In this PERSPECTIVES Viewpoint FX, we explore how politics, monetary policy and fiscal stimuli are set to reshape major currency paths in 2026. This publication navigates the nuanced interplay of risks and opportunities across key currency blocks, highlighting the drivers most likely to shape FX performance over the next twelve months. We also present our corresponding exchange rate forecasts. 

Key takeaways:

  • The EUR/USD exchange rate has recently traded within a well-defined range. This consolidation phase may continue in the near term, with monetary policy divergence and geopolitical developments likely to dictate the medium-term trajectory.
  • The narrowing interest rate differential between US and Japanese bonds may provide support for JPY appreciation against the USD in the coming quarters.
  • The CNY traded below the USD/CNY 7.00 mark for the first time since May 2023. Beijing remains interested in a strong CNY. Sustained strength will depend on China’s growth trajectory.

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