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Dollar set for biggest monthly gain against euro in 14 months
Published : Wednesday, 30 September, 2026 at 8:23 PM
Observer Online Report
The US dollar is set for its biggest monthly gain against the euro in 14 months, supported by stronger US growth and rising rate expectations while Europe faces energy, debt and political concerns.
The dollar traded near this year’s high against the euro on Wednesday, with the euro at $1.1339 in Asian trading.
The euro fell to $1.1312 on Tuesday, its lowest level since May 2025. It is also testing support around 178 yen.
The dollar has gained nearly 2.5 per cent against the euro in September and is heading for a third consecutive quarterly rise.
The stronger dollar also pushed the Australian dollar below 70 US cents for the first time since early August. The Aussie fell to a nine-week low of $0.6959 after inflation data came in slightly below forecasts.
“The US economy is running hot, Europe is losing the global AI race, and energy supplies and French politics remain big concerns for the euro,” said Brent Donnelly, president of foreign exchange trading at analytics firm Spectra Markets.
European gas prices surged earlier this month to their highest level since 2022.
French markets are also under pressure from debt concerns and political gridlock ahead of next year’s presidential election. The spread between French and German yields has widened beyond 115 basis points, its highest since 2012.
Options markets have also shifted sharply, showing that traders are increasingly seeking protection against further euro declines. However, Donnelly said the dollar may need strong US economic data to make further gains.
The dollar also reached a 16-and-a-half-month high against the Swiss franc at 0.8358 francs on Tuesday. The franc has weakened partly as investors have turned to other low-yielding currencies instead of the yen for carry trades.
The yen has become less attractive as a short against the dollar following US-Japan currency buying in July and August. Japan has also increased the pace of interest rate hikes.
The dollar has fallen 2 per cent against the yen in September and nearly 3.8 per cent in the third quarter. It touched a near two-week low of 156.38 yen in Asian trading.
The US core PCE inflation reading, the Federal Reserve’s preferred inflation gauge, was due later Wednesday. However, markets are mainly focused on Friday’s US jobs report. A strong report could strengthen expectations of higher US interest rates.
Those expectations weakened overnight after influential New York Fed President John Williams said there was “no need for urgency” in raising rates. Two-year Treasury yields fell about 3.5 basis points, while the probability of a rate hike next month priced into Fed funds futures fell to 50 per cent from 71 per cent.
The New Zealand dollar remained at $0.5645 after hitting its lowest level since November last year on Tuesday.
Sterling touched a three-month low on Tuesday and was last trading near $1.3230.
The yuan was heading for its seventh consecutive quarterly gain against the dollar in its final trading session before China’s October 1-7 holidays.
- MaT
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Editor : Iqbal Sobhan Chowdhury
Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
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Published by the Editor on behalf of the Observer Ltd. from Globe Printers, 24/A, New Eskaton Road, Ramna, Dhaka.
Editorial, News and Commercial Offices : Aziz Bhaban (2nd floor), 93, Motijheel C/A, Dhaka-1000.
Phone: PABX- 41053001-06; Advertisement: 41053012; 01793317829, 01550707291, E-mail: [email protected], [email protected] Online: email: [email protected] 41053014; 01550707297 Advertisement: 01550707296
