The US Dollar continues to strengthen in 2026, while performance across other major currencies remains highly differentiated. The Euro is the weakest currency on a broad cross-rate basis, Sterling has proved comparatively resilient, the Chinese Yuan continues to appreciate, and the Japanese Yen remains historically weak despite higher domestic interest rates.
The Dollar Index stands at 101.08, up 2.80% year-to-date. EUR/USD trades at 1.1378, representing a 3.13% decline for the Euro against the Dollar this year, while GBP/USD stands at 1.3269, with Sterling down a more moderate 1.38%.
USD/JPY trades at 156.95 and is essentially unchanged year-to-date, while USD/CNY stands at 6.7122, reflecting an appreciation of almost 4% for the Yuan against the Dollar.
The Euro remains under broad pressure. In addition to its 3.13% decline against the Dollar, it has weakened 1.63% against Sterling and 2.99% against the Yen. EUR/CNY has declined 6.88% year-to-date, the largest cross-rate move covered in the report.
This combination of weakness against the Dollar, Sterling, Yen, and Yuan makes the Euro the weakest of the five currencies on a broad cross-rate basis in 2026.
Sterling is performing comparatively better. GBP/USD is down only 1.38% year-to-date, considerably less than the Euro's decline. It is also the only major currency gaining against the Dollar in the latest session.
Sterling has nevertheless weakened against both the Yen and Yuan this year, demonstrating that its relative strength has been concentrated primarily against the Euro.
The Chinese Yuan remains one of the strongest-performing currencies of 2026. The onshore Yuan has appreciated approximately 3.95% against the Dollar, while the offshore rate has strengthened 3.74%.
The narrow spread between onshore and offshore exchange rates indicates limited divergence in capital flows. The Yuan's performance is particularly notable given China's weak equity performance and falling government bond yields, both of which would typically create pressure on the currency. The PBOC appears to be actively managing the Yuan higher.
The Japanese Yen remains historically weak despite the Bank of Japan's policy normalization. USD/JPY is almost unchanged year-to-date, although this masks considerable volatility during the year.
One-month implied volatility stands at 9.14%, the highest of any currency pair covered. The Yen has nevertheless gained against both the Euro and Sterling. Its failure to appreciate materially against the Dollar despite a rise of more than 100 basis points in 10-year Japanese Government Bond yields indicates that the US-Japan interest-rate differential remains the dominant influence on the pair.
