Forex and Commodities

Latest edition · October 8, 2026

Forex and Commodities en 1667703

UBS CIO views the recent USD rally and EURUSD drop below 1.12 as fundamentally overextended, driven by positioning rather than durable macro shifts. The team recommends establishing long EURUSD positions targeting 1.16 alongside selective options strategies to harvest elevated implied volatility.

The sharp drop in EURUSD from 1.17 in late August to below 1.12 has been fueled by robust US economic prints, speculation over a potential US diesel export ban, widening French-German yield spreads, and rising global rates. However, UBS CIO finds that European macro data have remained resilient and the aforementioned headwinds are either exaggerated or transitory. With USD positioning stretched and EUR oversold, UBS recommends going long EURUSD below 1.12 (target 1.16, stop 1.0985) and taking advantage of elevated volatility by selling downside in EURUSD, EURCHF, GBPCHF, and gold, as well as upside in USDSEK.

Key takeaways from the latest edition

• 1.EURUSD looks oversold after dropping from 1.17 to below 1.12, with positioning and options indicators suggesting USD is overbought and EUR is oversold.
• 2.Key drivers of USD strength—such as a potential US diesel export ban and French-German bond spread widening—are considered temporary or low-probability by UBS.
• 3.Recommended tactical opportunity of the week is going long EURUSD below 1.12 targeting 1.16 with a stop-loss at 1.0985.

What this series covers

• Opportunities of the week
• Yield pickup opportunities of the week
• Comments on recent opportunities
• Comments on select currencies and commodities
• Data calendar

Edition archive

• Forex and Commodities en 1667703

  October 8, 2026

• Forex and Commodities en 1667532

  October 5, 2026

• Forex and Commodities en 1667068

  September 24, 2026

• Forex and Commodities en 1666704

  September 17, 2026

• Forex and Commodities en 1666300

  September 10, 2026

• Forex and Commodities en 1665616

  August 27, 2026