EUR/USD Price Forecast - Eur Near 1.17: Tariff Truce at Davos vs. Fed ‘Higher for Longer’ Keeps the Pair Range-Bound

EUR/USD price – 1.17 pinned between tariff relief and Fed pressure

EUR/USD anchored around 1.1690–1.1720 after rebound from 1.1575

EUR/USD is trading around 1.1690–1.1685, with intraday spikes toward 1.1720, after a sharp recovery from the 1.1575 low. That rebound of roughly 115 pips is the market’s direct response to a shift in political risk, not random noise. Price is now sitting in a tight band between roughly 1.1665 and 1.1760, with 1.1575 acting as the current medium-term floor and 1.1760–1.1765 as the first serious upside barrier. The structure is range-bound with a mild bullish tilt rather than a one-way trend.

EUR/USD – tariff shock removed, but trend still constrained by US rate premium

The key macro change is Trump’s U-turn on Europe and Greenland. The threat of 10% US tariffs on eight EU countries from February 1 plus open talk about using military leverage over Greenland had markets pricing a fresh US-EU trade shock. That supported the dollar as a classic risk hedge and kept EUR/USD pinned closer to 1.16. Once Trump backed off, talked about a “framework” around Greenland and explicitly ruled out military action, that specific fear premium was pulled out of the dollar. The euro was the obvious beneficiary, helping push EUR/USD back toward 1.17. However, the removal of that shock did not flip the underlying rate story. The Fed’s “higher for longer” stance still leaves the US yield advantage intact, so the pair is correcting, not launching a new structural bull leg.

EUR/USD – euro supported by ECB tone and a strong ZEW at 59.6

On the EUR side, policy communication is finally offering some support. ECB President Christine Lagarde is signalling that inflation is under control and that current monetary settings are “appropriate”, code for no urgent rush into deeper cuts. Other Governing Council members have echoed the same line: resilience in the euro-area economy, tariff risk manageable for now, and inflation not collapsing. That message is backed by data: Germany’s ZEW investor sentiment index jumped to 59.6 in January, the highest in over four years. For EUR/USD, a ZEW near 60 tells you large investors see the eurozone outlook as improving rather than deteriorating. It makes it easier to justify the euro holding around $1.17 instead of sliding back toward $1.14–1.15 as in past stress episodes.

EUR/USD – Fed stance and DXY near 98.8 keep dollar from breaking down

On the USD side, the Fed is still the anchor for the entire EUR/USD structure. Officials are very clear: no aggressive easing unless inflation convincingly returns toward 2%. Markets are pricing around 50 bps of cuts for the year, but located around mid-year or later, not front-loaded. That keeps US yields sticky on the upside. The dollar index is still holding around 98.80, far from a collapse. For EUR/USD, that means every spike above 1.1720–1.1740 still meets selling interest because the rate differential remains in the dollar’s favour while the ECB is still seen as closer to another cut than the Fed. The result is a capped recovery: EUR/USD can reclaim 1.17 on tariff relief, but it struggles to build a sustained trend above 1.1760 without a real shift in Fed expectations.

EUR/USD – US GDP near 4.3%, PCE and jobless claims as near-term catalysts

Short-term direction now hinges on US data rather than headlines out of Davos. Markets are watching the final US GDP print, expected around 4.3% q/q, along with jobless claims and the Core PCE deflator. A stronger-than-expected GDP and sticky PCE would reinforce the Fed’s patience, back US yields and likely push EUR/USD back toward the lower end of the 1.1672–1.1700 zone, with 1.1633 and 1.1550 visible underneath on a break. A softer data mix would do the opposite: it would force markets to price earlier and deeper cuts, undercut the dollar and give EUR/USD a window to test 1.1735, 1.1760 and potentially the 1.18 area if stops get triggered. At the moment, the pair’s behaviour around 1.17 reflects a market waiting for these releases to decide whether the recent euro bounce is just a tactical move or the start of a broader repricing.

