ING's FX strategy team has put a number on what dollar bulls have been sensing for weeks: the greenback screens overvalued versus all G10 currencies bar sterling, by 1.1% on an equally weighted basis. Yet strategists Francesco Pesole, Frantisek Taborsky and Chris Turner say that is not enough to call the top. Their note, published on Tuesday, argues the week opened with fresh dollar strength — as crude stayed above $100 amid renewed fighting around Gulf energy routes — and that Tuesday's calendar, headlined by the NFIB survey and home sales, is unlikely to produce anything that breaks the trend.
The last time the dollar was this stretched was March 2025, when only a full-blown Sell-America shock could knock it down. Without a comparable catalyst now, ING sees the rally grinding on rather than snapping back.
That fits the tape. The dollar index traded at 102.56 in Asian hours on Tuesday, Reuters reported, after closing up 0.3% on Monday — near its highest since April last year. The euro was flat at $1.1159, down about 0.7% from its pre-payrolls level of 1.1241, the pound held at $1.3209, and the dollar slipped 0.1% to 158.435 yen. ING's model puts sterling as the sole G10 currency at fair value versus the dollar; all the rest screen expensive.
Why it matters
Two forces are doing the heavy lifting. Expectations for further Federal Reserve tightening remain stickier than for most other central banks, capping how far the dollar can fall even if oil retreats. And shaky bond markets keep demand alive for a liquid defensive currency: the US 10-year sat at 5.192% on Tuesday, down 5 basis points after Monday's holiday, while the Franco-German spread widening kept the euro pinned. Today's GBP/USD analysis shows where the dollar's one "fairly valued" peer sits on the charts, and the rupee's 1% jump on RBI action shows the other side of the same trade: when the dollar pauses, emerging-market currencies breathe.
ING also flagged one parked risk: the US midterms. Traders have long priced in the possibility of Republicans losing control of Congress, and precautionary, dollar-negative positioning ahead of that vote probably does not surface until late October. The bank's Tuesday note stays with the verdict Pesole gave on Friday: he sees no broad dollar correction forming.
What to watch
- Wednesday's US inflation print: a soft core CPI reading would test ING's claim that sticky Fed expectations keep the dollar bid.
- Brent crude: Tuesday's 1.4% slide to $105.20 eased some of the dollar's energy support; a renewed push on Gulf energy infrastructure would flip that back.
- DXY 102.50-103.00: the index sits at 18-month highs; a clean break above 103 extends the run, a drop under 102.00 says momentum is fading.
- Bank of Japan and RBA repricing: Japan's September wholesale inflation printed 6.8% year on year versus a 7.6% forecast, and the RBA minutes showed a fourth hike this year — both keep non-US rate bets alive.
Where the dollar stands today
| Pair / index | Level (Oct 13, Asian session) | Read |
|---|---|---|
| DXY | 102.56 | Near 18-month high; +0.3% Monday |
| EUR/USD | 1.1159 | Flat; ~0.7% below pre-NFP 1.1241 |
| GBP/USD | 1.3209 | Steady; ING: only G10 pair at fair value |
| USD/JPY | 158.435 | -0.1%; above pre-NFP 157.54 |
| Brent crude | $105.20 | -1.4% Tuesday; still above $100 |
| US 10-year yield | 5.192% | -5bp after Monday holiday |
MarketRadar take
ING's own math shows how big a genuine reversal would be: if the dollar is 1.1% overvalued on an equally weighted G10 basis, EUR/USD would have to trade near 1.128 just to reach the model's fair value from today's 1.1159 — a 120-pip unwind. But overvaluation alone has never been a timing tool. March 2025 proved it takes an external shock, and neither sticky Fed expectations nor fragile bond markets nor $100+ oil looks ready to supply one this week. Near-term bias stays with the dollar; the first real test is Wednesday's CPI print, the second is late-October midterm positioning.
