The USD is currently the weakest performing G10 currency year-to-date, while the EUR has also struggled, ranking as the second worst. Since early February, the EUR/USD has had difficulty maintaining prices above the 1.05 level.

Although the USD’s decline is attributed to shifting views on inflation and growth risks, the EUR faces ongoing structural challenges in the Eurozone affecting growth, alongside emerging concerns over European defence. Predictions suggest that the EUR/USD may continue to weaken into mid-year.

Additionally, there is a target identified for EUR/JPY at the 155 level over the next one to three months.

The fact that the US dollar is at the bottom of the G10 currencies so far this year points to a broader shift in sentiment. Traders appear to be reassessing expectations for inflation and economic expansion in the United States, which has weighed on the currency. Meanwhile, the euro has had its own set of hurdles, performing only slightly better than the dollar but still lagging behind its peers.

One of the sticking points for the euro has been structural strains within the Eurozone, which have cast doubt on its ability to sustain steady growth. On top of that, fresh worries around European defence policy have added to the uncertainty, further dampening confidence in the common currency. With both of these factors in play, it is hardly surprising that EUR/USD has struggled to hold above the 1.05 threshold since early February.

Looking ahead, the expectation remains that EUR/USD could weaken further as we move towards the middle of the year. Traders should be factoring in the possibility that these downward pressures are not going away anytime soon. If recent trends persist, there may be further dips that could present opportunities for those positioned correctly.

Meanwhile, in the case of EUR/JPY, a target around the 155 mark has been highlighted for the next one to three months. This suggests that the yen is facing its own pressures, potentially creating scope for the euro to gain ground against it. Investors watching this pair closely may need to consider how broader economic conditions impact both currencies.

With these market dynamics in motion, traders should stay alert to any updates that might shift sentiment further. The next few weeks could be particularly lively, and small shifts in expectations could have outsized effects on price action.