EUR/USD rally loses steam but US Dollar rallies remain limited so far
|- EUR/USD trades sideways, with upside attempts limited below 1.2000.
- Eurozone economic sentiment and industrial confidence figures beat expectations in January
- The US Dollar retreated on Thursday's early trade, as the impact of the Fed's hawkish stance waned.
The EUR/USD is trading at 1.1950 at the time of writing, down from session highs in the area of 1.200 ahead of the European session opening, but above Tuesday's lows near 1.1900. The pair is practically flat in the daily chart, despite bright Eurozone sentiment figures, with downside attempts limited, as US recovery attempts lack follow-through.
The Federal Reserve (Fed) left interest rates on hold, with Chairman Jerome Powell showing more confidence about the economy and the labor market, adding to the case for a steady monetary policy in the coming months. The market, however, keeps pricing at two rate cuts this year, according to data by the CME Group's Fed Watch Tool
Apart from that, US Treasury Secretary Scott Bessent mended US President Donald Trump's remarks, and assured that Washington pursues a "strong-Dollar" policy. These comments provided some support to the Greenback, but failed to trigger a solid recovery.
In the economic US Trade Balance figures, Factory Orders, and the weekly Jobless Claims data might provide some guidance to the US Dollar later on the day.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | 0.05% | -0.02% | -0.04% | -0.19% | -0.12% | -0.16% | |
| EUR | 0.01% | 0.06% | 0.00% | -0.02% | -0.17% | -0.10% | -0.14% | |
| GBP | -0.05% | -0.06% | -0.04% | -0.09% | -0.25% | -0.19% | -0.20% | |
| JPY | 0.02% | 0.00% | 0.04% | -0.04% | -0.18% | -0.15% | -0.15% | |
| CAD | 0.04% | 0.02% | 0.09% | 0.04% | -0.14% | -0.09% | -0.11% | |
| AUD | 0.19% | 0.17% | 0.25% | 0.18% | 0.14% | 0.06% | 0.04% | |
| NZD | 0.12% | 0.10% | 0.19% | 0.15% | 0.09% | -0.06% | -0.03% | |
| CHF | 0.16% | 0.14% | 0.20% | 0.15% | 0.11% | -0.04% | 0.03% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily Digest Market Movers: Euro consolidates gains, the US Dollar remains vulnerable
- The US Dollar drew some support from Wednesday's Fed hawkish stance and US Treasury Secretary Bessent's comments. The Greenback's upside attempts, however, remain limited, with investors pricing further rate cuts from May on, when Trump replaces Powell with a more dovish Fed Chairman.
- The US Dollar Index, which measures the value of the Greenback against a basket of currencies, remains more than 2% down in 2026 so far, weighed by Trump's erratic trade policies and the attacks on the Fed's independence, two of the main pillars of the US Dollar's status as reserve currency.
- Eurozone Consumer Confidence met expectations with a steady -12.4 reading in January. The Economic Sentiment Index rose to 99.4 from 97.2 in December, beating expectations of a mild decline to 97.0. Likewise, Industrial Confidence improved to -6.8 from -8.1 in the previous month, and Services Sentiment jumped to 7.2, from 5.8, well above the 6,0 reading anticipated by the market.
- Regarding interest rates, ECB officials' view that monetary policy is in a good place is starting to show its first cracks. ECB member and Austrian central bank governor Martin Kocher mentioned interest rate cuts for the first time since June last year, and German Chancellor Friedrich Merz complained that USD weakness is a burden for German exports. If the stance of the European Central Bank changes, the Euro might see a deeper correction.
- In the US, Initial Jobless Claims are expected to have increased to 205K last week, from the 200K reading in the previous week.
- At a later time, US Factory Orders are expected to show a rebound to 1.6% in November, following a 1.3% contraction in October.
- The US Goods and Services Trade Balance, on the contrary, is forecasted to show a widening deficit of $40.5 billion in November, from the $29.4 billion trade gap seen in October.
Technical Analysis: EUR/USD consolidates between 1.1900 and 1.2000
EUR/USD is in a consolidation phase after the reversal from the 261.8% Fibonacci extension of the January 16-20 uptrend, at 1.2085, was contained at the 1.1900 area.
Technical indicators are mixed. The Relative Strength Index (RSI) stands near 60 on the 4-hour chart, highlighting a moderately positive trend, although the Moving Average Convergence Divergence (MACD) has crossed below the signal line, with the histogram turning negative, which points to a fading upside momentum.
Support levels are at Wednesday's low in the area of 1.1900, and the January 27 low, at 1.1850. On the upside, the 1.2000 psychological level is holding bulls at the present time, ahead of the 1.2082 long-term high hit on Tuesday.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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