EUR/USD Forecast and News

EUR/USD's rebound seems to have hit some small resistance just north of 1.1900, but the overall picture still points to further gains in the near future, with the immediate goal being the 1.2000 milestone.

EUR/USD adds to Tuesday’s decline, revisiting the area below 1.1900 the figure on Wednesday.

The pair’s humble retracement comes in tandem with decent losses in the Greenback, with the US Dollar (USD) giving away its earlier jump following stronger-than-expected US Nonfarm Payrolls in January.

Indeed, on the latter, the US economy added 130K jobs in quite an auspicious start to the year, while the Unemployment Rate ticked lower to 4.3%, and Average Hourly Earnings held steady at 3.7% over the last twelve months.

Fed on hold, confidence up, but no rush

The Fed left the Fed Funds Target Range (FFTR) unchanged at 3.50% to 3.75% at its January 28 meeting, fully in line with expectations.

The tone, however, was a touch more constructive. Policymakers sounded slightly more confident on growth, while still acknowledging that inflation remains somewhat elevated. Importantly, the Federal Open Market Committee (FOMC) no longer sees employment risks as deteriorating. The decision passed 10 to 2, with two dissenters preferring a 25 basis points cut.

Chair Jerome Powell made it clear that the current stance is viewed as appropriate. He reiterated that policy will be decided meeting by meeting, with no preset path. Recent inflation overshoots were largely attributed to tariff effects, while services disinflation is still seen as progressing. Crucially, no one on the Committee is treating a rate hike as the base case.

ECB steady, sticking to the script

The European Central Bank (ECB) also stayed put, leaving all three key rates unchanged in a unanimous and widely expected decision.

The message was steady and quiet. The medium-term forecast still says that inflation will return to the 2% objective, and the most recent data hasn't changed that. Wage indicators are still showing indications of stabilisation, although pricing for services and pay dynamics are still being closely watched. The Bank is still planning for a small drop in inflation in 2026, which supports the assumption that it can afford to wait.

President Christine Lagarde described risks as broadly balanced and stressed that policy remains data dependent and agile. The Governing Council acknowledged recent FX moves, judged them to be within historical norms, and reiterated that there is no exchange rate target. In other words, policy is not on autopilot, but neither is it in a hurry to move.

Positioning is still Euro positive, but losing some punch

Positioning continues to lean in favour of the Euro, although the momentum behind that bias appears to be softening.

According to the Commodity Futures Trading Commission (CFTC), speculative net long positions rose to around 163.4K contracts in the week to February 3, the highest since August 2023. At the same time, institutional accounts, largely hedge funds, lifted short positions to nearly 218.5K contracts, levels not seen since May 2023.

Open interest edged lower to roughly 910.5K contracts. That subtle drop suggests participation may be starting to plateau rather than accelerate further.

Focus back to the US, dollar risks linger

Near term: The US Dollar remains the dominant driver, while labour market data, inflation releases and the broader geopolitical backdrop are likely to shape price action in the sessions ahead.

Risks: A Fed that stays cautious for longer continues to underpin the Greenback, particularly against an ECB that is effectively in automatic pilot. On the charts, a clear break below the 200 day Simple Moving Average (SMA) would raise the probability of a deeper corrective move.