Daily Market Report
10/26/2026
EUR/USD ranged in the high 1.11’s to the low 1.12’s overnight. The Euro (EUR) trades higher against its peers on Monday. In the European trade, the major currency is slightly higher at around 1.1210 against the US Dollar, but has given back some of its early gains.
The Euro attracts bids as Moody’s keep France’s sovereign rating unchanged at Aa3, while it was expected to downgrade.
Analysts at Danske Bank note that Moody’s decision late on Friday to keep France’s sovereign rating unchanged at Aa3 with a negative outlook ran counter to “wide market expectations of a downgrade.” They highlight that the agency’s stance rests on the assumption “that a deficit-reducing 2027 budget will be adopted and that financing costs and social tensions will abate somewhat in the coming months.”
Danske Bank points out that Moody’s now “expects a deficit of 5.2% of GDP next year, down from the 5.4% the government expects this year but slightly above its 5% target.”
The British Pound (GBP) extends its reversal from the five-week highs reached against the US Dollar (USD) last week, as investors trim USD short positions ahead of the Federal Reserve’s (Fed) monetary policy meeting, due on Wednesday. The GBP/USD pair hits session lows just below 1.3350, on Monday about 0.5% below last week’s peak, at 1.3419.
Market volatility remains at relatively low levels, as traders bide their time ahead of monetary policy decisions by the Fed and other central banks later this week, with the US Dollar showing a somewhat firmer stance than in the previous weeks.
The US central bank is widely expected to leave its monetary policy unchanged on Wednesday. Fed policymakers have been requesting some more time to assess the impact of September’s rate hike before tightening monetary policy further, which has prompted investors to ditch hopes of back-to-back interest rate hikes.
The USD/JPY pair gains as the US Dollar claws back its early losses and turns positive. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.12% higher to near 101.87.
The Greenback gains as investors turn cautious ahead of the Federal Reserve (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, the Fed is almost certain to leave interest rates steady in the 3.75%-4.00% range, which makes the monetary policy guidance a key catalyst for the US Dollar’s outlook.
Source: FX Street