EUR/USD slipped to about 1.168 (Jan 7, 2026) amid shrinking odds of an immediate ECB cut and persistent U.S. rate advantage. Short-term consolidation is likely, while the European Parliament’s pending digital euro vote could influence longer-term confidence in the currency.

EUR/USD has traded near 1.17–1.18 this week as Bulgaria formally adopted the euro and the ECB held rates steady. Diverging central-bank outlooks — ECB cautious, Fed expected to cut — plus a weaker dollar and mixed eurozone data have driven consolidation around multi-month highs. Traders should watch 1.17 support and 1.18 resistance for the next directional move.

The ECB kept its deposit rate at 2% and upgraded its growth outlook, helping the euro rally to near $1.18 against the dollar. Dollar weakness and fading expectations of near‑term Fed tightening supported EUR/USD gains; traders should watch 1.171–1.172 as near‑term support and 1.18–1.182 as resistance.

The euro strengthened sharply in the past week, climbing to around $1.17–$1.18 after the ECB opted to keep policy rates unchanged. A dovish tilt in Federal Reserve expectations, mixed euro‑area PMI readings and the structural step of Bulgaria’s planned euro adoption combined to support the EUR/USD rally. This article explains the immediate drivers, technical posture and implications for traders.

EUR/USD strengthened after the Fed’s 25bp rate cut and dovish tone, pushing the euro to two‑month highs. ECB commentary on resilient growth and inflation above target supported the move, while real appreciation and export competitiveness remain watchpoints for policy and traders.

The euro strengthened last week as U.S. dollar weakness and shifting rate expectations pushed EUR/USD higher, while upside surprises in eurozone inflation and hawkish ECB commentary kept policymakers from signaling early easing. Traders should watch technical levels around 1.1625–1.1700 and monitor upcoming inflation and Fed guidance for the next directional moves.