US Dollar Forecast & Global FX Outlook - May 2026

USD/CAD Outlook

Expected range: 1.34 – 1.38

USD/CAD is expected to remain range-bound, as US dollar strength is balanced by Canadian dollar support from oil prices and stable domestic growth. The US dollar continues to benefit from higher yields and resilient economic performance, while the Canadian dollar is supported by steady commodity prices and stable economic conditions.

Short-term direction will be driven by US inflation data, Federal Reserve guidance, and oil price movements. Any upside in USD/CAD is likely to be limited unless US data significantly outperforms expectations.

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EUR/USD Outlook

Expected range: 1.15 – 1.18

EUR/USD is expected to trade with a slight downward bias, as the euro faces pressure from weak growth and ongoing easing expectations. At the same time, the US dollar remains supported by interest rate differentials and stronger economic data.

That said, improving global sentiment or better-than-expected Eurozone data could provide short-term rebounds within the range.

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British Pound (GBP/USD)

Sterling enters April under pressure as the UK economy faces persistent inflation, slowing growth, and fiscal uncertainty, with higher energy prices further weighing on both consumers and businesses. While elevated inflation could support a more hawkish Bank of England stance, this is being offset by weak economic fundamentals and ongoing US dollar strength, limiting upside potential for GBP/USD.

Bias: Neutral to mildly negative

Apr 2026 GBP/USD Monthly Range: 1.3000 – 1.3450

Japanese Yen (USD/JPY)

The Japanese yen remains one of the most volatile currencies in the current environment, driven by wide US-Japan rate differentials, ongoing policy normalization by the Bank of Japan, and rising risk of government intervention. While higher domestic yields are providing some support, they are not sufficient to offset the US dollar’s yield advantage, and intervention risk increases sharply as USD/JPY approaches upper levels, creating the potential for sudden reversals.

Bias: Elevated but highly volatile

Apr 2026 USD/JPY Monthly Range: 156.00 – 162.00

Swiss Franc (USD/CHF)

The Swiss franc continues to perform as a traditional safe-haven currency amid geopolitical uncertainty and elevated market volatility, remaining well-supported while competing directly with the US dollar for defensive flows. This dynamic keeps USD/CHF trading within a more contained range compared to other major pairs.

Bias: Stable defensive range

Apr 2026 USD/CHF Monthly Range: 0.7600 – 0.8000

Chinese Yuan (USD/CNY)

The Chinese yuan remains tightly managed by authorities focused on maintaining currency stability, supporting economic growth, and managing capital flows, with policymakers likely to smooth volatility and prevent excessive depreciation despite pressure from a stronger US dollar. This approach continues to anchor USD/CNY within a controlled range.

Bias: Managed stability with mild USD strength

Apr 2026 USD/CNY Monthly Range: 6.85 – 6.98

Indian Rupee (USD/INR)

The Indian rupee remains particularly sensitive to rising oil prices due to India’s reliance on energy imports, with higher crude prices increasing inflation risks, widening trade deficits, and putting sustained pressure on the currency. Unless energy prices stabilize, USD/INR is likely to remain biased higher.

Bias: Upside risk in USD/INR

Apr 2026 USD/INR Monthly Range: 91.00 – 93.50

Australian Dollar (AUD/USD)

The Australian dollar remains closely tied to global risk sentiment, Chinese economic performance, and commodity prices, with higher commodity prices providing some support but broader market caution limiting upside. Without a clear improvement in global sentiment, AUD/USD is expected to remain range-bound.

Bias: Soft with rebound potential

Apr 2026 AUD/USD Monthly Range: 0.6650 – 0.7000

New Zealand Dollar (NZD/USD)

The New Zealand dollar remains one of the most risk-sensitive currencies, coming under pressure in a defensive market environment where investor demand for risk assets declines, with any recovery dependent on stabilizing global conditions and improved risk appetite.

Bias: Cautious, risk-sensitive

Apr 2026 NZD/USD Monthly Range: 0.5600 – 0.5950

Mexican Peso (USD/MXN)

The Mexican peso continues to benefit from strong yield differentials and deep trade integration with the US, but remains vulnerable to global volatility and risk-off sentiment, creating a dynamic where it performs well in stable markets but weakens during periods of uncertainty.

Bias: Volatile with mild USD upside

Apr 2026 USD/MXN Monthly Range: 18.60 – 19.60