Euro Set for 1.5% Monthly Gain

The euro settled at $1.19 at the end of January, close to a four-year high and marking a 1.5% gain over the month, supported by broad dollar weakness as investors digested a series of economic and policy developments. The US dollar came under pressure amid ongoing policy uncertainty in Washington, including renewed tariff threats by Trump, criticism of the Fed’s independence, worries over a potential government shutdown, and the president’s remark that he was unconcerned about the dollar’s recent decline. Economic data also bolstered the euro. The Eurozone economy expanded 0.3% quarter-on-quarter in Q4 2025, matching the previous quarter and slightly above the 0.2% market expectation, with Spain, Germany, and Italy all exceeding forecasts. Meanwhile, the ECB Consumer Expectations Survey showed that short-term inflation expectations remained steady, while expectations for three and five years ahead accelerated, reflecting growing medium- to long-term price pressures.