EUR/USD weekly outlook | January 26, 2026

The EUR/USD remains in focus after last week saw the US dollar sell-off sharply across the board as Trump’s tariff theatrics unnerved investors about US policy. Investors demanded foreign currencies after the US president made a quick U-tun after his surprise announcement of tariffs on European countries. Meanwhile speculation over the Fed Chairmanship continued, and investors wondered what that would mean for interest rates. Perhaps the biggest driver behind the dollar sell-off was reports of intervention from Japan, where the USD/JPY staged one of its biggest drops in recent years. The EUR/USD outlook remains positive in early parts of the week ahead, thanks to strong momentum and the removal of tariff threats. Trump was at it again during the weekend with fresh tariffs threats on Canada. From a macro point of view, the focus will turn to the FOMC rate decision on Wednesday, in what otherwise seems like a quieter week for traditional data. All told, the risks remain tilted to the upside for EUR/USD.

 

FOMC rate decision: No change expected

 

Perhaps the week’s biggest macro event is on Wednesday, January 28 at 19:00 GMT, namely the FOMC rate decision. The Fed cut rates in December and signalled more cuts are on the way this year, with the Fed Chair Powell under intense pressure from Washington to ease rates even faster. However, no change is expected at this meeting, thanks to slight improvement in data, and as the Fed tries to defend its credibility. Any hints of an imminent rate cuts from Powell or in the policy statement should be dollar negative. However, if the Fed acknowledges recent improvement in US data, then this could provide some much needed support for the dollar, potentially keeping the EUR/USD below 1.20 handle.

 

What other macro releases will impact the EUR/USD outlook?

 

Here is a full list of upcoming data releases for the week ahead from both the US and Eurozone, which should have some implication on the EUR/USD outlook.

 

 

EUR/USD key levels to watch

 

The EUR/USD closed last week right near the highs, around 1.1833. So the first thing on Monday, I’d be expecting some follow-through technical buying that could potentially take us above 1.1850 and towards the 1.19 handle. With the September 2025 high coming in at 1.1918, that will be my near-term upside target.

 

 

Above that, we have the 1.20 handle, which is a key psychologically important level where EUR/USD may head in the coming days, should the US dollar remain under pressure.

On the downside, the key support to watch is now around the 1.1750 to 1.1770 area. This area was the breakout zone we saw at the end of last week, where a bearish trend line converged with prior resistance.

Above this zone, we have the 1.18 handle, which is the first initial support to watch. But if we go back below the broken trend line, namely below the 1.1750 area, that would be a bearish development, in which case we could well see some downward movement in EUR/USD as disappointed bulls rush for the exits.

That said, the path of least resistance is clearly to the upside for the time being, and as a result, we maintain a bullish EUR/USD outlook for the week ahead.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R