Right now, if you’re looking at a currency converter, you’ll see that the euro is indeed worth more than the dollar. As of mid-January 2026, the exchange rate is hovering around 1.16. Basically, for every 1 euro you have, you can get about $1.16 USD.
It feels like a lifetime ago—though it was really just 2022—when the two were equal. That "parity" moment was a massive deal for travelers and businesses alike. But today, the euro has clawed back some serious ground. If you’re planning a trip to Rome or Paris, your coffee is going to cost you a bit more in "real" money than it did a few years back.
Why the Euro Is Beating the Greenback Right Now
Currencies don't just move because people like one flag more than another. It’s mostly about interest rates and how much "stuff" an economy is making.
Honestly, the Federal Reserve in the U.S. has been the main character in this story. They’ve been trimming interest rates to keep the American economy from stalling, especially with the labor market showing some cracks lately. When U.S. rates drop, the dollar often loses its "muscle" because global investors look elsewhere for better returns.
Meanwhile, over in Frankfurt, the European Central Bank (ECB) has been playing a more cautious game. They’ve kept their key deposit rate steady at 2.0% for a while now. Because the ECB isn't rushing to cut rates as fast as the Fed, the euro looks relatively more attractive to the big money managers.
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The Growth Gap: U.S. vs. Europe
It's a weird situation. On paper, the U.S. economy is actually growing faster. Most experts, like the teams at Goldman Sachs and Morgan Stanley, expect the U.S. to hit about 2.1% to 2.6% GDP growth this year. The Eurozone? They’re lucky if they hit 1.2%.
Usually, the faster-growing economy has the stronger currency. But 2026 is proving to be the year of the "policy pivot." Markets aren't looking at who is winning today; they’re betting on whose interest rates will stay higher for longer. Right now, that bet is on the euro.
What Most People Get Wrong About Exchange Rates
You’ve probably heard people say a "strong" currency is always good. That’s a total myth.
If the euro gets too expensive—say, climbing toward 1.25 or 1.30—it actually starts to hurt European countries. Think about it. If you’re a German car manufacturer selling a BMW in New Jersey, a strong euro makes your car more expensive for Americans to buy. If the price goes up, sales might go down.
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On the flip side, a "weak" dollar (relatively speaking) is kinda great for U.S. tech giants. When Apple or Microsoft sells software in Europe and brings those euros back home, they convert into more dollars.
The "Real World" Impact on Your Wallet
If you're sitting at home wondering why this matters, look at your next vacation or your Amazon cart.
- International Travel: If you’re an American heading to Spain, your purchasing power is down about 15% from the 2022 lows. That "cheap" trip isn't so cheap anymore.
- Imported Goods: That Italian leather bag or French wine? The price tag in the U.S. is likely creeping up because the importers have to pay more for those goods in euros.
- Investment Portfolios: If you own international stocks or ETFs, a rising euro actually pads your returns. When the euro gains value, the underlying value of those European assets increases when converted back to your home currency.
Will the Euro Keep Climbing?
Predicting the future of EUR/USD is a fool's errand, but we can look at the "clues" on the ground.
There's a lot of talk about tariffs. If the U.S. ramps up trade barriers, it could actually push the dollar back up as investors seek safety. There's also the "AI Investment Gap." The U.S. is projected to spend over $2 trillion on AI infrastructure by 2027, while Europe is looking at closer to $300 billion. That massive productivity engine in the States could eventually pull the dollar back into the lead.
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For now, though, the euro is the "expensive" one.
Actionable Moves for 2026
If you have upcoming expenses in Europe or you're managing a small business that imports from overseas, don't just watch the charts.
1. Lock in rates if you're traveling: If you have a big trip coming up and the rate dips toward 1.14, it might be worth buying some currency or pre-paying for hotels.
2. Review your "Home Bias": Most investors keep too much money in their home country. With the euro showing strength, having some exposure to European equities (like the STOXX 600) can act as a natural hedge against a sliding dollar.
3. Watch the ECB meetings: The next big move for the euro will happen the moment Christine Lagarde hints at a rate cut. Until then, expect the euro to stay on top.
The days of 1-to-1 parity are in the rearview mirror for now. The euro has its swagger back, even if the underlying economy is moving a bit slower than its American cousin. It’s a reminder that in the world of global finance, it’s not just about how fast you run, but how much the bank is willing to pay you to stay in the race.
Next steps for your finances: Audit your travel budget for the "euro premium" and check your brokerage account for European diversification to capitalize on the current currency trend.