The Euro has pulled back from session highs but remains above the 1.1800 mark, trading at 1.1820 against the US Dollar (USD) at the time of writing, practically flat on the day. Investors’ attention has shifted from Eurozone inflation and services activity data to the upcoming US ADP Employment Change report.
Preliminary Eurozone HICP figures showed that consumer inflation slowed to a 16-month low of 1.7% in January, while core inflation “remained steady,” maintaining a key metric from a monetary policy perspective. Producer prices, meanwhile, posted a slightly smaller-than-expected contraction, which may have prevented the Euro from retreating further.
The US Dollar has remained steady. President Trump signed a bill ending a two-day government shutdown, “easing markets,” while Kevin Warsh’s selection as Federal Reserve Chairman Jerome Powell’s replacement has been welcomed. Warsh is viewed as a “respected policymaker who is expected to be cautious with rate cuts and guarantee the central bank's autonomy.”
Investors are approaching the ADP Employment Change report with caution, as the key Nonfarm Payrolls report has been delayed due to the shutdown. Later in the week, the US ISM Services PMI is also expected to influence US Dollar crosses.
Euro Performance Against Major Currencies
The table below shows the percentage change of the Euro (EUR) against major currencies today. According to the report, the Euro was “the strongest against the Japanese Yen.”
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|
| USD | -0.17% | 0.61% | 0.12% | -0.12% | 0.41% | 0.05% | |
| EUR | -0.01% | -0.18% | 0.63% | 0.11% | -0.12% | 0.40% | |
| GBP | 0.17% | 0.18% | 0.80% | 0.30% | 0.06% | 0.58% | |
| JPY | -0.61% | -0.63% | -0.80% | -0.48% | -0.71% | -0.20% | |
| CAD | -0.12% | -0.11% | -0.30% | 0.48% | -0.24% | 0.28% | |
| AUD | 0.12% | 0.12% | -0.06% | 0.71% | 0.24% | 0.52% | |
| NZD | -0.41% | -0.40% | -0.58% | 0.20% | -0.28% | -0.52% | |
| CHF | -0.05% | -0.03% | -0.22% | 0.55% | 0.07% | -0.16% | 0.36% |
Weak Eurozone Data Limits Recovery
The Euro turned lower after Eurostat data revealed that yearly inflation fell to 1.7% in January from 2% in December, while core inflation grew at a steady 2.3% year-on-year pace. Monthly HICP accelerated to 2% from 0.2% the previous month, and core HICP grew at 0.3%, unchanged from December.
Eurozone Producer Prices contracted 0.3% in December, year-on-year falling by 2.1% after November’s 1.4% contraction, slightly better than market expectations of a 2.3% decline.
Services sector data also disappointed. HCOB Services PMI for the Eurozone slowed to a four-month low of 51.6, below preliminary expectations of 51.9 and down from December’s 52.4. The German HCOB Services PMI was revised lower to 52.4 from the preliminary 53.3, confirming that business activity in the region’s largest economy remains sluggish.
US Focus: ADP Private Payrolls and ISM Services
In the US, market attention is on the January ADP private payrolls report, expected to show net job creation of 48K, up from December’s 41K, still considered relatively low.
Later, the US ISM Services PMI is forecast to show a moderate slowdown to 53.5 in January from December’s 54.4, with the Employment Index seen edging up to 52.3 from 52.0.
Technical Outlook: EUR/USD in a Consolidation Range
EUR/USD shows a moderate recovery from Monday’s lows at 1.1775, with 4-hour chart indicators highlighting “fading bearish pressure.” The MACD line appears poised to cross above the signal line, signaling a potential bullish move, while the RSI sits just below 50, the divide between bearish and bullish territory.
Price action remains within Monday’s trading range. “Bulls would need to break the weekly top at the 1.1875 area to confirm the pair’s recovery,” targeting resistance between the January 29 high at 1.1995 and the 1.2000 psychological level. Immediate support is at 1.1775, with further downside potentially attracting sellers to the January 21 low near 1.1660.
