Forex

Dollar Steadies Near Three-Week Low; Euro Slips on French Debt Strain

The dollar index held near 101.76 on Oct. 21, 2026, after a three-week low, as the euro eased to $1.122 and the Australian dollar hit a three-week high.

Oct 21, 2026 - 12:26

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The U.S. dollar held steady against most major currencies on Wednesday, October 21, 2026, after slipping to a three-week low in the previous session, as traders weighed Middle East tensions, oil-driven inflation concerns and a run of central bank commentary. The euro remained under pressure as France's borrowing costs climbed.

The dollar

The dollar index, which measures the U.S. currency against six peers, was little changed at 101.76, CNBC reported, citing Reuters. The index had fallen 0.2% on Tuesday and touched 101.50, its lowest level since October 1.

According to the report, the dollar has drawn safe-haven demand amid the U.S.-Israeli war with Iran and has been helped by U.S. energy independence. At the same time, falling Treasury yields this month, as investors sought government bonds during volatility in AI-related stocks, have weighed on the currency. Carol Kong, an economist and currency strategist at Commonwealth Bank of Australia, said in a client note that because equity sentiment and the growth outlook are closely tied to major technology companies, their earnings "can have a large bearing on the USD."

Euro and French politics

The euro slipped 0.1% to $1.122 and was down almost 1% for the month, CNBC reported. France's benchmark 10-year bond yield rose above 5% on Wednesday for the first time since 2002 as the government struggled to pass its 2027 budget amid violent protests, according to The Guardian.

John Hardy, global head of macro strategy at Saxo, described the situation as "a concern" for the euro but said "it's not a panic by any means just yet," according to CNBC. Matthew Ryan, head of market strategy at Ebury, told The Guardian that the euro "continues to lag most major currencies" because of the political risk premium attached to France.

Sterling after UK inflation data

Sterling was little changed at $1.33 and rose against the euro for a fifth straight session, hovering near its highest level in more than 16 months, CNBC reported. The move followed UK data showing consumer price inflation of 3.5% in the 12 months to September 2026, up from 3.1% in August, according to the Office for National Statistics. The ONS said transport, particularly motor fuels, made the largest upward contribution, and that the average price of diesel reached 192.5 pence per litre, the highest since July 2022. CNBC reported that the data could strengthen the case for a Bank of England rate increase in November.

Yen and Asia-Pacific currencies

The yen held at 158.1 per dollar. Bank of Japan Deputy Governor Ryozo Himino said underlying inflation was close to the central bank's 2% target and that financial conditions remained loose, comments CNBC said signaled scope for higher borrowing costs.

The Australian dollar rose 0.3% to $0.7026, a three-week high, after Reserve Bank of Australia Deputy Governor Andrew Hauser told a Citi conference that the inflation outlook looked "materially worse," according to CNBC. The New Zealand dollar slipped 0.1% to $0.568, and the Canadian dollar was steady at C$1.405 per U.S. dollar. Indonesia's rupiah edged 0.1% lower after Bank Indonesia left its main policy rate unchanged for a fourth straight meeting while raising its deposit facility rate.

Tuesday's levels

At Tuesday's U.S. close, USD/JPY had fallen 0.19% to 158.18 and EUR/USD stood at 1.12, while U.S. Dollar Index futures were at 101.53, Investing.com reported.