Bias: The outlook for USD/UAH is bullish-to-range-bound, as it is currently above the 90-day average and in the upper half of the three-month range.
Key drivers:
- Rate gap: The Federal Reserve is expected to make rate cuts in 2026, which could weaken the USD, while the National Bank of Ukraine holds a high key policy rate to control inflation.
- Risk/commodities: Recent oil price volatility is keeping the USD firm, while also impacting the Ukrainian economy and currency dynamics.
- Economic growth projections: The International Center for Ukrainian Studies forecasts modest GDP growth for Ukraine in 2026, which may lend support to the UAH.
Range: The USD/UAH pair is likely to drift within its recent range as the market evaluates upcoming economic indicators and geopolitical developments.
What could change it:
- Upside risk: Strong US labor market data could boost USD demand further.
- Downside risk: If the NBU adopts a more aggressive monetary policy or if geopolitical tensions escalate, the UAH could strengthen against the USD.
