The US Dollar is strengthening again as markets reassess Friday's weaker employment report, while political and fiscal concerns push the Euro to its lowest level in 17 months. Sterling remains under pressure, the Chinese Yuan continues to demonstrate relative resilience, and the Japanese Yen remains broadly stable despite continued policy normalization.
The Dollar Index has risen 0.41% to 102.345, approaching its 52-week high of 102.535 reached earlier in the session. The Dollar is now up 4.09% year-to-date, making it one of the strongest-performing major currencies of 2026.
Friday's weaker September employment report initially weighed on the currency, but the Dollar has subsequently recovered as investors reassess the details of the data. Attention now turns toward the Federal Reserve's meeting minutes for additional guidance on the timing of any further rate increases after near-term expectations for tightening diminished.
The Euro is the standout underperformer. EUR/USD fell as low as 1.1161 in Asian trading before recovering slightly to 1.1190, marking a fresh 52-week low. The currency is now down 4.73% against the Dollar year-to-date.
Political and fiscal risks are contributing to the decline. Spain is reportedly preparing for an early election, while French sovereign spreads over German Bunds have widened to multi-year highs, raising broader concerns surrounding Eurozone fiscal stability.
Investor positioning has also become increasingly bearish, with hedge funds selling the Euro in the cash market and increasing demand for downside protection through EUR/USD put options. Technical support is now concentrated around the 1.1109–1.1111 area.
Sterling is also under pressure, with GBP/USD trading at 1.3215, down 1.78% year-to-date. The pair is approaching important support levels as markets consider whether it could fall below 1.30 during October.
Bank of England policymaker Catherine Mann has maintained a hawkish stance, emphasizing the need for further rate increases to preserve policy credibility and prevent inflation expectations from moving higher. Elevated oil prices and persistent inflation continue to complicate the UK's monetary policy outlook.
The Chinese Yuan remains the relative outperformer. USD/CNY is broadly unchanged at 6.7060, while offshore USD/CNH trades at 6.7113. The Yuan has appreciated approximately 4.04% against the Dollar year-to-date.
The narrow spread between onshore and offshore exchange rates indicates limited capital-flow pressure, while the PBOC's daily fixing mechanism continues to maintain stability as mainland markets return from the Golden Week holiday.
The Japanese Yen is marginally stronger, with USD/JPY at 157.69 after briefly reaching 158.11. The currency remains broadly unchanged against the Dollar year-to-date despite significant volatility.
The Bank of Japan's gradual normalization process remains an important influence, while the possibility of Japanese investors repatriating overseas assets provides a potential source of structural support for the Yen.
