FX Monthly

The report characterizes the recent USD rally as cyclical rather than structural, anticipating a reversal in the second half of 2026 as global growth expectations converge. The authors maintain a bearish outlook on the USD versus major currencies by year-end.

Key Takeaways

• 1.The recent USD rally is viewed as cyclical rather than structural, with an expectation for the DXY to move lower towards 98 by year-end as global growth expectations converge.
• 2.The Bank of Canada and other DM central banks are expected to continue fiscal spending and policy tightening, contrasting with a Federal Reserve expected to remain on hold in 2026.

Table of Contents

• Majors Summary
• FX Forecasts
• CAD Crosses
• EUR Crosses
• Central Bank Forecasts
• Market Pricing
• United States
• Canada
• Europe
• Asia-Pacific
• Emerging Markets

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