2026 began with a small pullback in USD/EUR, continuing the correction seen over the Christmas period. This pushed the pair below the 1.17 level, with prices briefly dipping to around 1.1660. However, buying interest returned quickly, suggesting this move was only a short pause. A move back above 1.17 would point to the broader upward trend remaining intact.
Looking ahead, the key event this week is Friday’s . Forecasts suggest conditions may be stabilising, with the expected to ease to 4.5%. Investors will also start to focus on the new quarterly earnings season, which typically begins with large banks.
In addition, is set to report results next Thursday, which could also influence market sentiment.
US-Venezuela Escalation
The US dollar strengthened at first after the Venezuelan president was detained and taken to the United States to face court proceedings. This initial move reflected higher uncertainty and risk in financial markets. However, buyers quickly stepped back in, suggesting that investors do not expect the situation to escalate into a serious conflict. So far, reactions from Russia and China have been limited to words, making a major military confrontation unlikely.
That said, the situation remains worth watching. Market uncertainty could return if the United States decides to take further action, or if tensions rise with countries such as Cuba or Colombia.
At the same time, events in Venezuela have pushed peace talks over Russia’s war in Ukraine into the background. Despite positive comments from Donald Trump and Ukrainian President Volodymyr Zelenskiy, major disagreements remain, especially over the Zaporizhzhya nuclear power plant and the Donbas region. A lasting peace still looks distant. If negotiations formally break down, this could weaken the euro and reduce the chances of continuing its upward move
Labor Market Data in Focus
After the disruption and lack of data caused by the US government shutdown, regular updates from the US labour market are expected to resume.
Forecasts do not point to a sharp weakening. Instead, they suggest a modest improvement, with the unemployment rate expected to ease to 4.5% from the previous 4.6%. As usual, revisions to earlier months’ data will also be closely watched, as they can change the overall picture.
If the data matches market expectations, the impact on the US dollar should be neutral. In that case, the likelihood of another interest rate cut as early as January would remain relatively low.
Key Support Prevents Further Declines
The strong defense of the support level around 1.1660, marked by a sharp V-shaped rebound, shows that buying interest in the main currency pair remains solid. To push prices higher from here, buyers will need to break above the short-term downward trend line that has capped the recent correction.
If buyers manage to break through that level, the next main target will be the resistance zone around 1.1800, which has already been tested several times. On the downside, the most important support remains the well defended area near 1.1660.
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