EUR/USD – 1.1665–1.1760 range defines the battlefield for now

Technically, EUR/USD is locked in a well-defined short-term box. On multiple analyses the core band is 1.1672–1.1760. Recent price action has respected 1.1665–1.1672 as near-term support, while capping rallies in the 1.1735–1.1760 region. Below the range, the key reference lows are 1.1633, then 1.1600 and 1.1550. That 1.1550 zone aligns with the previous downside targets mentioned in the more bearish outlooks and would mark a deeper test of the trend. Above the range, 1.1766 and 1.1808 stand out as extension levels where fresh selling is likely to appear if EUR/USD squeezes higher. The structure is classic range-trading: fading strength near the upper band and buying dips near the lower band has worked and will keep working until a major macro surprise forces a breakout.

EUR/USD – intraday structure: EMAs, Fibonacci bands and the 1.17 pivot

Shorter timeframes tell the same story in more detail. On the 2-hour chart, EUR/USD is holding above a rising trendline from mid-January, with the 50-period EMA clustered near $1.1675 and the 200-period EMA just below $1.1650. These moving averages act as layered support on dips. The Fibonacci retracement from the January low marks $1.1695 as the 38.2% band and $1.1672 as the 50% band – both zones where buying interest has repeatedly emerged. Candlestick behaviour near $1.1720–1.1740 shows smaller bodies with upper wicks, which signals consolidation and hesitation rather than outright rejection. On 4-hour views, the 20- and 100-period averages around 1.1685 are compressing, and the 200-period average near 1.1700 is capping gains, confirming that 1.17 is the exact pivot around which positioning is being reset. The RSI is hovering in the 50–54 region across intraday frames, consistent with a corrective phase, not a trend reversal.

EUR/USD – Fed–ECB divergence and tariff risk define the medium-term bias

Stepping back, the medium-term story remains clear. The Fed is still more hawkish than the ECB. The market sees US growth holding near 4% annualised with the Fed cutting later and slower, while the euro area faces weaker potential growth and a central bank that will have to balance resilience against lingering disinflation. That backdrop argues against a sustained EUR/USD break far above 1.18 unless the Fed pivots harder than currently priced. At the same time, the political risk balance has changed. Trump has turned off the immediate tariff switch and parked the Greenland saga inside a “framework” discussion with NATO. That removes the most aggressive near-term threat to the euro and explains why dips toward 1.16 now attract buyers instead of triggering panic selling. In other words, macro keeps the pair capped, but politics now provide a stronger floor.

EUR/USD – scenario map: upside path to 1.18 vs downside risk to 1.1550

The upside scenario is straightforward. If US data starts to miss, Core PCE eases, and the Fed’s tone softens while ECB rhetoric stays steady, EUR/USD can extend its squeeze above 1.1760. A clean hourly close above 1.1765 opens 1.1808, and beyond that the market would look at the recent weekly highs around 1.1860–1.19. In that path, previous resistance at 1.1735–1.1760 turns into support on pullbacks. The downside scenario revolves around two risks: stronger-than-expected US data and any renewed escalation on tariffs or geopolitical fronts. A break below 1.1672 followed by a loss of 1.1633 would shift the focus to 1.1600 and then 1.1550. That 1.1550 level coincides with previous signal levels for long entries and would be the first area where medium-term buyers re-assess the whole EUR/USD story. Below there, the 1.1575 low and then the broader 1.15 handle become critical for maintaining any constructive euro narrative.

EUR/USD – trading stance and verdict: range-bound with slight upside, effectively a HOLD

Putting all the pieces together – the rebound from 1.1575, the tight 1.1672–1.1760 range, the Fed’s rate advantage, the ECB’s stabilising tone, the removal of immediate tariff risk, and the upcoming US data – EUR/USD is a range market with a mild upside bias, not a clean trend. For tactical traders, the logic is to buy dips near 1.1670–1.1630 with targets around 1.1735–1.1760 and to respect 1.1550 as the line where that strategy stops making sense. For a directional label, the pair is not attractive as an outright aggressive long or short at current levels. The macro and technicals argue for a HOLD stance: trade the range, keep risk tight around the edges, and wait for either a break above roughly 1.1765 or below 1.1630 to justify a conviction trend position in EUR/USD.

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