Commerzbank’s Volkmar Baur notes that EUR/USD is stuck between 1.18 and 1.19 as recent US and Eurozone data have been uneventful, with attention turning to Federal Reserve minutes. He highlights Japan’s agreed USD 36 billion first tranche under a USD 550 billion trade-commitment, arguing that if fully implemented, these flows would likely support the US Dollar.

Japanese capital flows and Dollar outlook

"From this evening, things could get a little more interesting again with the minutes of the last Fed meeting, but in recent days, data releases from the US and the eurozone have not been particularly exciting. It is therefore of little surprise that EUR-USD has hardly moved recently and is still trading between 1.18 and 1.19."

"Earlier today, it was reported that the US and Japan had agreed on an initial investment of around USD 36 billion. This is part of the planned total of USD 550 billion in investments that Japan is required to make over the next three years (until the end of Trump's term in office) under the trade agreement."

"Overall, Japan has committed to almost doubling its direct investments per year compared to 2024. This would of course be quite significant – but it remains to be seen whether this will actually pan out."

"The exact impact on the US dollar therefore remains unclear. Overall, however, it can be said that if the investments really do reach the levels agreed in the trade agreement, they are likely to have a positive effect on the US dollar."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)