KeyBank | FX Daily Report – February 24, 2026

• The U.S. dollar strengthened against a basket of its peers by about 0.2% Tuesday morning as traders seek clarity on new tariff measures. A slew of Federal Reserve officials are slated to speak today, followed by February’s consumer confidence survey due at 10am. The dollar has lost about 0.5% year-to-date.

• The British pound weakened slightly against the dollar on Tuesday following modest gains in the prior two trading sessions, as traders awaited comments from Bank of England Governor Andrew Bailey and monitored potential impacts from new U.S. tariffs. Bailey is expected to address the British Parliament’s Treasury Committee later in the day, where he may offer additional insight into his decision to vote to leave interest rates unchanged at the BoE’s meeting earlier this month. While the timing of future rate cuts remains uncertain, traders expect the British central bank to cut rates twice this year to take the benchmark rate to 3.25%. Any comments perceived to be dovish could firm up the chances of a March cut and push markets to speculate on more than 50bps of easing later this year. The British pound is flat against USD year-to-date.

• The Japanese yen weakened against the greenback by as much as 0.8% Tuesday morning, breaching the 156-per-dollar level overnight, following a report that Japanese Prime Minister Sanae Takaichi had expressed reservations about further interest rate hikes from the Bank of Japan. The report, published in The Mainichi Daily, immediately sent the yen to a two-week low and weighed on Japanese government bond yields. It’s also the latest example of growing tension between policymakers’ fiscal and monetary policy objectives – Takaichi is a fiscal dove that needs low rates to finance her large deficits, while the Bank of Japan appears headed for rate hikes to combat a weaker currency that has raised the costs of imported food and fuel. Before the report was released, a majority of economists expected the BoJ to raise rates to 1% by June and traders had priced in a roughly 70% chance of a hike by April. In January, the New York Federal Reserve – acting on behalf of the U.S. Treasury Department – took the lead in conducting rate checks to prop up Japan’s currency without a request from Tokyo. The yen has gained about 0.4% year-to-date.

• The Chinese yuan traded close to a three-year high against the dollar on Tuesday morning as onshore traders returned from a nine-day holiday and placed bets that the U.S. Supreme Court ruling against President Donald Trump’s tariffs will bolster Chinese exports. Sentiment has been aided by renewed dollar weakness and signs of elevated foreign inflows following China’s record current account surplus in the fourth quarter of 2025. President Trump will travel to China from March 31st to April 2nd for a highly anticipated meeting with Chinese President Xi Jinping. CNY/USD has appreciated by about 1.6% year-to-date.

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