[MARKET ANALYSIS] FX markets are rangebound with very few fresh catalysts

DXY: Flat

• Trades rangebound with demand constrained after softening alongside the heightened risk appetite during US trade and amid a light data calendar. There was also very little impact seen following the latest Fed comments, including from Musalem who stated that inflation could stay higher for longer, although this is not his baseline, while he noted that policy is neutral now in real terms and is balancing appropriately.

EUR/USD: +0.1%

• Trades slightly firmer after its recent return to 1.1800 territory on the back of a softer dollar, but with further gains limited by a lack of catalysts from the bloc.

GBP/USD: Flat

• Takes a breather after advancing in tandem with the gains in cyclical peers and following comments from BoE's Greene, who said there is a strong case for the Bank to do exactly the opposite of what the Fed is doing and that it does not make sense to set domestic policy based on the risks from another central bank.

USD/JPY: -0.3%

• Continues to pullback after climbing to its best levels in over two weeks yesterday following the Takaichi government's reflationist picks for the BoJ board, with the pair not helped by the lack of fresh drivers and absence of tier-1 data for Japan, while there was also recent comments from BoJ's hawkish dissenter Takata who stated that they must conduct further rate hikes in a gradual manner.

Antipodeans: AUD/USD Flat / NZD/USD +0.1%

• Pauses overnight following the recent outperformance that was facilitated by their high-beta statuses and hot Aussie CPI data, while quarterly capex data from Australia also topped forecasts, which feeds into next week's GDP release.

The FX markets are currently rangebound, reflecting constrained demand amidst a lighter data calendar and mixed central bank signals. The recent comments from the Fed suggest a neutral policy stance, but with inflation concerns lingering, it's limiting momentum across major pairs. As traders look for fresh catalysts, the lack of key economic data may keep currencies like the USD and GBP sidelined, while the AUD and NZD show some resilience due to their recent outperformance.