The Global FX Outlook – February 2026

February begins with global currency markets reminded that volatility can return quickly when policy messaging, geopolitics, and rate expectations collide. The U.S. dollar has come under renewed pressure after late-January political commentary and rising questions around policy credibility, while markets remain highly sensitive to headlines tied to Iran and the Trump Administration’s push to purchase Greenland. At the same time, central banks are moving further out of sync, making interest-rate divergence and relative economic momentum the main drivers of FX pricing early this year.

Outside the U.S., the growth picture remains uneven but is showing important shifts. The euro briefly lifted above 1.2000 in January before easing back, with the setup suggesting a period of consolidation even as supportive fundamentals persist. In the UK, early signs of improvement have emerged as PMIs firm and retail activity strengthens, while a rise in inflation reduces the likelihood of near-term easing and offers some support for sterling. In commodity-linked FX, higher oil prices and a softer USD have helped the Canadian dollar, while Australia and New Zealand stand out as relative outperformers. AUD strength reflects improving domestic momentum and rising expectations for RBA tightening, while NZD outperformance has been supported by improving activity signals and higher-than-expected inflation. Meanwhile, USD/JPY volatility has returned on renewed concerns around Japanese government debt and political developments, and the Chinese yuan has continued to strengthen despite weaker domestic demand, supported by export performance and ongoing policy management.

The February 2026 Currency Outlook explores how headline-driven USD dynamics, shifting central-bank expectations, commodity support, and upcoming trade risks are shaping global currency markets as 2026 unfolds.

What you will learn in this report:  

• Market analysis: Why the U.S. dollar has turned more headline-sensitive, how policy credibility and geopolitics are influencing sentiment, and why relative growth and interest-rate divergence are back at the centre of FX markets.
• Currency projections: U

  pdated 1–3 month views across USD, EUR, GBP, CAD, JPY, CNY, AUD, NZD, and MXN, including key pairs such as EUR/USD, GBP/USD, USD/CAD, USD/JPY, AUD/USD, NZD/USD, USD/CNY, and USD/MXN.

• Risks to watch: Continued USD downside tied to geopolitics and policy credibility, EUR range swings after the January move above 1.2000, GBP sensitivity to shifting inflation and policy timing, CAD and MXN volatility as USMCA negotiations approach, AUD strength if the RBA begins a tightening phase, NZD outperformance as recovery momentum builds, and renewed JPY volatility linked to yields and debt-market concerns.