The U.S. Dollar's Rally Pauses and the Canadian Dollar Remains Firm—How Will European Currencies React?

The U.S. Dollar's Rally Pauses and the Canadian Dollar Remains Firm—How Will European Currencies React?

29.10.2026 New

In U.S. currency trading the previous day, the FOMC kept the policy interest rate unchanged at 3.75–4.00% and noted in its statement that the economy remained resilient and that inflationary pressures persisted.The dollar-yen pair traded within a range of 157.65 to 158.35 yen on the 28th, but dollar buying paused after the announcement as Fed Chair Warsh did not explicitly state that the next rate hike was imminent.Meanwhile, the Bank of Canada raised its policy rate from 2.25% to 2.50% and hinted at the possibility of further rate hikes. The Canadian dollar remained firm against the U.S. dollar, with the USD/CAD exchange rate hovering around 1.399 on the morning of the 29th.

Ahead of the ECB’s policy decision, the euro traded against the dollar within a range of $1.1113 to $1.1169 on the 28th and closed near $1.1154.Although dollar selling following the FOMC meeting supported the euro’s recovery, concerns remain over France’s fiscal issues and European bond yields.In the UK, the government’s budget proposal was released, but the pound’s reaction was relatively muted, with the GBP/USD pair trading in the low $1.33 range. Attention will focus on how the ECB signals the outlook for further rate hikes following its decision to keep rates unchanged.

Today’s economic indicators include the UK’s September consumer credit balances and money supply at 6:30 p.m., followed by the eurozone’s October economic sentiment index at 7:00 p.m. At 9:30 p.m., the U.S. September PCE price index, preliminary GDP figures for the July–September quarter, and initial jobless claims will be released simultaneously.Core PCE is expected to rise 3.1% year-over-year, and GDP growth is forecast at an annualized rate of 3.2%. Additionally, the ECB’s policy rate is scheduled for 10:15 p.m., followed by a press conference with ECB President Lagarde at 10:45 p.m. We’ll be watching for differences in interest rate outlooks between the dollar and the euro.