FX Talking: We need to talk about Kevin
The dollar is ending the year around 9% lower, driven in part by the Fed easing cycle and the resilience of overseas economies. We continue to look for some more dollar weakness in 2026 on the back of further Fed cuts and speculation over a more doveish tilt to the Fed should Kevin Hassett be named the next Fed Chair
Executive summary
Our call remains that EUR/USD heads to 1.22 by end-2026 as lower US rates, lower energy prices and, crucially, the arrival of German fiscal stimulus supports higher valuation levels for the euro. In Europe, that will be played out in a higher EUR/GBP and perhaps even a higher EUR/CHF, too. Outperforming in Europe should be the Swedish krona – buoyed by fiscal stimulus in an election year. We also very much continue to like the Czech koruna – backed by strong domestic growth and high real interest rates.
And for commodity currencies, those outperforming should be those backed by metals rather than energy. We’re still bullish on the Australian dollar and very positive on the South African rand. But for a full overview of our currency coverage, please see our 2026 FX Outlook. And more detailed Asian forecasts can be found in this bundle.
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8 December 2025
FX Talking: We need to talk about Kevin This bundle contains 4 ArticlesThis publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more