The Euro (EUR) joined the Pound Sterling (GBP) in reversing this year’s losses on Monday, DBS Senior FX Strategist Philip Wee notes.

EUR back to best closing level since July 2023

“EUR/USD appreciated a third session by 0.4% to 1.1130, its best closing level since July 2023. GBP remained the best-performing component this year, appreciating 2.4% ytd vs. the 0.8% ytd gain in the EUR. The CHF has significantly narrowed this year’s losses to -1.4% ytd from -8.5% at the end of April.” 

“Although the European Central Bank, Bank of England, and Swiss National Bank lowered rates before the Fed, they did not provide a trajectory on their easing intentions. In its June Summary of Economic Projections, the Fed projected 100 bps of rate cuts in 2025, followed by another 100 bps reduction in 2026.”

“We reckon the CAD, the least volatile DXY unit, will not be left behind if the weakest components (JPY and CHF) continue to recover more of this year’s losses.”