Financial markets were dominated by themes of cooling inflation, a slowing economy, and increasing expectations of policy easing by both ECB and Fed last week. This convergence of factors ignited a full risk-on mode among investors, propelling major US stock indexes and Germany’s DAX to sharp gains. In tandem, benchmark treasury yields in both Europe and US experienced significant declines. Consequently, Euro and Dollar emerged as the week’s worst performers, largely overwhelmed by these market movements.
Looking ahead, this risk-on sentiment is expected to persist, likely keeping Dollar under pressure generally, with the notable exception of its pairing with Euro. Technical developments in various Euro crosses suggest that the selling pressure on the Euro would persist for some time.
Conversely, New Zealand Dollar stood out as the strongest currency, largely due to the…