seen as the most likely window for the first easing move, with a probability of around 65.0%. Chicago Fed President Austan Goolsbee recently noted that the Fed could return to a dovish stance by year-end if inflation continues to move steadily toward the 2.0% target, but warned against relying on productivity gains to offset adverse price pressures — a key argument previously raised by Kevin Warsh, a candidate for Fed chair. Similar views were expressed by Boston and Richmond Fed Presidents Susan Collins and Thomas Barkin, who agreed that clear macroeconomic signals are needed before adjusting rates.
Meanwhile, the nomination of two proponents of economic stimulus — Chuo University honorary professor Toichiro Asada and Aoyama Gakuin University professor Ayano Sato — to the Bank of Japan’s policy board was interpreted by markets as a signal of potential policy easing, weakening the yen to two-week lows. Political pressure on the BoJ has also intensified: Prime Minister Sanae Takaichi expressed concerns about further rate hikes during a February 16 meeting with Governor Kazuo Ueda, which analysts saw as a factor limiting the tightening trajectory and prompting another bout of yen weakness. Ueda later emphasized the need for careful analysis of macroeconomic data at the March and April meetings, while confirming that a hawkish tone would remain if forecasts are met.
XAU/USD
Gold prices are showing moderate gains during the Asian session on February 26, extending a corrective move and testing the 5200.00 level for an upside breakout, as investors await the outcome of a new round of U.S.–Iran talks on the nuclear deal, set to take place today in Geneva amid sharply increased pressure from the Republican administration. On February 19, President Donald Trump issued a 15-day ultimatum for Iran to reach an agreement after the previous meeting delivered limited progress due to unresolved disputes over nuclear and regional security issues.
In his two-hour “State of the Union” address to Congress, Trump also warned of the possibility of limited airstrikes on Iranian infrastructure, including military and administrative targets, and reaffirmed that he would never allow Iran to acquire nuclear weapons. While he stressed that a diplomatic solution remains the preferred outcome, markets remain cautious amid the risk of escalation, underscored by the buildup of U.S. forces and military equipment in the Middle East and official statements from Iranian leaders signaling readiness for retaliatory measures.
At 15:30 (GMT+2), traders will also focus on weekly U.S. jobless claims data, with initial and continuing claims expected to rise from 206.0K to 215.0K, increasing pressure on the Federal Reserve regarding potential monetary easing in the second half of the year. Continuing claims are projected near 1.860 million versus 1.869 million previously, indicating a relatively stable labor market. On Friday, January producer inflation data will be released, complementing personal consumption expenditure figures. Core producer prices are forecast to slow from 3.3% to 3.0% year-on-year and from 0.7% to 0.3% month-on-month, while headline PPI is expected to ease from 3.0% to 2.6% and from 0.5% to 0.3%, respectively.
