EUR/USD holds near one-month lows amid a moderate US Dollar recovery
- EUR/USD treads water below 1.1650 in a bearish trend from weekly highs at 1.1700.
- The US Dollar remains firm despite moderate US inflation figures.
- The pair remains in a bearish channel with one-month lows at 1.1618 in sight.
EUR/USD is practically flat on Wednesday, trading just below 1.1650 at the time of writing, with one-month lows in the 1.1615 area in sight, which are at a relatively short distance. The US Dollar maintains a moderate bullish bias in a calm market session, unfazed by the softer-than-expected US core Consumer Prices Index (CPI) data released on Tuesday.
Figures from the US Bureau of Labour Statistics (BLS) revealed that price pressures remained fairly steady in December, against market hopes of an uptick in the core inflation. The US Dollar, however, maintained its mild bullish tone, as the data did not change the Federal Reserve's (Fed) monetary policy expectations. Futures market is practically fully pricing a steady interest rate decision in the late-January meeting, and the chances of a rate cut in March have dropped to 26% from nearly 40% one week ago, according to the CME FedWatch tool.
Market volatility has been low during a dozy Asian session. The economic calendar in Europe is void, apart from a speech by the European Central Bank’s Vice-President, Luis De Guindos. In the US, Retail Sales data and an array of Fed speakers will be in focus, although traders will keep an eye on the US Supreme Court, which might rule on US President Donald Trump’s tariffs later on Wednesday.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.09% | 0.03% | 0.00% | -0.25% | -0.16% | 0.00% | |
| EUR | 0.01% | -0.08% | 0.04% | 0.02% | -0.24% | -0.15% | 0.02% | |
| GBP | 0.09% | 0.08% | 0.13% | 0.10% | -0.16% | -0.07% | 0.10% | |
| JPY | -0.03% | -0.04% | -0.13% | -0.00% | -0.26% | -0.18% | -0.00% | |
| CAD | -0.01% | -0.02% | -0.10% | 0.00% | -0.26% | -0.17% | 0.00% | |
| AUD | 0.25% | 0.24% | 0.16% | 0.26% | 0.26% | 0.10% | 0.26% | |
| NZD | 0.16% | 0.15% | 0.07% | 0.18% | 0.17% | -0.10% | 0.17% | |
| CHF | -0.01% | -0.02% | -0.10% | 0.00% | -0.00% | -0.26% | -0.17% |
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: US CPI data failed to hurt the US Dollar
- The US Dollar maintains its moderate constructive tone intact, despite the softer-than-expected core CPI figure seen on Tuesday.
- Headline US inflation grew 0.3% pace in December and 2.7% year-on-year, in line with market expectations, while the core CPI slowed to 0.2% from 0.3% the previous month and grew at a steady 2.6% annual pace, against market expectations of 0.3% and 2.7% increases, respectively.
- The US ADP employment 4-week average report, on the other hand, revealed an 11.75K increase in the first week of 2026, following the previous 11K. This reading marks the fifth consecutive week with a net increase in jobs, which has contributed to easing concerns about the labour market and strengthens the case for steady Fed interest rates in the coming months.
- Also on Tuesday, the heads of the European Central Bank (ECB), the Bank of England (BoE), the Bank of Canada (BoC), and nine other central banks released a statement showing their solidarity with Federal Reserve Chairman Powell in reaction to the unprecedented attacks from US President Donald Trump. The central bankers defended the independence of their institutions as a cornerstone for price, financial, and economic stability in the interest of the citizens that they serve.
- Later on Wednesday, November's US Retail Sales are expected to show that consumption bounced up 0.4% after a flat performance in October, boosted by higher car sales. Excluding autos, sales of all other items are seen growing at a 0.4% pace, unchanged from last month.
- A slew of Fed speakers will also take the stage during the American session. The focus will be on Governor Stephen Miran, Trump's latest pick for the Board, and a vocal dove. Philadelphia Fed President Anna Paulson, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and New York Fed President John Williams will also meet the press on Wednesday.
Technical Analysis: EUR/USD bears eye the 1.1615 support area
The EUR/USD pair treads water below the 1.1650 line, after pulling back from the 1.1700 area earlier this week. Technical indicators show a neutral-to-bearish tone. The Moving Average Convergence Divergence (MACD) is practically flat on the 4-hour chart, showing a lack of momentum, while the Relative Strength Index (RSI) has dropped below 43, pointing to fading demand.
Price action remains trapped within a descending channel from late December highs. The intraday low is near 1.1635, and the one-month low of 1.1618 remains in the bears' sight. Further down, the confluence of the channel bottom and December 2 lows, right below 1.1600, is a key area.
Immediate resistance stands at the channel top, now around 1.1685, ahead of Monday's high, near 1.1700. Further up, the target is the January 6 high, in the area of 1.1740.
(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.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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