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    According to BBH analysts, after reaching about 1.1768, EUR/USD dropped to around 1.1700.

    by VT Markets
    /
    Jan 21, 2026
    The EUR/USD currency pair approached 1.1700 on Monday, after recently peaking near 1.1768. This change followed comments from ECB President Christine Lagarde about maintaining stable monetary policy despite US tariff threats. Lagarde stated that the current monetary policy is still favorable. She also indicated that the short-term effects of new US tariffs would be minimal.

    ECB Policy and Market Predictions

    The European Central Bank has stopped its easing, expecting the EUR/USD pair to remain within the range of 1.1500 to 1.1800 in the upcoming months. These insights are from the FXStreet Insights Team, who gather market views from various experts. Back in 2025, the euro was stable against the dollar around 1.1700. Analysts believed the European Central Bank was done cutting rates, which would keep the pair trading in that 1.1500 to 1.1800 range. This forecast depended on the ECB sticking to its current policy.

    Market Implications for Traders

    Today, January 21, 2026, that range has clearly broken, with EUR/USD trading much lower around 1.0950. This is mainly due to economic differences: the Eurozone’s Q4 2025 GDP growth was only 0.1%, while the U.S. grew by a stronger 2.0%. This has widened the gap in interest rates, favoring the dollar. For derivative traders, the previous strategy of selling volatility within the 1.15-1.18 range no longer applies. With Eurozone inflation now at 2.1%, just above the ECB’s target, there is pressure on the ECB to consider more easing. This suggests traders should buy put options to protect against or profit from a drop towards the 1.0800 level seen in late 2025. The market anticipates a higher chance of an ECB rate cut by mid-year compared to the Federal Reserve, so any strength in the euro should be viewed with caution. Volatility is low, with one-month implied volatility around 5.5%, which makes options relatively cheap. This presents an opportunity to create bearish positions, like put spreads, that can profit from a continued, gradual decline in the currency pair. Create your live VT Markets account and start trading now. Create your live VT Markets account and start trading now.

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