Euro Gains Against The Swiss Franc
The Euro gained the most against the Swiss Franc. The Dollar remains stable due to Warsh’s nomination, with markets expecting at least two rate cuts in 2026. German retail sales rose 0.1% in December, contrary to forecasts of a 0.2% decline. In the US, the ISM Manufacturing PMI is forecasted to increase to 48.3.
EUR/USD is on a downward correction, hovering near 1.1850. Technical indicators suggest further decline. The ISM Manufacturing PMI indicates US economic health, with a reading above 50 signalling expansion. The next release is expected on February 2, 2026, with a consensus of 48.5.
The Dollar’s strength is the main story, driven by the nomination of Kevin Warsh to lead the Fed. This is keeping EUR/USD pinned below 1.1900, even with some positive data out of Germany. All eyes are now on the US ISM manufacturing data due later today.
We see the market potentially underestimating US economic resilience, much like it did throughout 2025 when a slowdown never fully materialized. The January 2025 nonfarm payrolls report, for instance, showed a surprising addition of 295,000 jobs when only 170,000 were expected. A strong ISM reading today would reinforce this trend of positive US surprises.
Market Expectations And Trading Strategies
With the ECB decision this Thursday and US payrolls on Friday, we are seeing a notable rise in implied volatility. The CBOE EuroCurrency Volatility Index has climbed to 8.2, up from lows near 6.5 late last year. Buying straddles or strangles on EUR/USD could be a way to trade the expected price swings without picking a specific direction.
Given that the pair is struggling to stay above the 1.1830 support level, buying puts looks attractive for those with a bearish view. A break below this level could quickly see a move towards the 1.1770 target. Consider weekly options that expire after Friday’s NFP report to capture the potential downside from the data releases.
We should not forget the European Central Bank’s cautious stance, which has been a consistent theme since its last meeting in December 2025. Back then, policymakers pushed back against market expectations for aggressive rate cuts. Any similar dovish language on Thursday would add significant weight to the Euro’s decline.
Should there be any surprise strength in the Euro, we would view rallies toward the 1.1950 area as opportunities to initiate bearish positions. Selling call spreads with a strike price at or above the 1.2000 psychological level offers a defined-risk way to bet against a sustained recovery. This strategy benefits from both a price drop and the passage of time as we head into the week’s key events.
