Euro Surges Past 1.20 as Dollar Weakness Meets ECB Concern

Key Moments

Dollar Under Pressure Ahead of FOMC

The U.S. dollar extended its decline as downside momentum remained in control. Earlier losses linked to perceived USD/JPY intervention risks continued to shape price action.

Later in the session, the selloff accelerated. Donald Trump said he was not concerned about the dollar’s weakness, signaling tolerance for a softer currency.

The recent slide appears largely technical rather than driven by new fundamentals. Such moves often retrace over time. However, the dollar currently lacks a clear catalyst for a sustained rebound.

Attention now shifts to the upcoming FOMC decision. The Fed is widely expected to keep rates unchanged and repeat its data-dependent stance.

Markets do not anticipate major surprises. However, traders will closely watch Chair Jerome Powell’s remarks. Any signal that he intends to remain on the Board until 2028 could trigger a hawkish reaction.

Looking ahead, February may offer scope for a dollar recovery as fresh data arrive. In particular, the Nonfarm Payrolls report could reshape rate expectations.

Recent U.S. Jobless Claims have improved. As a result, investors see signs of a firmer labor market. Markets currently price about 48 basis points of easing by year-end. Strong data could reduce those expectations and support the greenback.

ECB Signals Discomfort With Stronger Euro

On the euro side, ECB officials have grown more vocal as EUR/USD trades above 1.20. That level has become a key reference point for policymakers.

ECB Vice President Luis de Guindos previously noted that moves above 1.20 complicate the policy outlook. Meanwhile, several officials reiterated this concern on Wednesday.

They warned that sustained euro strength could weigh on inflation. If the currency continues to rise while Eurozone inflation softens, traders may price in another ECB rate cut.

EUR/USD Technical Picture – Daily Chart

On the daily chart, EUR/USD has broken above 1.20 as dollar weakness persists. This area now acts as a key battleground.

Sellers may look to re-enter near this zone. They are likely to define risk above the recent swing high and target a pullback toward 1.16.

By contrast, buyers need a sustained hold above 1.20. That would confirm upside momentum and open the door to fresh highs.

EUR/USD Technical Picture – 4-Hour Chart

The 4-hour chart shows a clear rising trendline guiding the move higher. This structure continues to support the bullish bias.

From a risk perspective, buyers may prefer pullbacks toward the trendline. Such moves offer a more favorable risk-reward for trend continuation.

Meanwhile, sellers will watch for a decisive break lower. The next key support sits near the 1.1850 area.

EUR/USD Technical Picture – 1-Hour Chart

On the 1-hour chart, a counter-trendline caps near-term upside. Sellers continue to use this level as resistance.

However, buyers will look for a clean break above the line. Such a move would reinforce bullish momentum and support further gains.

The red line marks today’s average daily range. It provides additional context for short-term positioning.

Key Event Risk and Data Watch

Several near-term events could influence EUR/USD and broader FX markets.

These events could reshape rate expectations and volatility. As a result, EUR/USD remains sensitive to shifts in both Fed and ECB policy outlooks.