After tumbling to a four-year low at the start of the year, the US dollar has quietly clawed back nearly all of its losses, and travellers booking summer trips to Europe and Japan are about to feel the difference. The window won’t necessarily stay open, which makes this a good season to take advantage of it.
It’s been an unusually volatile year for the dollar, and most travellers haven’t noticed. In January, the US Dollar Index, which tracks the greenback against a basket of major currencies including the euro, the pound and the yen, fell below 96 for the first time since 2022, driven by expectations of Federal Reserve rate cuts and broader concerns about the dollar’s long-term standing.
By June, those expectations had reversed entirely. Inflation came in hotter than forecast, the Fed held rates rather than cutting them, and the index has since climbed back to around 98, its strongest run in well over a year. For anyone converting dollars into euros or yen this summer, that swing is the difference between a so-so exchange rate and a genuinely good one.
The recovery shows up most clearly against the currencies that matter for a European trip. The euro, which strengthened against the dollar through most of 2025, has eased back this year as the European Central Bank’s rate moves failed to keep pace with a more hawkish Fed. The pound has followed a similar pattern.
Neither currency is at a multi-year low against the dollar, but both are meaningfully cheaper to buy than they were twelve months ago, which means hotel rates, dinners, and the incidental costs of a European holiday go further than they did last summer.
Japan remains the standout, and for reasons that have little to do with this year’s swings specifically. The yen has been historically weak against the dollar for several years now, sitting in territory that would have seemed implausible a decade ago, and that weakness has barely budged even as the dollar itself has wobbled.
The practical effect is a country that was once a byword for expense now offering some of the best value in Asia: a serious sushi dinner, a week of bullet train travel, an evening of good sake in a Kyoto izakaya, all priced in a currency that simply buys less than it used to. Crucially, Japan’s own inflation has stayed low, which means that weak yen translates into a real discount rather than evaporating into higher local prices, as has happened in countries like Turkey, where currency weakness is offset by inflation running well above 30%.
That last point is worth holding onto for any destination chosen on exchange rate alone. A currency trading cheap against the dollar only delivers real value if local prices haven’t risen to compensate, which is precisely what makes Japan, and to a lesser extent several Southern European destinations, better bets than headline exchange-rate rankings alone would suggest.
The dollar’s 2026 comeback is real, and it’s a useful tailwind for a European or Japanese trip booked this summer. Whether it holds into autumn is genuinely an open question, given how quickly it reversed course once already this year, which makes the case for travelling sooner rather than waiting for an even better rate that may not arrive.
Amanda O’Brien is the creator and editor of The Boutique Adventurer. She has visited 80 countries and is a member of the British Guild of Travel Writers as well as the IFTWTA. She is passionate about wine had has just completed Level 3 of the WSET. Born in Australia, she lives in London.