Summary: The Pound held its ground against the US Dollar, trading just below 1.2500 after two days of gains. The Dollar weakened following disappointing JOLTS job openings data and improving risk sentiment, but the upcoming US ISM Services PMI and ADP employment data could bring fresh volatility.

Outlook: The BoE rate decision will be a key driver for GBP this week, with a dovish outlook likely to weigh on Sterling. Meanwhile, the US Nonfarm Payrolls report on Friday will be crucial for shaping expectations around future Fed rate cuts. If US labour market data shows further weakness, the Dollar could continue to slide.

Summary: The Euro rebounded on Tuesday, rising nearly 0.8% against the Dollar as concerns over US-EU tariffs eased slightly. However, EUR/USD remains below 1.0400, with weak Eurozone economic data limiting upside momentum.

Outlook: The Euro remains vulnerable to further declines, especially with US data in focus this week. A stronger-than-expected ISM Services PMI or solid jobs data could put fresh pressure on EUR/USD. Additionally, any further developments on US-EU trade tensions could drive volatility.

Summary: USD/CAD remained above 1.4300, consolidating after a sharp decline earlier in the week. The Canadian Dollar continues to find support from higher oil prices and a dovish outlook from the Bank of Canada, which has signalled more rate cuts ahead.

Outlook: Traders will be watching the US economic data for short-term direction. If the US labour market shows signs of weakening, USD/CAD could struggle to make significant gains. Additionally, any renewed trade tensions between the US and Canada could impact sentiment.

Summary: USD/CHF declined for the second consecutive day, falling to around 0.9030. The US Dollar weakened broadly as market sentiment improved, and investors turned to the Swiss Franc as a safe-haven asset amid ongoing geopolitical and trade uncertainties.

Outlook: The focus remains on upcoming US data and Swiss economic releases. If US data disappoints, USD/CHF could see further downside. Additionally, safe haven flows into the Franc could increase if geopolitical tensions or trade concerns escalate.

Summary: The Australian Dollar struggled as US-China trade tensions resurfaced. China retaliated against new US tariffs with its own set of levies on US imports, creating additional uncertainty. The Reserve Bank of Australia remains on track to consider a rate cut in February, further pressuring the AUD.

Outlook: The key risk for AUD/USD remains global risk sentiment and developments in US-China trade relations. If tensions escalate further, risk aversion could weigh on the Aussie Dollar. Meanwhile, US jobs data will play a role in determining near-term direction.

The US Dollar remains under pressure following weak economic data, while traders await key employment reports later in the week. The Pound is in focus ahead of the BoE’s rate decision, which could set the tone for Sterling’s direction. The Euro remains fragile despite a modest rebound, while commodity-linked currencies like the AUD and CAD are reacting to global trade developments. The key risks to watch remain central bank policy shifts and US trade policy moves.