Fed decision and political risks: EURUSD prepares for a new surge

Ahead of the Fed’s interest rate decision, the EURUSD pair made a sharp move higher and is trading near 1.1995. Discover more in our analysis for 28 January 2026.

EURUSD forecast: key takeaways

• US Federal Reserve interest rate decision: previous value – 3.75%, projected at 3.75%
• The pair is aiming for the 2021 highs
• EURUSD forecast for 28 January 2026: 1.2120

Fundamental analysis

The EURUSD forecast takes into account that today the euro is forming a correction after a sharp rally and is trading near the 1.1985 level.

Amid uncertainty in the global economy and elevated global risks, the market is currently focused on the US Federal Reserve’s interest rate meeting.

Today, the Fed is expected to keep the interest rate unchanged at 3.75%, as part of its strategy to fight inflation. While markets generally expect further tight monetary policy, analysts do not rule out an unlikely but possible 0.25% rate hike if US economic data continues to show growth. Such a decision would become a trigger for EURUSD movement, as even small rate changes can affect USD dynamics.

At the same time, today’s EURUSD forecast also considers an alternative scenario surrounding the interest rate decision, taking into account Donald Trump’s desire to weaken the USD to boost competitiveness. The US president has recently been frequently interfering in the Fed’s work and attempting to exert political influence on economic decision-making. In this case, the Fed may leave the interest rate unchanged or lower it.

A rate cut would further weaken the USD and push the EURUSD rate towards the 2021 highs.

Technical outlook

On the H4 chart, the EURUSD pair formed a Harami reversal pattern near the upper Bollinger Band. At this stage, it may develop a corrective wave following this signal. Since quotes have moved outside the ascending channel, they may head towards the 1.1935 level. A rebound from this area would open the way for continued upward momentum.

At the same time, today’s EURUSD forecast also suggests an alternative scenario, in which the pair continues to rise towards 1.2120 without testing the support level.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: bullish
• Key resistance levels: 1.2120 and 1.2200
• Key support levels: 1.1830 and 1.1725

Main scenario (Buy Limit)

A pullback towards the 1.1935 level will allow buyers to build new positions, and amid pressure on the US dollar and expectations surrounding the Fed meeting outcome, the market may continue to move towards the upper targets of the range.

The risk-to-reward ratio exceeds 1:3. The upside potential is around 185 pips, with the risk limited to 50 pips.

• Buy Limit: 1.1935
• Take Profit: 1.2120
• Stop Loss: 1.1885

Alternative scenario (Sell Stop)

A decline and consolidation below 1.1800 will signal profit-taking and waning bullish momentum after January’s sharp rally. In this case, a corrective pullback towards lower support levels is likely.

• Sell Stop: 1.1795
• Take Profit: 1.1700
• Stop Loss: 1.1830

Risk factors

Any unexpected hawkish signals from the Fed, strong US macroeconomic data, or easing political tensions could temporarily support the US dollar and trigger a correction in the EURUSD pair.

Summary

With the market awaiting the Fed’s interest rate decision, the EURUSD pair is forming a correction. Technical analysis of EURUSD suggests a pullback towards the 1.1935 support area before further growth.

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