USD

Risk sentiment improved during the latest session as hopes of renewed diplomacy resurfaced, with Iranian officials now expected to travel to Islamabad for talks after all. This shift helped unwind some of the dollar’s recent safe‑haven bid, leaving the greenback weaker despite renewed tough rhetoric from President Trump, who warned of further escalation if Iran rejects the proposed deal once the ceasefire expires tomorrow.

Attention now turns to key domestic drivers. Trump’s nominee for Fed Chair, Kevin Warsh, testifies before the Senate today, where markets will watch closely for any signals on his policy leanings. Warsh faces a delicate balancing act: aligning with Trump’s preference for easier policy while also reassuring lawmakers that he will protect Fed credibility. US March retail sales are also due this afternoon, with expectations for a sharp acceleration from 0.6% to around 1.4%, which could influence near‑term dollar direction.

EUR

The euro gained around half a percent in the previous session but is edging lower again this morning, highlighting its continued role as a more reactive currency in the current environment. With both USD and GBP dynamics firmly in the driving seat, EUR/USD and EUR/GBP are likely to remain externally led rather than shaped by eurozone‑specific developments.

The main scheduled event today is the German and eurozone ZEW economic sentiment survey, which will offer an updated read on confidence. Meanwhile, expectations for a rate hike at next week’s ECB meeting have faded sharply, with markets now assigning just an 8% probability. As a result, ECB policy is offering little near‑term support, leaving the euro vulnerable to shifts in global risk appetite.

GBP

Sterling has steadied over the past couple of sessions following last week’s sell‑off triggered by a resurgence in political risk. Focus today has been on the UK labour market report for February, which initially appeared constructive as the unemployment rate fell from 5.2% to 4.9%. However, the improvement reflected a drop in labour force participation rather than stronger employment growth, complicating the headline message.

Adding to concerns, payroll employment declined by 11,000 in March, while private‑sector wage growth excluding bonuses came in as expected at 3.2%. Attention now shifts quickly to March CPI, due early tomorrow, where consensus expects a rise from 3.0% to 3.3%. With inflation data arriving just ahead of the Bank of England’s decision, sterling’s near‑term performance is likely to remain data‑dependent and cautiously supported rather than decisively bid.