Euro Weakens Near 1.1850 as Dollar Gains Support

Key Moments

EUR/USD Under Pressure as Dollar Gains Support

The Euro hovers around 1.1850, consolidating after a 1% drop on Friday. The greenback remains strong, boosted by Kevin Warsh’s Fed nomination. Meanwhile, risk-off sentiment continues to weigh on the Euro.

US President Donald Trump confirmed Warsh will succeed Jerome Powell as Fed Chair in May. Warsh favors a smaller Fed balance sheet and has advocated lower borrowing costs. However, he is expected to move cautiously on inflation.

Risk appetite weakened in Asia and is likely to stay fragile into European trading. Reports of Chinese investors struggling to unwind Silver positions have spilled over into equity markets, pressuring risk-sensitive currencies like the Euro.

Data-Heavy Week Keeps Traders Alert

Investors remain cautious with a packed macroeconomic calendar. German Retail Sales for December beat expectations but provided only minor support to the Euro. Today, attention focuses on Manufacturing PMIs for both the Eurozone and the US.

Later in the week, the ECB will release its policy decision on Thursday, followed by US Nonfarm Payrolls on Friday. Both events are expected to drive EUR/USD volatility.

Euro vs. Major Currencies

The Euro shows mixed performance against major currencies, standing out as the strongest versus the Australian Dollar. Daily percentage changes are summarized below.

The heat map shows daily moves for major currency pairs. The base currency is on the left, and the quote currency is on top. For instance, EUR/USD displays the Euro’s percentage change against the US Dollar.

The U.S. dollar extended gains Monday, with the Dollar Index at 97.01, boosted by Trump’s Fed pick Kevin Warsh and a selloff in precious metals. EUR/USD held at 1.1850, GBP/USD at 1.3790, and USD/JPY rose to 155.00 as markets eye central banks and U.S. jobs data.

— Wall Street News (@wlst_news) February 2, 2026

Daily Digest: Market Drivers

• Kevin Warsh’s Fed nomination strengthens the US Dollar. CME FedWatch Tool shows at least two expected rate cuts in 2026, while Warsh has historically focused on inflation control.
• German Retail Sales rose 0.1% in December, recovering from November’s 0.5% decline. Year-over-year growth increased to 1.5% from 1.3%. The Euro’s immediate reaction was muted.
• Eurozone’s final HCOB Manufacturing PMI is expected to rise to 49.4 in January from 48.8, still signaling moderate contraction.
• US ISM Manufacturing PMI is projected at 48.3 for January, with the Prices Paid component climbing to 60.5.
• Atlanta Fed President Raphael Bostic is scheduled to speak later. Bostic resists near-term rate cuts and recently said the Fed’s balance sheet is “about right,” highlighting internal committee differences.

Technical Picture: Bears Remain in Control

EUR/USD trades near 1.1850 after retreating from four-year highs around 1.2100. On the 4-hour chart, technical indicators suggest ongoing downside pressure. The RSI is below 50, while MACD histogram bars are expanding negatively.

Support lies just above the January 26 low at 1.1835 and the 50% Fibonacci retracement at 1.1830. A break lower could target the 61.8% retracement near 1.1770.

Resistance is near Friday’s high at 1.1955, followed by the psychological 1.2000 level.

Understanding Risk Sentiment

“Risk-on” markets favor higher-risk assets, while “risk-off” periods push investors into safer instruments. In risk-off conditions, currencies like the US Dollar, Japanese Yen, and Swiss Franc typically strengthen.

Risk-On vs. Risk-Off Currencies

Risk-on: AUD, CAD, NZD, RUB, and ZAR often gain due to commodity dependence. Commodities usually rise, boosting these currencies.
Risk-off: USD, JPY, and CHF strengthen as safe-haven investments. The Dollar benefits from reserve currency demand, the Yen from domestic government bond holdings, and the Franc from strict banking rules.