Dollar and G10 FX: DXY, Euro, Sterling Daily — 2026-10-26

Top developments

DXY Tests 102.18 as Fed Hike Odds Fade

The US Dollar Index (DXY) tested 102.18 as the probability of an October Federal Reserve rate hike dropped to about 15%. This decline in hawkish expectations has weighed on the dollar's broad strength, with the index trading near 101.80 in early European hours on Tuesday, October 20. Traders are now assessing the Fed's rate outlook, with the DXY weakening below the 102.00 psychological mark.

EUR/USD Slips on French Fiscal Risk

The Euro (EUR/USD) fell as troubles in France weighed on sentiment, with violent manifestations in France causing the currency to retreat. The ECB reference rate showed 1 EUR = 1.1193 USD on October 23, reflecting a slight decline. The pair is currently trading in a narrow range, with 20-day volatility at only 0.37%, indicating a collective wait-and-see approach by traders ahead of central bank decisions.

Sterling Holds Near $1.3400 Amid Risk Aversion

Sterling (GBP/USD) hit a one-month high of $1.3409 earlier in the week, supported by hotter-than-expected British inflation, but has since held around $1.33955. On Friday, GBP/USD faced resistance at 1.3353 as global risk aversion pressured the pound. Despite the recent dip, Sterling edged up to a fresh 17-month high versus the Euro, demonstrating relative strength against the single currency.

Swiss Franc Rebounds as Markets Eye Fed

USD/CHF rebounded on Friday, reversing previous losses to trade around 0.8250, up 0.56% on the day. This move followed a fall to a one-month low of 0.8191 on Thursday. The rebound reflects a slight recovery in the US Dollar alongside Treasury yields, as traders position for the next week's Fed interest rate decision.

Local view

German Media: Commerzbank Predicts Weaker Dollar

German financial outlet FXStreet reported that Commerzbank expects both the US Federal Reserve and the European Central Bank (ECB) to leave interest rates unchanged in October, followed by a 25 basis point hike in December. The bank's economists anticipate this could lead to EUR/USD jumping toward 1.18, driven by a weaker dollar outlook.

Japanese Media: Policy Maintenance Expected

Japanese market commentary from Fisco and Minkabu highlights that the yen is expected to remain firm as both the Bank of Japan and the US Federal Reserve are likely to maintain their current policies. The focus is on the upcoming meetings for Japan, the US, and Europe, with traders adopting a wait-and-see stance. The Nikkei reported that rising oil prices have increased inflation concerns for the Fed, potentially improving its rate position relative to the ECB.

Context & numbers

• DXY Level: The US Dollar Index traded near 101.80 on Tuesday, October 20, before testing 102.18 later in the week.
• EUR/USD Rate: The ECB reference rate was 1.1193 USD per EUR on October 23. The pair closed the week ending October 22 at 1.1205.
• GBP/USD Rate: Sterling traded at $1.33955, having hit a one-month high of $1.3409 earlier in the week.
• USD/CHF Rate: The pair traded around 0.8250 on Friday, up 0.56% from the previous day.
• Fed Hike Odds: October hike odds dropped to about 15%.

On the radar

• Fed Decision: The Federal Reserve's interest rate decision is the primary focus for next week, with markets pricing in a low probability of a hike.
• RBA and FOMC Minutes: The Reserve Bank of Australia (RBA) decision statements are due at 03:30 UTC on November 3, and FOMC minutes are scheduled for release on November 18.
• French Political Instability: Continued manifestations in France remain a key risk factor for the Euro, with violent protests causing currency volatility.