USD Bid on Safe-Haven Flows; GBP and EUR Direction Data-Dependent.

• USD – Firm at the start of the year, supported by safe-haven demand and geopolitical uncertainty, though further gains depend on whether tensions escalate and upcoming data delivers surprises.
• EUR – Momentum has cooled after a strong end to last year, but the euro remains relatively stable. Inflation data this week will be key in shaping near-term direction.
• GBP – The weaker performer for now, pressured by a stronger dollar and a quiet UK data calendar, leaving sterling driven mainly by global factors.

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USD:

The US dollar has started the year with a bid as markets price in higher geopolitical risk following the US capture of Venezuelan President Maduro over the weekend. Safe-haven assets are outperforming, with the dollar benefitting alongside the Japanese yen and gold. Attention is now on whether tensions escalate further, particularly given the potential impact on oil markets. Any lasting effect on FX will depend on the scale and duration of these developments.

It is also a very busy week for US data. Friday’s non-farm payrolls report is the main focus, with job growth expected to slow to around 59k from 64k previously. ISM surveys, ADP employment, JOLTS job openings, and University of Michigan consumer sentiment are also due and could drive short-term moves.

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EUR:

The euro’s upward momentum faded in the final days of 2025, with EUR/USD now trading around 1% below its December peak. This week’s focus is inflation, with CPI data from Germany and France ahead of the eurozone-wide release on Wednesday. These figures will be important for shaping expectations around ECB policy and could determine whether the euro stabilises or drifts further lower.

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GBP:

Sterling has followed its peers lower against a strengthening dollar in the first few days of the year. With a quiet UK data calendar, GBP/USD and GBP/EUR are likely to be driven mainly by geopolitical developments and incoming US and eurozone data.

The only UK releases of note are the final December PMI readings and a KPMG-REC survey on the labour market later in the week, leaving sterling with limited domestic support in the near term.

Economic Calendar