The Global FX Outlook – January 2026

January opens the year with global currency markets adjusting to a more balanced — but still uneven — economic landscape. The U.S. dollar has softened modestly as the Federal Reserve begins its easing cycle, yet remains resilient on the back of strong U.S. growth and a labour market that continues to hold together. As central banks move further out of sync, interest-rate divergence and relative economic performance are once again the primary drivers of FX markets in early 2026.

Outside the U.S., growth dynamics are improving but remain uneven. The euro has consolidated following strong gains in 2025 as the ECB holds rates steady, while sterling is finding support as Bank of England rate cuts are increasingly viewed as necessary stimulus rather than a sign of weakness. In Asia-Pacific, the Australian and New Zealand dollars are emerging as relative outperformers, supported by firmer domestic growth and shifting central-bank expectations. Meanwhile, the Japanese yen remains volatile despite further rate hikes, and the Chinese yuan has held firm amid strong export performance even as domestic demand remains soft.

The January 2026 Currency Outlook explores how easing U.S. monetary policy, improving global growth expectations, and evolving trade relationships — including upcoming USMCA negotiations — are shaping currency markets as the new year begins.

What you will learn in this report:  

• Market analysis: Why the U.S. dollar is drifting lower but avoiding a sharp decline — and how strong U.S. growth, easing inflation, and shifting bond-yield differentials are influencing FX markets at the start of 2026.
• Currency projections: Updated 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, and USD/MXN.
  Gain clarity on expected ranges and the macro forces driving each currency early in the year.
• Risks to watch: Further Federal Reserve rate cuts, ECB and BoE policy pauses versus easing, Bank of Japan rate increases and debt-market concerns, AUD and NZD sensitivity to global growth and commodities, volatility around USMCA trade discussions, and China’s ongoing domestic slowdown alongside resilient export growth.