Money markets don't usually start the year with a criminal investigation, but here we are. If you’ve been watching today's exchange rate dollar to euro, you've likely noticed a weirdly resilient U.S. dollar. On Saturday, January 17, 2026, the spot rate is sitting right around 0.8616 EUR per 1 USD.
That might not sound like a massive jump if you only check the charts once a month. Honestly, though, it’s a bit of a shocker for analysts who predicted a weaker dollar this year.
The big story isn't just a number on a screen. It’s the drama. Earlier this week, news broke that federal prosecutors opened an investigation into Fed Chair Jerome Powell. You’d think a "criminal investigation" into the guy who controls the world’s reserve currency would send the dollar into a tailspin. It did—for about five minutes. Investors panicked, dumped U.S. assets, and then realized something fundamental: the U.S. economy is still outperforming Europe.
Now, the dollar has clawed back its losses. It’s basically telling the Euro, "Nice try."
What’s driving today's exchange rate dollar to euro?
If you're planning a trip to Rome or just trying to move some business capital, you've gotta look at the "Big Two": interest rates and growth.
Right now, the Federal Reserve is holding the line. They’ve got the Fed Funds rate sitting in that 3.5% to 3.75% range. Compare that to the European Central Bank (ECB), which is chilling at 2%.
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When the U.S. pays you nearly double the interest for holding their currency, the dollar stays strong. Simple as that. Philip Lane, the ECB’s chief economist, basically said yesterday that they aren't even debating a rate change right now. They’re happy where they are because inflation in the Eurozone is finally behaving, hitting that 2% sweet spot.
But Europe has a growth problem. Germany is struggling, and there’s a lot of anxiety about U.S. tariffs under the current administration.
The Powell Factor and Central Bank Independence
The market is currently obsessed with the "independence" of the Fed. On January 11, Powell made a statement that essentially reaffirmed that the Fed doesn't take orders from the White House. Then came the investigation.
International bankers, including ECB President Christine Lagarde, actually issued a statement of solidarity with Powell this week. They know that if the Fed loses its reputation for being independent, the dollar's status as a safe haven goes poof.
Despite the legal noise, the dollar is actually gaining. It’s up about 1.24% since the start of January. Why? Because while the Fed is under fire, the U.S. tech and AI sectors are still absolute monsters. Money flows where the profit is.
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Looking at the Real Numbers
If you go to a bank today, you aren't getting that 0.8616 mid-market rate. You're probably looking at something closer to 0.82 or 0.83 after they take their cut.
- Mid-Market Rate: 1 USD = 0.8616 EUR
- Weekly Trend: Bearish for the Euro (down 0.3% in the last 48 hours)
- Monthly Outlook: The dollar is trending toward a "neutral" level of 100 on the Dollar Index, down from the 110 highs of last year, but still fundamentally solid.
Why the Euro is feeling "Heavy"
The Euro is basically stuck.
Wage growth in Europe is still high, which keeps services inflation sticky. The ECB can’t really cut rates further to help growth because they're scared of a second wave of inflation. On the flip side, they can't raise rates because Germany’s industrial sector is already gasping for air.
It’s a "wait and see" game.
Luis de Guindos, the ECB Vice-President, mentioned in an interview two days ago that central bank independence is the "cornerstone" of stability. That was a subtle jab at the political drama in the U.S. But until that drama actually translates into lower U.S. interest rates, the Euro is going to keep feeling heavy against the dollar.
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What you should actually do with this info
Don't wait for "parity" (1:1) anytime soon. We aren't there.
If you are a business owner importing goods from the EU, today's rate is actually pretty decent compared to the volatility we saw at the end of 2025. You’ve got a stronger dollar than most "experts" predicted for this quarter.
Actionable Steps:
- Lock in rates for Q1 travel: If you're heading to Europe this spring, buying some Euros now isn't a bad move. The dollar is at a short-term peak thanks to the "flight to safety" following the Powell news.
- Watch the January 28 Fed Meeting: This is the next big catalyst. If they signal a hold (which most expect), the dollar will likely stay in this 0.85-0.87 range.
- Avoid the "Panic Sell": If you hold U.S. assets, don't let the headlines about investigations scare you. The underlying economic data (GDP and jobs) is still leaning in favor of the dollar.
- Check the "Spread": Always compare your bank's rate to the mid-market rate. If they're charging you more than 2-3% in fees, use a fintech transfer service instead.
The bottom line? The dollar is the "least ugly" currency in the room right now. Even with a legal cloud over the Fed, the high interest rates and tech dominance are keeping today's exchange rate dollar to euro firmly in the Greenback's favor.