EUR\/USD is stable around 1.1850 after a 1% drop, despite better-than-expected Eurozone manufacturing PMIs. The Euro falls against the US Dollar, supported by Kevin Warsh’s nomination as the next Federal Reserve Chair and a risk-averse market sentiment.<\/p>\n
Kevin Warsh’s nomination has been confirmed, bringing relief as he is expected to maintain a cautious stance on inflation. Positive data from Europe includes an upward revision to the Eurozone PMI to 49.5 and German PMI to 49.1.<\/p>\n
US manufacturing data is anticipated, with markets remaining cautious ahead of the ECB’s monetary policy decision and the US Nonfarm Payrolls report. German Retail Sales rose by 0.1% in December, outpacing expectations, while US ISM Manufacturing PMI is predicted to improve slightly.<\/p>\n
Technically, EUR\/USD hovers above 1.1835 in a bearish correction after dropping from highs near 1.2100. It targets 1.1770, with resistance at 1.1955 and 1.2000.<\/p>\n
The ISM Manufacturing PMI, released monthly, is crucial for gauging US manufacturing activity, with readings over 50 indicating expansion. The ISM Prices Paid index also reveals business sentiment on inflation, influencing USD performance.<\/p>\n
The US ISM Manufacturing PMI data has come in dramatically stronger than expected at 52.6, smashing the 48.5 consensus. This is the first reading above the expansionary 50.0 level in 16 months, signaling a robust turn in the US manufacturing sector. This unexpected strength is a clear bullish signal for the US Dollar, putting immediate and intense pressure on the EUR\/USD pair.<\/p>\n
We must now reconsider the market’s pricing of two Federal Reserve rate cuts for 2026. The appointment of Kevin Warsh, who has historically been sensitive to inflation, combined with this strong economic data makes a dovish pivot less likely. Looking back at 2025, we saw how quickly markets repriced Fed expectations, and a similar rapid shift towards a more hawkish stance could unfold now.<\/p>\n
While the upward revisions to the Eurozone and German manufacturing PMIs are positive, they are overshadowed by the US data. Germany’s PMI at 49.1 still indicates a contraction, making the Euro’s fundamental picture look weak in comparison to the accelerating US economy. The European Central Bank’s decision on Thursday will be critical, but it is unlikely to offer enough support to counter the dollar’s momentum.<\/p>\n
The ISM Prices Paid component, which jumped sharply, points to persistent inflationary pressures that the new Fed leadership cannot ignore. This mirrors the stubborn inflation we observed through parts of 2025, suggesting the fight is not yet over. This gives the Federal Reserve a clear reason to remain cautious and delay any potential rate cuts.<\/p>\n
Given the bearish technical setup and the strong fundamental tailwind for the dollar, we should consider positioning for further downside in EUR\/USD. Buying puts with strike prices below 1.1800 could be a direct way to play this expected weakness. Alternatively, a bear put spread could be used to target a move toward the 1.1770 support level while limiting premium costs.<\/p>\n
The focus this week remains on the ECB decision and, most importantly, the US Nonfarm Payrolls report on Friday. The latest NFP report in January showed a surprisingly strong addition of 285,000 jobs, and another robust reading would solidify dollar dominance. These events will introduce significant volatility, providing catalysts for the next major move.<\/p>\n
We are watching the key support level at 1.1830, which corresponds to the 50% Fibonacci retracement. A decisive break below this level in the coming sessions would open a path towards the next major target at 1.1770. Any upward movements are likely to be viewed as selling opportunities, with significant resistance expected near 1.1950.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD holds steady near 1.1850 despite upbeat Eurozone data; markets await key US economic releases.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40697","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40697","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=40697"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/40697\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=40697"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=40697"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=40697"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}