The EUR/USD rate increases by over 0.50% for the second day of the week as the dollar falls despite the publication of solid macroeconomic data from the US on that day. The improvement in risk appetite, sponsored by US President Donald Trump, who dropped his threat to impose tariffs on Europe, underpins the common currency. At the time of writing, the pair is trading at 1.1743, having rebounded from intraday lows of 1.1670.
Euro extends gains as easing US-Europe trade tensions outweigh robust US data and put pressure on dollar
Wall Street is set to end Thursday’s session with gains, boosted by robust gross domestic product (GDP) data for the third quarter of 2025. Employment data released at the same time and a slightly stable inflation reading doomed the chances of the Federal Reserve cutting interest rates at its January meeting.
Data from Prime Market Terminal indicates that money markets expect the Fed to leave interest rates unchanged with a 95% probability. By the end of the year, investors expect interest rates to be cut by 42 basis points, below the 60 points expected on January 7.
In Europe, the European Central Bank (ECB) presented the minutes of its latest monetary policy meeting, in which members broadly agreed on its assessment of the economic situation and that headline inflation rates remain consistent with the central bank’s medium-term target of 2%.
As revealed by Bloomberg, European Union members also plan to unblock the trade agreement with the US and vote on ratification.
Economic schedule for January 23
The EU economic document will include HCOB Flash PMIs for France, Germany and the bloc. ECB President Christine Lagarde will also cross the wires. In the US, investors’ attention will focus on the S&P Global Flash PMI indices and the final version of the University of Michigan’s Consumer Sentiment report.
Price in euros this week
The table below shows the percentage change of the euro (EUR) against the major currencies traded this week. The euro was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.44% | -1.11% | 0.41% | -0.88% | -2.48% | -3.03% | -1.47% | |
| EUR | 1.44% | 0.33% | 1.84% | 0.55% | -1.07% | -1.61% | -0.04% | |
| GBP | 1.11% | -0.33% | 1.28% | 0.22% | -1.39% | -1.95% | -0.37% | |
| JPY | -0.41% | -1.84% | -1.28% | -1.28% | -2.86% | -3.39% | -1.86% | |
| BOOR | 0.88% | -0.55% | -0.22% | 1.28% | -1.58% | -2.14% | -0.59% | |
| AUD | 2.48% | 1.07% | 1.39% | 2.86% | 1.58% | -0.56% | 1.04% | |
| NZD | 3.03% | 1.61% | 1.95% | 3.39% | 2.14% | 0.56% | 1.61% | |
| CHF | 1.47% | 0.04% | 0.37% | 1.86% | 0.59% | -1.04% | -1.61% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Euro from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily market update: investors ignore bullish US data, driving the euro higher
- The US Department of Commerce said the Fed’s preferred inflation measure, basic personal consumption expenditures (PCE), rose 2.7% y/y in October and accelerated slightly to 2.8% in November, broadly in line with expectations.
- The U.S. Bureau of Economic Analysis showed that GDP grew 4.4% y/y in Q3 2025, exceeding forecasts of 4.3% and improving significantly from Q2’s pace of 3.8%. The expansion was driven by stronger exports and a smaller decline in inventories.
- According to data from the United States Department of Labor, the number of recent applications for unemployment benefits in the week ending January 17 increased to 200,000. from a revised 199,000, but was still well below expectations of 212,000.
- The minutes of recent ECB meetings adopted dovish language, with policymakers acknowledging that economic growth remains resilient but is exposed to geopolitical risks that could weigh on sentiment and deflect markets’ risk aversion. Inflation remains close to the 2% target. Policymakers reiterated that policy does not follow a predetermined path, maintaining its data-driven position.
- The U.S. Dollar Index (DXY), which tracks the U.S. currency’s performance against six other currencies, fell 0.50% to 98.29.
Technical Outlook: EUR/USD may break the 1.1800 level in the near future
EUR/USD turned from slightly neutral to bullish after rebounding from 1.1576, near the 200-day basic moving average (SMA) at 1.1590, sharpening the common currency’s rally above 1.1600 towards 1.1700.
The relative strength index (RSI) shows that the bulls are gaining momentum. Therefore, in the brief run, they have the advantage.
To maintain a bullish continuation, buyers need to clear the December 24 high at 1.1807. Once crossed, the next stop will be 1.1850, followed by last year’s cycle high at 1.1918. For a bear reversal to occur, EUR/USD must break below 1.1700 and clear key support levels such as the 20-, 50- and 100-day SMAs, each at 1.11693, 1.1663 and 1.1660, respectively. In the event of a breach, the bulls’ last line of defense would be the 200-day SMA.
Frequently asked questions about the euro
The euro is the currency of the 20 European Union countries belonging to the euro zone. It is the second most widely traded currency in the world after the US dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with average daily turnover exceeding $2.2 trillion per day. EUR/USD is the most traded currency pair in the world, accounting for an estimated 30% discount on all trades, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the euro area. The ECB sets interest rates and manages monetary policy. The ECB’s primary task is to maintain price stability, which means controlling inflation or stimulating economic growth. Its basic tool is to raise or lower interest rates. Relatively high interest rates – or the expectation of higher interest rates – will usually benefit the euro and vice versa. The Governing Council of the ECB takes decisions on monetary policy at meetings held eight times a year. Decisions are made by the heads of the euro zone’s national banks and six constant members, including ECB President Christine Lagarde.
Inflation data in the euro area, measured by the Harmonized Index of Consumer Prices (HICP), is an essential econometric indicator for the euro. If inflation rises more than expected, especially above the ECB’s target of 2%, this obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to interest rates will typically benefit the euro as they make the region more attractive as a place to park money for global investors.
The published data are used to assess the condition of the economy and may affect the euro. Indicators such as GDP, PMIs for industry and services, employment and consumer sentiment surveys may influence the direction of the common currency. A robust economy is good for the euro. Not only will it attract more foreign investment, but it may prompt the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is faint, the euro will likely fall. The economic data for the four largest eurozone economies (Germany, France, Italy and Spain) is particularly essential as they constitute 75% of the eurozone economy.
The next essential data release for the euro is the trade balance. This indicator measures the difference between what a country earns from exports and what the country spends on imports over a given period. If a country produces a highly sought after export, its currency will only appreciate in value due to the additional demand generated by foreign buyers wanting to buy those goods. Therefore, a positive net trade balance strengthens the currency and vice versa in the case of a negative balance.
