The Euro has taken a turn for the worse against the US Dollar, trading at 1.1845 as of writing. This comes despite some positive economic news from the Eurozone. The Dollar, however, remains strong, supported by the upcoming appointment of Kevin Warsh as the new Federal Reserve Chair. A cautious market sentiment and Warsh's nomination are weighing on the Euro's performance.
Investors breathed a sigh of relief when US President Donald Trump announced that Kevin Warsh will succeed Jerome Powell as Fed Chair in May. Warsh, an advocate for a smaller balance sheet and lower borrowing costs, is expected to adopt a cautious approach to inflation.
In Europe, the final HCOB Manufacturing PMI readings revealed a better-than-expected performance in January. The Eurozone PMI was revised upwards to 49.5, from an initial estimate of 49.4, and above December's 48.8. Similarly, German PMI was revised to 49.1, from a preliminary estimate of 48.7.
The focus now shifts to the US Manufacturing PMI, due later today. Investors are likely to remain cautious ahead of a busy economic week, which includes the Eurozone Central Bank's monetary policy decision on Thursday and the highly anticipated US Nonfarm Payrolls report on Friday.
Euro Price Today
The table below shows the percentage change of the Euro (EUR) against major currencies. The Euro performed best against the Swiss Franc.
USD EUR GBP JPY CAD AUD NZD CHF
USD 0.05% -0.05% 0.15% 0.15% 0.15% 0.12% 0.43%
EUR -0.05% -0.09% 0.09% 0.11% 0.10% 0.08% 0.38%
GBP 0.05% 0.09% 0.19% 0.21% 0.20% 0.17% 0.48%
JPY -0.15% -0.09% -0.19% 0.02% 0.01% -0.02% 0.29%
CAD -0.15% -0.11% -0.21% -0.02% -0.01% -0.04% 0.27%
AUD -0.15% -0.10% -0.20% -0.01% 0.00% -0.03% 0.28%
NZD -0.12% -0.08% -0.17% 0.02% 0.04% 0.03% 0.31%
CHF -0.43% -0.38% -0.48% -0.29% -0.27% -0.28% -0.31%
The heat map illustrates the percentage changes of major currencies against each other. The base currency is selected from the left column, and the quote currency from the top row. For instance, EUR/USD represents the Euro as the base and the US Dollar as the quote.
Daily Digest: Market Movers
- The market has responded positively to Warsh's nomination as the next Fed Chief. According to the CME Group's Fed Watch Tool, the market anticipates at least two rate cuts in 2026. However, Warsh, a former Fed Governor, was sensitive to inflation risks during his tenure.
- German Retail Sales grew by 0.1% in December, following a 0.5% decline in November, and beating market expectations of a 0.2% drop. Year-on-year, German retail consumption accelerated to 1.5%, from 1.3% the previous month. The impact on the Euro has been minimal.
- In the US, January's ISM Manufacturing PMI is expected to show a moderate improvement to 48.3 from 47.9 in December, with prices paid accelerating to a four-month high of 60.5.
- Later, Atlanta Fed President Raphael Bostic will speak. Bostic has been reluctant to cut interest rates and recently affirmed that the balance sheet is "about right." This highlights the differences of opinion within the central bank's committee.
Technical Analysis: EUR/USD
The EUR/USD is in a bearish correction, hovering around 1.1850 after retreating from four-year highs near 1.2100. Technical indicators on the 4-hour chart point to further declines. The Relative Strength Index (RSI) has fallen below the key 50 level, and the Moving Average Convergence Divergence (MACD) histogram shows expanding negative bars.
The pair has found some support above the January 26 low, at the 1.1835 level, and the 50% Fibonacci retracement of the late-January rally, at 1.1830. Further down, the target is the 61.8% Fibonacci retracement of the mentioned cycle, at the 1.1770 area.
Upside attempts are likely to face resistance at Friday's high, near 1.1955, before the round 1.2000 level.
Economic Indicators
ISM Manufacturing PMI
The Institute for Supply Management (ISM) Manufacturing PMI is a leading indicator of business activity in the US manufacturing sector. Released monthly, it is obtained from a survey of manufacturing supply executives. A reading above 50 indicates expansion in the manufacturing economy, a bullish sign for the US Dollar (USD). Conversely, a reading below 50 signals a decline in factory activity, seen as bearish for USD.
The ISM Manufacturing PMI provides valuable insights into the state of the US manufacturing sector. A reading above 50 suggests business activity expansion during the survey period. PMIs are leading indicators and can signal shifts in the economic cycle. Stronger-than-expected prints typically have a positive impact on the USD. In addition to the headline PMI, the Employment Index and Prices Paid Index are closely watched, as they offer insights into the labor market and inflation.
ISM Manufacturing Prices Paid
The ISM Manufacturing Index reflects business conditions in the US manufacturing sector, considering expectations for future production, new orders, inventories, employment, and deliveries. It is a significant indicator of the overall US economic condition. The ISM Prices Paid represents business sentiment regarding future inflation. A high reading is positive for the USD, while a low reading is negative.
Read more: FXStreet Economic Calendar
