G7 FX talks fuel USD bearishness – Danske Bank

EUR/USD edged higher above 1.13 as the USD continues to soften in an otherwise relatively quiet week for G10 FX, Danske Bank's FX analysts report.

Fed holds steady, markets expect September cut

"Reports of FX discussions at the G7 meeting in Canada have further reinforced the market's underlying bias toward adding to USD shorts, amid ongoing speculation that the US administration is actively pursuing a weaker greenback."

"Recent Fed commentary remains fairly balanced, with most members indicating the Fed is in a 'good place,' and Powell's wait-and-see stance appears to have been broadly accepted by markets. Based on current pricing, a rate cut within the next two meetings seems unlikely barring any significant surprises."

"We see limited FX impact from incremental policy repricing at this stage, with price action more likely to be driven by headlines related to tariffs and FX policy, Treasury market dynamics, and incoming hard US data — with the next key releases due in early June. Tactically, we continue to favour buying EUR/USD on dips."