Monex's October 2026 FX Forecasts

We warned at the beginning of last month that fiscal concerns are rising across the US, Europe, Japan and the UK amongst others, and that this theme was likely to remain in play throughout September. That prediction has proven accurate, though our expectation that this would weigh on FX volatility has started to break down again as October gets underway. Unlike August, when the US was the primary target of bond market worries, leading to a broad-based surge in borrowing costs as Treasury yields rose, now it is France in the crosshairs. The result has been a notable divergence in government bond yields, with the euro as collateral damage.

Alongside ongoing events in the Middle East and rising inflation expectations, these dynamics will pose an additional challenge for rate-setters in the coming month. Our view remains that fiscal concerns are unlikely to fade, meaning the risks of a bond market blow-up will be weighing on the minds of policymakers and traders alike, adding to pre-existing debasement worries. Given recent market events, the euro is likely to remain vulnerable, while sterling also looks exposed with a Budget set for month-end, and carry trades are likely to suffer in a more volatile interest rate environment. As a result, we have turned bullish on the dollar in our October forecasts, predicting a period of outperformance for the buck into the back end of the year.

Read our October 2026 FX Forecasts here:

Authors:

Nick Rees, Head of Macro Research

Barry van der Laan, Senior FX Market Strategist

Disclaimer

This information has been prepared by Monex International Markets plc, part of Monex S.A.P.I. de C.V. (“Monex”). The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. All entities in the “Monex” group of companies are regulated for different products and services within the jurisdictions in which they operate. Details of the different entities can be found here. Details of the respective entities’ regulated status and available products and services can then be found on the relevant links to the individual jurisdictions’ website.