UBS expects the euro to recover to $1.16 by the end of 2026, arguing that its slide from $1.17 to nearly $1.11 against the dollar has gone further than Europe's economy justifies and that markets are excessively pessimistic on Europe. The decline reflects stronger US economic data, worries about a possible US diesel export ban, rising global bond yields and concern over France's finances, with French spreads widening significantly. UBS does not expect a broader European debt crisis and sees a French budget deal as likely, which should narrow those spreads. Markets have almost fully priced out a US rate hike in October, making a sustained fall below $1.10 less likely, and UBS sees support at $1.10 and $1.08 with resistance at $1.13. A Democratic win of both the House and Senate in the midterms would likely be a modest negative for the dollar, a risk not reflected in market pricing.
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Related tickers and likely impact
EUR/USD
▲ Likely positiveRelevance: medium
| Market | Currencies |
|---|---|
| Close on 10/19/2026 | 1.12125 |
| Change that session | -0.24% |
DXY
▼ Likely negativeRelevance: medium
| Market | Currencies |
|---|---|
| Close on 10/19/2026 | 101.98 |
| Change that session | +0.20% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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