EUR/USD forecast: Currency Pair of the Week | February 9, 2026

The dollar has continued to weaken following its reversal on Friday, when risk assets bounced back in style. Though some of that move has since lost momentum, we could well see renewed appetite for risk when US investors enter the fray. But we have already seen some big moves. It was Japan that stole the spotlight with the Nikkei surging on a decisive election win for the ruling LDP. The US dollar has also been heading lower across the board so far in today’s session, with even the USD/JPY turning negative on the day after climbing well north of 157.00 handle initially. The only reason US dollar may find support later this week is if risk appetite turns sour again, or we see some super strong readings in incoming data, with non-farm payrolls to come in mid-week and CPI on Friday. But last week’s weaker labour market data pointed to a soft labour market, causing investors to re-price US rates in favour of more cuts. Add to that renewed chatter around diversification away from the US, and the greenback has come under pressure from all sides. Against this backdrop, the EUR/USD forecast remains bullish.

 

US dollar remains under pressure

 

Last week’s labour market data surprised on the soft side, forcing markets to rethink how robust the US economy really is. The big focus now is Wednesday’s January non-farm payrolls report, alongside benchmark revisions. Consensus expects a modest +70k print, but in this environment, a downside miss would be far more impactful than an upside surprise. Beyond that, we also have US retail sales and CPI later in the week. If those numbers reinforce the idea that growth and inflation are cooling, the Federal Reserve may find it harder to justify its current stance. In short, softer data equals a softer dollar.

 

Meanwhile, Bloomberg reported earlier that Chinese regulators have encouraged private banks to rein in exposure to US Treasuries, citing concentration risk concerns. If Chinese banks continue to diversify away from US debt, this could keep the dollar under pressure in favour of gold and other assets, including the euro. Many see Europe representing the most credible alternative to US markets in terms of size and liquidity. That’s not to say Europe is flawless – far from it – but when investors are thinking about diversification, there aren’t many other realistic destinations right now. Last week, the ECB seemed okay with a higher EUR/USD exchange rate. Meanwhile, growing political pressure on UK PM Starmer and a dovish-leaning Bank of England should keep the EUR/GBP supported, which in turn would make the EUR/USD more favourable than GBP/USD.

 

On the euro side of things, there’s not much to look forward to this week. But with the ECB seemingly comfortable with the EUR/USD exchange rate, we could well be heading back towards $1.20 in the event the US jobs report missing expectations or not being surprisingly strong this week.

 

EUR/USD forecast: Technical analysis and levels to watch

 

The EUR/USD’s technical trend is bullish, and key support in the 1.1770-1.1800 region has been defended for now. Adding support, speculative long positions in the euro remain high. That doesn’t necessarily mean the EUR/USD will continue to rise, but unless something changes drastically for fund managers to reduce their leveraged long positions in the pair, there are fewer compelling reasons for the pair to go lower.

 

 

So, the short-term bias in this EUR/USD forecast remains to the upside. As long as US data continues to soften and global risk appetite holds up, the path of least resistance looks towards the 1.200 level, with interim resistance seen around the 1.1900 area. Ultimately, though, Wednesday’s US jobs report is likely to decide how this week ends – and whether the euro’s latest rally has real legs or not.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R