FX Forecasts February 2026

Monex's February 2026 outlook highlights a tactical FX regime where geopolitical shocks and intervention threats override fundamental macro differentials. They forecast a sideways move for the DXY and warn of rising volatility impacting carry trades.

Key Takeaways

• 1.The US dollar (DXY) is expected to remain largely range-bound in the short term as fundamental strength is offset by political risk premia and intervention concerns.
• 2.Implied FX volatility has risen significantly, making carry trades less attractive and favoring safe-haven assets and lower-yielding G10 currencies.
• 3.The British pound faces downside risks due to deteriorating public finances and potential political instability within the ruling Labour Party.

Table of Contents

• INTRODUCTION
• FX VIEWS
• US dollar
• Euro
• British pound
• Japanese yen
• Canadian dollar
• Scandi FX
• Polish złoty
• FORECASTS

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