FX Update: Focus Turns to US Data and Eurozone Inflation .

• USD – Continues to soften against most major peers as improving risk sentiment reduces safe-haven demand, with markets now focused on key US data releases for direction.

• EUR – Remains relatively well supported, with inflation data and ECB commentary likely to shape expectations, though gains may be limited without fresh catalysts.
  

• GBP – Holding steady after recent political and economic developments, but longer-term growth concerns continue to temper enthusiasm.

USD:

The dollar continues to ease against most of its major counterparts as stronger equity markets and improving risk appetite reduce demand for traditional safe-haven assets. The main exception remains USD/JPY, where the pair’s move to a fresh 40-year high has reignited speculation that Japanese authorities could intervene to support the yen.

Attention today turns to US consumer confidence, which is expected to improve modestly from 93.1 to 94.4, alongside the May JOLTS Job Openings report. After last month’s surprise jump to 7.6 million vacancies, markets expect a more moderate reading of around 7.3 million. These releases could provide fresh insight into the resilience of the US economy and help shape expectations for the Federal Reserve’s next policy move.

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EUR: 

The euro faces a busy session as markets digest inflation data alongside commentary from ECB policymakers at the Sintra central banking forum. French CPI slowed sharply from 2.8% to 2.0%, below expectations, suggesting inflation pressures continue to ease following the earlier energy price shock.

Focus now shifts to German inflation figures later today and the broader Eurozone inflation report tomorrow. Investors will also monitor speeches from several ECB officials, including Elderson, Schnabel, Cipollone, Vujčić and Lane, after President Lagarde’s opening remarks offered little new guidance. While the euro remains relatively supported, further direction is likely to depend on incoming inflation data and any shift in ECB rhetoric.

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GBP: 

Sterling traded relatively steadily following comments from PM-in-waiting Andy Burnham, who outlined a long-term vision for the UK economy centred on regional investment, devolution and higher living standards. Importantly for markets, he reaffirmed his commitment to the current fiscal rules, helping to reassure gilt investors.

Meanwhile, final GDP figures confirmed the UK was the fastest-growing economy in the G7 during the first quarter. However, markets remain cautious, as this pattern has become a recurring feature of seasonal adjustments rather than a clear sign of stronger underlying growth. As a result, while sterling has stabilised, longer-term growth concerns continue to limit upside potential.

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