EUR

It was a fairly choppy week for the euro. There were moments of optimism early on, but those didn’t really stick as markets were repeatedly pulled back by ongoing Middle East developments.

On the data side, things were steady rather than strong. PMIs held in growth territory, while Germany’s business sentiment softened slightly. Nothing dramatic, but not enough to give the euro much support either.

Overall, the tone felt a bit heavy, especially as risk sentiment became more fragile as the week went on.

USD

The dollar had a mixed but ultimately supported week.

Early optimism around a potential pause in tensions between the US and Iran briefly weighed on the dollar as risk appetite improved. But that quickly reversed as conflicting headlines and uncertainty around any real de-escalation kept markets on edge.

Safe-haven demand remained a key theme. Even when sentiment improved temporarily, it didn’t take much to bring investors back into the dollar.

At the same time, uncertainty around the Federal Reserve path continues to linger, keeping markets reactive to incoming data and headlines.

GBP

Sterling showed some resilience, holding onto gains from the previous week’s recovery following the Bank of England’s decision to hold rates while still signalling concern about inflation.

That said, it wasn’t a straightforward move higher. GBP spent much of the week stuck in a back-and-forth range as markets balanced expectations of further tightening against a challenging global backdrop.

Geopolitics played a big role. Rising tensions in the Middle East early in the week weighed on the pound through risk-off flows. A brief improvement in sentiment, on hopes of a pause in hostilities, helped lift GBP, but those gains were capped as uncertainty around any real ceasefire remained.

On the data front, UK inflation held steady, but the figures didn’t yet reflect the recent surge in energy prices. Retail sales came in slightly better than expected, though the impact was limited as markets remain focused on the broader global picture.

This Week

EUR

It’s a quieter week on paper for the euro, but inflation data will be the key focus.

Germany and the wider Eurozone release their latest HICP figures, which should give a clearer signal on whether price pressures, particularly from energy, are starting to build again.

The ECB remains in a difficult position, and any upside surprises here could quickly shift expectations.

USD

This is a big week for the dollar, with a heavy focus on labour market data.

We’ve got the full lineup, JOLTS, ADP, ISM, jobless claims, and then the main event: Nonfarm Payrolls.

In addition, comments from Federal Reserve Chair Jerome Powell will be closely watched for clues on the policy outlook.

The Fed is balancing a complicated mix of factors right now, and strong data could reinforce expectations that interest rates may stay elevated for longer. Expect markets to stay sensitive and reactive throughout the week.

GBP

For the pound, it’s likely to remain largely driven by external factors.

With a lighter UK calendar and a holiday-shortened week, GBP will take its cues from global sentiment, US data, and geopolitical developments.

The Bank of England’s current stance is still offering some underlying support, but it may not be enough to drive direction on its own.

Global Outlook

Markets still feel stuck in a loop.

There have been moments of optimism around potential de-escalation in the Middle East, including reports of possible ceasefire discussions. But these have been repeatedly challenged by conflicting signals and ongoing tensions.

That uncertainty is keeping energy prices elevated, which in turn feeds directly into inflation concerns, something central banks were hoping to move past.

At the same time, the risk of further escalation, including increased military involvement, is keeping investors cautious and supportive of safe-haven assets like the dollar.

So the overall picture hasn’t really changed, markets want to move forward, but keep getting pulled back by geopolitical reality.

And as we know, anything Donald Trump says can quickly trigger market volatility. Comments that the US could “take the oil in Iran” added another layer of tension this weekend to an already fragile backdrop.

Looking ahead, two things remain in focus:

• Developments in the Middle East
• US economic data and central bank signals

In addition, comments from Federal Reserve Chair Jerome Powell will be closely watched for clues on the policy outlook.