UBS turns more bullish on US dollar, sees euro and yen weakening further
UBS raised its dollar forecasts and cut euro and yen targets, citing higher US rate expectations and resilient economic fundamentals.
UBS has turned more bullish on the U.S. dollar, forecasting further weakness in the euro and Japanese yen through the second half of 2026. The bank revised its currency forecasts, citing higher U.S. interest rate expectations and resilient economic fundamentals that continue to support the greenback.
The Swiss bank now expects EUR/USD to fall to 1.12 by end-2026, down from its previous forecast of 1.14. For the yen, UBS projects USD/JPY to reach 165 by both the end of the third quarter and year-end. The revisions reflect a repricing of U.S. interest rates and expectations for additional Federal Reserve tightening, which have strengthened the dollar's yield advantage over other major currencies. For foreign exchange traders, this divergence in monetary policy outlooks reinforces the dollar's appeal, particularly against currencies from economies with more accommodative central banks. Traders can monitor live dollar index and major pair quotes on NowPrice's FX page for real-time pricing context.
Looking ahead, markets will focus on upcoming U.S. economic data, including employment and inflation figures, which could further shape Fed policy expectations. Any signs of persistent inflation or labor market strength may reinforce the dollar's bullish trajectory, while weaker data could trigger a pullback. Traders should also watch for intervention risks from Japanese authorities if USD/JPY approaches the 165 level, as well as eurozone growth data that might influence ECB policy direction.