ECB and BoE to Stand Pat, While US Dollar Mostly Firmer | Investing.com

The US dollar is firmer against most G10 peers as markets stay in consolidation mode ahead of the European Central Bank and Bank of England decisions. Neither central bank is expected to move rates today, putting the focus squarely on guidance. While headline Eurozone inflation is below target, the hurdle for another ECB cut appears high. The BoE, by contrast, is still likely to deliver at least one cut later this year but may resist letting expectations run too far ahead.

Risk assets are on the back foot. Equities and bonds trade with a heavier tone after the Nasdaq’s sharp decline, and attention will soon pivot back to the US labor backdrop despite government data delays. Challenger job cuts, weekly initial jobless claims, and the December JOLTS figures remain in view. In Latin America, Mexico’s central bank is widely seen maintaining its extended pause, potentially into midyear.

FX snapshot

• Euro: Yesterday’s high near $1.1840 gave way to steady selling toward $1.1790 into New York and to roughly $1.1780 today. Monday’s ~$1.1775 low (the weakest since January 23) is close by; a break of $1.1760–$1.1765 would likely signal another leg down. There are sizable expiries around $1.18 today.
• Yen: Intervention fears have eased. The dollar’s rebound from last week’s trough near JPY152.10 extended to JPY156.85 yesterday and nearly JPY157.35 today. Nearby resistance sits around JPY157.50, with notable options at JPY157 expiring tomorrow.
• Sterling: After whipsawing through Tuesday’s range, cable slipped to ~ $1.3555 today, a nine-session low that grazed the 20-day moving average. Support is seen near $1.3535.
• Canadian dollar: USD/CAD held firm around CAD1.3680–1.3685 into yesterday’s close and probed CAD1.3700 in Europe. A sustained break higher would target the CAD1.3755–CAD1.3760 zone, with options clustered at CAD1.3700 expiring tomorrow.
• Australian dollar: The Aussie remains heavy within Tuesday’s ~$0.6945–$0.7050 range, slipping toward $0.6960. The pullback looks set to extend; Monday’s low was near $0.6910, with $0.6880 as the next technical waypoint. A loss of that could open another half-cent decline.
• Mexican peso: The dollar firmed back toward mid-range (~MXN17.1935–MXN17.5725). A test of the 20-day moving average near MXN17.5315 is plausible; the pair hasn’t closed above it in nearly a month. For now, the greenback has held below MXN17.39.
• Offshore yuan: The dollar touched a three-day high near CNH6.9480 and is hovering around CNH6.94 in European hours. The PBOC fixed the onshore rate at CNY6.9570 versus 6.9533 yesterday; recent firmer fixings have been relatively modest.
• Indian rupee: After a gap lower on Tuesday, USD/INR is consolidating around mid-January levels. The January 29 record near INR92.0165 remains intact; today’s range is roughly INR90.0735–INR90.5210. The central bank is expected to keep the repo rate at 5.25% tomorrow.

Equities, rates, and commodities

• Equities: The Nasdaq’s 1.5% drop weighed on Asia-Pacific trade; among major markets, only the Hang Seng, mainland shares listed there, and Singapore’s Straits Times advanced. Europe’s Stoxx 600 is threatening to break a four-day winning streak, while US index futures are narrowly mixed.
• Rates: US and European 10-year yields are a bit firmer, while Japan’s 10-year JGB yield eased nearly two basis points. Longer-dated JGBs also softened after a well-received 30-year auction. European benchmarks are mostly 1–2 bp higher, and the US 10-year is hovering near 4.28%.
• Gold and silver: Gold stalled near $5090 yesterday before sliding toward ~$4790 today and stabilizing around $4880 in late European trading. Silver topped a little above $92 yesterday, then fell toward ~$73.50, and has steadied near $79.
• Oil: March WTI is consolidating within yesterday’s range, trading in just over a 50-cent band on either side of $64.

Data delays and what’s next

• US data flow: A partial government shutdown has delayed the JOLTS report and January nonfarm payrolls. Today brings Challenger job cuts and weekly initial jobless claims; claims are expected to edge up to around 212k, the highest since mid-December.
• Banxico: Mexico’s central bank meets today and has signaled a pause in its easing cycle. The economy appears to have sidestepped recession, while inflation pressures remain elevated.

Central banks in focus

• ECB and BoE: Both are widely expected to leave policy unchanged today. Markets see the ECB on hold with only a small chance of a cut, while the BoE is anticipated to ease at least once this year, most likely in late Q2 or early Q3 based on current pricing.
• Japan flows: Weekly portfolio data show Japanese investors buying foreign bonds for a second straight week (first such back-to-back since December) and adding to foreign equities. Foreign investors bought Japanese bonds for a second week and domestic equities for a sixth consecutive week.
• Australia trade: December’s surplus widened to A$3.37 billion from A$2.6 billion. The monthly surplus averaged about A$3.8 billion in 2025 versus A$5.6 billion in 2024. Exports grew an average 0.4% per month last year and fell 0.3% on average in 2024; imports rose 0.5% per month in 2025 and 0.8% in 2024. Australia still posted a current account deficit of roughly 2.3% of GDP last year, similar to 2024.

Bottom line: The dollar retains a modest bid into the ECB and BoE. With policy stasis the base case, guidance and global risk appetite may set the tone until delayed US labor data arrive.