The US S&P Global Purchasing Managers’ Index (PMI) for January is set for release at 14:45 GMT. Preliminary estimates suggest a faster expansion in the US Composite PMI, with manufacturing and services sectors showing improvement. In December, the Composite PMI was 52.7, while the upcoming Flash Services PMI is predicted at 52.8, up from 52.5, and Manufacturing PMI is expected to rise to 52.1 from 51.8. Strong US private sector performance would boost the US Dollar (USD), whereas weaker figures could be a disadvantage.
The EUR/USD is trading near 1.1738, within a Symmetrical Triangle on the daily chart, indicating reduced volatility. The currency pair’s price is approaching the upper pattern boundary around 1.1770. The 20-day Exponential Moving Average (EMA) at 1.1689 is rising beneath the price, supporting upward movement. The Relative Strength Index (RSI) at 57 maintains momentum above the midline. A break above the January high of 1.1769 could see the pair reach 1.1800 and 1.1900. Conversely, the 20-day EMA will provide key support if the price declines.
Focus on US PMI Data
The focus today is the release of the US S&P Global PMI data, which is a key gauge of economic health. The market expects a strong reading, suggesting the US private sector is expanding, which would be favorable for the US Dollar. A better-than-expected number will likely increase bullish bets on the dollar.
We’ve seen EUR/USD trading in a tight range recently, indicating a significant price move is likely coming. The PMI data today is the probable catalyst that will trigger a breakout from this pattern. Traders should be prepared for a spike in volatility around the 14:45 GMT release time.
This release is particularly important after the latest Consumer Price Index (CPI) report for December 2025 showed core inflation holding firm at 3.8%. This persistent inflation, a trend we saw through late 2025, keeps pressure on the Federal Reserve to maintain its current stance. A strong PMI today would reinforce the narrative of a robust economy that can handle higher rates.
For traders expecting the PMI data to beat estimates, buying EUR/USD put options with a strike price below 1.1700 could be a viable strategy to profit from a stronger dollar. Conversely, if the data disappoints, call options with a strike price near 1.1800 could capture a sharp upward move in the pair. The key is positioning for the potential volatility before the numbers are public.
Looking Back at 2024-2025 Rate-Hiking Cycle
Looking back at the rate-hiking cycle of 2024-2025, we saw that similar data releases often caused immediate and significant price swings in major currency pairs. Given the current contracted volatility in EUR/USD, an options strategy like a long straddle could be used to trade a large price move, regardless of the direction. This involves buying both a call and a put option with the same strike price and expiration date.
Beyond today’s release, this data will heavily influence sentiment leading into next week’s Federal Reserve meeting. A strong economic signal would give the Fed more reason to sound hawkish, which could weigh on EUR/USD in the weeks ahead. This underlying economic strength continues to provide a buffer against geopolitical risks and concerns over trade tariffs.
