Please find enclosed the latest edition of our PERSPECTIVES Viewpoint – designed to provide regular, up-to-date analysis of key trends in all the major asset classes.

 

In this Viewpoint FX, we return to the core drivers of currency markets, focusing on how monetary policy divergence and macro fundamentals are reasserting their influence. As inflation dynamics, growth differentials and central bank trajectories reshape rate expectations, we explore how these forces are translating into FX opportunities – and why relative policy paths and real yield differentials may once again anchor currency performance in an environment of fading cyclical distortions.

Key takeaways

  • The USD has been supported by geopolitical risk premia and a hawkish repricing of Fed expectations in swaps. A sustained de-escalation in the Middle East should unlock EUR upside, particularly given the ECB’s likely front-loaded tightening in response to elevated inflation expectations.
  • Structural factors such as gradual monetary policy normalisation and capital repatriation flows support a stronger JPY.
  • CNY has outperformed most currencies vs. USD in 2026, appreciating by roughly 3% YTD and showing resilience even during geopolitical shocks. CNY still looks undervalued.

 

The PERSPECTIVES Memo is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

PDF

Language:

'

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

This web page is not an offer to buy a security or enter into any transaction. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.