Major Forex Themes: Central Banks Take Center Stage

The US Dollar continues to trade firm against major currencies as markets position ahead of key central bank decisions from the Bank of England, ECB, and Bank of Japan. The dollar index remains supported amid cautious sentiment, though softer US labor market data has kept expectations alive for further Fed rate cuts down the road.

Sterling remains under pressure after UK inflation surprised to the downside, strengthening expectations of a BoE rate cut. This has capped any meaningful GBP recovery, keeping the broader trend biased lower.

In emerging markets, the Indian Rupee stabilized in the 90–91 zone, helped by RBI intervention after briefly slipping toward record lows. Near-term INR moves will likely remain managed, with volatility contained unless global risk sentiment shifts sharply.

Overall, central bank guidance and policy signals remain the dominant force in FX markets, with traders focused more on tone and forward guidance than headline decisions.

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