Euro to Dollar Forecast: EUR/USD Holds Near 1.1715 as ECB Stance and US Tariff Risks Shape Outlook

In particular, the consumer price index in December stood at 0.2% on a monthly basis and eased from 2.1% to 1.9% year-on-year, compared with a forecast of 2.0%. The core indicator, which excludes food and fuel prices, came in at 0.3% month-on-month and slowed from 2.4% to 2.3% year-on-year. Against this backdrop, officials at the European Central Bank (ECB) are expected to continue adhering to their plan of keeping interest rates at current levels for an extended period, while being unlikely to move toward rate cuts. Analysts note signs of economic recovery in the euro area; however, a key obstacle may be the 10.0% US import tariffs announced over the weekend by President Donald Trump, which could come into force on February 1. In Germany, the ZEW index of current conditions improved from –81.0 to –72.7 points, while the economic sentiment index jumped from 45.8 to 59.6 points.

The US dollar, which is driving the pair’s movement, is trading near 98.30 on the USDX, continuing the downward trend that began after Sunday’s statement by the US president about the possible introduction of 10.0% sanctions against eight European countries from February 1 should they refuse to support his plan to “acquire” Greenland, with a subsequent increase to 20.0–25.0%. Investors interpreted Trump’s rhetoric as a return to the aggressive trade policy of last year, when similar comments triggered a surge in volatility and a sharp correction in export-sensitive assets. The current market reaction is developing along similar lines: pressure has intensified on financial sector stocks, industrial companies, and businesses reliant on global supply chains, equity indices have lost around 1.0–2.0%, and traders are reallocating funds into safe-haven assets, boosting demand for gold and US Treasury bonds. Analysts fear that further escalation could hurt corporate profits and slow international trade and economic growth. The outcome of the upcoming Federal Reserve meeting is unlikely to change the situation, as preliminary estimates suggest the regulator will keep borrowing costs unchanged at 3.50–3.75%, with a 95.0% probability according to the CME FedWatch Tool.

Support and resistance levels

On the daily chart, the instrument is approaching the resistance line of an ascending channel with boundaries at 1.2000–1.1560.

Technical indicators are weakening the sell signal: the fast EMAs of the Alligator indicator remain below the signal line while narrowing their range, and the AO histogram is forming corrective bars, rising within negative territory.

Resistance levels: 1.1800, 1.2000.

Support levels: 1.1630, 1.1400.

Trading scenarios and EUR/USD outlook

Long positions may be considered after a rise and consolidation above the 1.1800 level, with a target at 1.2000. Stop-loss: 1.1730. Time horizon: 7 days or more.

Short positions may be considered after a decline and consolidation below the 1.1630 level, with a target at 1.1400. Stop-loss: around 1.1710.