The US Dollar remains broadly firm in 2026, supported by elevated Treasury yields and the Federal Reserve's higher-for-longer policy stance. Its performance, however, varies considerably across major currencies: the Euro remains the weakest, Sterling has proved comparatively resilient, the Chinese Yuan continues to outperform, and the Japanese Yen remains near historically weak levels.
The Dollar Index trades at 101.83, close to the upper end of its 52-week range of 95.55 to 102.95.
The Dollar has strengthened most decisively against the Euro. EUR/USD stands at 1.1197, with the Dollar gaining approximately 4.9% year-to-date. GBP/USD trades at 1.3345, representing a more modest 0.82% Dollar appreciation, while USD/JPY at 157.39 is essentially unchanged for the year.
The notable exception is China. USD/CNY stands at 6.6681, with the Yuan appreciating approximately 4.58% against the Dollar year-to-date.
The Euro remains the weakest major currency covered. EUR/USD is down 4.67% year-to-date, while EUR/GBP has declined 3.75% and EUR/JPY 4.26%.
The largest move is against the Chinese currency, with EUR/CNH down 8.94% year-to-date. Euro weakness continues to reflect fiscal stress in France, subdued Eurozone growth, and monetary-policy dynamics, alongside continued weakness in Germany's industrial economy.
Sterling remains the strongest European currency in relative terms. GBP/USD is down only 0.82% year-to-date, while GBP/EUR has appreciated 4%.
The Bank of England's cautious easing path and 3.75% policy rate continue to provide Sterling with a carry advantage. UK Gilt yields are nevertheless among the highest in developed markets, leaving fiscal sentiment and the country's current-account deficit as important risks.
The Chinese Yuan remains the strongest major currency covered in 2026. Its 4.58% appreciation against the Dollar stands in sharp contrast to weakness in Chinese equities and the country's exceptionally low government bond yields.
The onshore and offshore Yuan remain closely aligned, suggesting limited divergence in capital flows. A strong trade surplus, PBOC currency management, and reduced Dollar demand from Chinese importers continue to support the currency.
The Japanese Yen has barely moved against the Dollar despite significant changes in domestic monetary policy. USD/JPY stands at approximately 157.38, leaving the Yen down only around 0.4% year-to-date.
The Bank of Japan has raised its policy rate to 1.25%, while the 10-year JGB yield has increased to multi-decade highs. However, the remaining interest-rate gap with the US and UK continues to support carry trades and keep the Yen at historically weak levels.
