EUR/USD flatlines near recent lows ahead of US inflation data

EUR/USD remains flat near 1.1860 on track to a moderate weekly recovery.
Eurozone GDP figures revealed a steady economic growth in Q4.
US CPI is expected to show that consumer prices moderated further in January.

Guillermo Alcala FXStreet

The Euro (EUR) keeps trading lower against the US Dollar (USD) for the fourth consecutive day on Friday, hovering below 1.1860 at the time of writing, down from its weekly high of 1.1928. Better-than-expected Eurozone Gross Domestic Product (GDP) data has failed to offset the negative impact of the risk-averse sentiment.

Preliminary data released by Destatis earlier on Friday revealed that the Eurozone economy grew at a steady 0.3% pace in Q4 and 1.4% year-on year, against expectations of a moderate slowdown to 1.3%. Eurozone Employment Change figures, released at the same time, have shown a 0.2%, unchanged from Q3 but above the 0.1% market consensus. Year-on-year, Eurozone jobs rose 0.6%, in line with expectations.

The Euro, however, remains on its back foot amid a dismal market sentiment. Investors’ fears about AI's negative impact on the labour market triggered another decline on Wall Street, after Microsoft AI CEO Mustafa Suleyman told The Financial Times that all white-collar jobs would be replaced in the next 12 to 18 months.

The US Dollar picks up in risk-off markets

The risk-off mood extended through the Asian session, providing some support to the safe-haven US Dollar, and offsetting Thursday's downbeat macroeconomic data. US Initial Jobless Claims fell by 5K but remained at high levels, at 227K, and above the 222K expected. Beyond that, Existing Home Sales fell by 8.4% in January, feeding concerns about the strength of the US economy.

Market movement, however, remains subdued, with traders awaiting the release of January’s US CPI figures for further insight into the Federal Reserve’s (Fed) monetary policy plans. Headline inflation is expected to have eased to 2.5% year-on-year, from 2.7% in December, with the core inflation down to 2.5% from 2.6% in the previous month.

Economic Indicator

Consumer Price Index (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Economic Indicator

Consumer Price Index ex Food & Energy (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Author

Guillermo Alcala

FXStreet

Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.

Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850

Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.