According to Jinshi Data, strategist Mark Cranfield pointed out that the Japanese yen has occupied the headlines this month, but the baton will be passed to the euro and become the next driving force of global currency trends.
The euro looks set to move higher against the dollar in the coming weeks, which would help boost developed and emerging market currencies. Traders expect the Federal Reserve to cut interest rates more than the European Central Bank in the coming months.
Despite the sharp rise in EUR/USD over the past two months, leveraged positioning still favors net short EUR, which means more short covering in EUR could occur in the near term.
September will be a watershed month for asset classes, with the ECB meeting first, followed by the Fed and the Bank of Japan. Guidance from Europe is likely to be the least dovish of the three, which will add a tailwind to the euro.