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We saw truly massive shifts in the FX market last week, with moves not seen since the early chaotic days of the COVID-19 pandemic.

A rather anodyne week in currency trading ended in a dollar buying frenzy on Friday.

For the first time in a while, most of the major currencies traded in tight ranges last week, with the exception of the yen, which continues to rally amid rising expectations for a faster pace of Bank of Japan policy normalisation.

The announcement that the US and Russia would hold peace talks over Ukraine boosted European assets last week, and that included European currencies, led by the euro and the Swedish krona.

President Trump's decision to postpone tariffs on Canadian and Mexican goods last Monday whipsawed markets, and led initially to a sharp relief rally in major currencies.

The US dollar rallied during almost the entirety of last week as all signs suggested that the imposition of tariffs from the Trump administration was imminent.

A "tariff relief" rally gathered speed last week, as Trump's flurry of initial activity and executive orders seem to be focused elsewhere for now, and markets hope that their worst fears on tariffs will not be realised.

Financial markets breathed easier after better than expected inflation data out of the US last week.

2024 was a year characterised by political upheaval, central bank U-turns and US economic exceptionalism that propelled the dollar to a near flawless FX performance.

The relentless dollar rally continued for yet another week, fuelled by sharply higher bond yields in the US and signs that the world’s largest economy is, yet again, gaining momentum.

The holiday period, and the first few trading sessions of 2025, brought no respite for the FX market from the main themes of late-2024.

The ECB meeting last week went mostly according to the script, with a 25bp cut and significant downward revisions to the bank’s view on Euro Area economic growth.