The U.S. dollar remains near record highs; can the euro rebound from its 17-month low?

The U.S. dollar remains near record highs; can the euro rebound from its 17-month low?

05.10.2026 New

In U.S. currency trading on the previous business day, the dollar came under temporary selling pressure after the September nonfarm payrolls figure came in at 29,000—well below market expectations—and the unemployment rate rose to 4.2%.Average hourly earnings also slowed to a 0.1% month-over-month increase and a 3.0% year-over-year increase, and employment figures for July and August were revised downward by a combined 60,000, significantly dampening expectations for an additional rate hike at the October FOMC meeting.However, the dollar has recovered today against the backdrop of high U.S. Treasury yields and a weak euro, with the dollar-yen pair trading around 158 yen.

European currencies failed to sustain a rally despite the eurozone’s September HICP accelerating to 3.8% year-over-year from 3.2% the previous month and the core HICP rising to 2.5%.Today, against the backdrop of concerns over France’s fiscal situation, the euro fell temporarily to $1.1161—a 17-month low—while the pound also faced resistance around $1.32.While accelerating inflation suggests the possibility of further interest rate hikes by the ECB, caution in the European bond market is weighing on the euro; the market will be watching to see if the services PMI provides any positive economic support.

Today’s economic indicators include the release of the revised September services PMI figures for France at 4:50 p.m., Germany at 4:55 p.m., the Eurozone at 5:00 p.m., and the U.K. at 5:30 p.m.Forecasts are 51.4 for France, 52.9 for Germany, 53.0 for the Eurozone, and 51.7 for the UK—all above the 50-point mark. Following that, the U.S. September ISM Non-Manufacturing Index is scheduled for release at 11:00 PM.We will be watching to see whether confirmation of resilience in the European economy will halt the decline of the euro and the pound, or whether strength in the U.S. services sector will once again lead to a surge in dollar buying.