USD: Focus on Fed's Williams speech today – ING

In our 2026 FX outlook published this week, we make the call that the low-volatility environment will extend into 2026 and carry trade strategies will remain popular. The question of whether investors have over-reached into carry was partially answered yesterday, when one popular target currency, the Hungarian forint, faced some tough news on the budget side, ING's FX analyst Chris Turner notes.

DXY probably traces out a 99.25-99.75 range

"Some looser fiscal policy was already priced in by the market, but at the same time, the resilience of the forint shows a market reasonably wedded to carry trades in a mixed environment for core markets. We also note that Latam currencies are performing very well, buoyed by high carry and the metals story."

"For today, the focus will be on the US House presumably passing the Senate compromise bill to reopen government, at least until 30 January. If approved, that means the US government can reopen, perhaps on Friday, and that the September NFP jobs report (potentially USD negative) can be released early next week. Before then, we have a keynote speech from New York Fed President John Williams at 1520CET today. He is seen as slightly dovish, though looks unlikely to move the needle on current pricing of a 66% probability of a 25bp Fed cut in December."

"While we would love to say that the dollar made a significant high last week, the catalysts for it to come lower are not obvious right now. That's why we think DXY probably traces out a 99.25-99.75 range for the time being."