The US dollar ended the third quarter of 2026 almost exactly where it started: the Federal Reserve's nominal broad dollar index was 120.97 on September 30, compared with 120.92 on June 30 [1]. Inside the quarter, it fell 2.2% to 118.32 on August 24, then rose again as Treasury yields climbed above 5% [1][4]. The biggest single move was in the Japanese yen, which strengthened 3.3% against the dollar after the US and Japan carried out a rare joint intervention on July 31 [1][2].
How did the dollar perform in Q3 2026?
The broad dollar index measures the dollar against the currencies of the main US trading partners, weighted by trade. It was up 1.0% for 2026 through September, and its 2026 range ran from a low of 117.44 on January 29 to a high of 121.79 on October 1 [1].
| Exchange rate | Dec 31, 2025 | Jun 30, 2026 | Sep 30, 2026 | Dollar change in Q3 | Dollar change in 2026 |
|---|---|---|---|---|---|
| Broad dollar index | 119.75 | 120.92 | 120.97 | 0.0% | +1.0% |
| Yen per dollar | 156.80 | 162.61 | 157.25 | -3.3% | +0.3% |
| Dollars per euro | 1.1736 | 1.1417 | 1.1345 | +0.6% | +3.4% |
| Dollars per pound | 1.3447 | 1.3259 | 1.3267 | -0.1% | +1.4% |
| Canadian dollars per dollar | 1.3712 | 1.4205 | 1.4210 | 0.0% | +3.6% |
| Mexican pesos per dollar | 18.0057 | 17.4490 | 18.0609 | +3.5% | +0.3% |
| Chinese yuan per dollar | 6.9931 | 6.7851 | 6.7045 | -1.2% | -4.1% |
| Swiss francs per dollar | 0.7936 | 0.8082 | 0.8348 | +3.3% | +5.2% |
Source: Federal Reserve H.10 noon buying rates in New York and nominal broad dollar index, via FRED [1]. "Dollar change" is the change in the dollar's value against each currency; for the euro and pound, the dollar's change is the inverse of the quoted rate's change.
The dollar gained most against the Swiss franc (3.3%) and the Mexican peso (3.5%) in the quarter, and lost most against the yen (3.3%) and the Chinese yuan (1.2%) [1]. The yuan reached 6.6947 per dollar on September 21, its strongest level of 2026 [1].
What was the US-Japan yen intervention?
On Friday, July 31, 2026, Japan's Ministry of Finance and the US Treasury bought yen together, a rare coordinated move, CNBC reported [2]. The yen had weakened to 163.73 per dollar the day before and strengthened to 157.57 on the day of the intervention [2]. Treasury Secretary Scott Bessent said the "coordinated foreign exchange actions countered disorderly yen movements," and Japan said it "will not hesitate to conduct further coordinated interventions in the future" [2]. Japan also said it planned to use the Fed's FIMA repo facility, which lets foreign central banks borrow dollars against Treasury securities instead of selling them [2].
The Fed's minutes said the intervention "directly contributed to dollar depreciation, given the yen's considerable weight in currency indexes," and that the New York Fed acted only as fiscal agent for the Treasury [3]. The Bank of Japan followed with a rate increase to 1.25% on September 18, which narrows the gap between US and Japanese interest rates [5].
Why did the dollar fall and then recover?
July and August: narrowing rate gaps
From June 30 to August 24, the dollar index fell 2.2% [1]. The Fed's minutes attributed the dollar's decline over the summer to "narrowing interest rate differentials and improving foreign growth" as well as the yen intervention [3]. Other central banks were raising rates faster than markets had expected; the ECB raised its deposit rate in June and again in September, to 2.50% [6].
September: yields above 5%
From August 24 to September 30, the dollar index rose 2.2% [1]. Over the same period, DataPorium data show the 10-year Treasury yield rose from 4.70% to 5.29% and the Fed raised its target range to 3.75% to 4.00% [4]. Higher US yields make dollar assets more attractive to foreign investors. The yen ended September at 157.25 per dollar, close to where it traded right after the intervention [1][2].
Oil and safe-haven demand
The war with Iran affects currencies in two ways. Higher oil prices hurt big importers of energy, such as Japan and the euro area, while the United States is a net exporter of petroleum products, and the Fed's minutes noted record US energy exports in the second quarter [3]. At the same time, investors often buy dollars and Swiss francs in a crisis; in the third quarter, the dollar rose against the franc [1].
What happened to the euro and the pound?
The euro slipped 0.6% against the dollar in the quarter, to $1.1345, even though the ECB raised its deposit rate to 2.50% with effect from September 16 [1][6]. The Fed also raised rates in September, so the gap between US and euro-area rates did not narrow much. The pound was almost unchanged at $1.3267 [1].
Government bond yields rose in all of these economies. CNN reported on September 24 that 10-year yields in Germany and France were at their highest in about 15 years and Japan's 10-year yield had reached 3.08%, a level last seen in 1996 [7]. When yields rise everywhere at once, the relative appeal of each currency changes less than the headlines about rate hikes suggest.
What does a flat dollar mean for investors and companies?
For US investors in foreign stocks, a stable dollar means currency moves added little to returns in the third quarter, except in Japan, where a stronger yen raised the dollar value of Japanese assets by about 3% [1]. For US multinationals, a dollar that was about 1% stronger than at the start of the year slightly reduces the dollar value of foreign sales [1]. For Mexico, a weaker peso in the quarter makes its exports cheaper in the United States, its largest market.
The Fed's broad dollar index ended Q3 2026 at 120.97, almost unchanged from 120.92 on June 30, after a 2.2% summer decline that a joint US-Japan yen intervention helped start.
Frequently asked questions
Did the US dollar go up or down in Q3 2026?
Neither, overall. The Fed's broad dollar index was 120.97 on September 30, 2026, compared with 120.92 on June 30, after falling to 118.32 in August [1].
Did the US intervene in the currency market in 2026?
Yes. The US Treasury joined Japan in buying yen on July 31, 2026, a coordinated intervention both governments confirmed [2].
What is the yen exchange rate in 2026?
The yen was 157.25 per dollar on September 30, 2026, after weakening past 163 in late July before the intervention [1][2].
Why does the dollar rise when Treasury yields rise?
Higher yields on US bonds attract foreign investors, who need dollars to buy them. In September 2026, the 10-year yield rose to 5.29% and the dollar index rose 2.2% from its August low [1][4].
Sources & References
- [1] Federal Reserve Bank of St. Louis, FRED, Nominal Broad U.S. Dollar Index and H.10 daily exchange rates
- [2] CNBC, U.S., Japan confirm coordinated yen intervention, signal readiness for more (August 3, 2026)
- [3] Federal Reserve, Minutes of the FOMC, September 15-16, 2026
- [4] DataPorium Interest Rates (Treasury yields and Fed decisions)
- [5] Bank of Japan, Change in the Guideline for Money Market Operations (September 18, 2026)
- [6] European Central Bank, Key ECB interest rates
- [7] CNN Business, Global bond sell-off deepens, sending borrowing costs higher around the world (September 24, 2026)
