Forex News
- EUR/USD tumbles 0.75% as Kevin Warsh’s Fed nomination boosts US yields and Dollar demand.
- Hot US producer inflation reinforces the Fed’s steady-rate stance, lifting Treasury yields above 4.25%.
- Strong German and Eurozone GDP data fail to offset Dollar strength driven by policy repricing.
EUR/USD drops during the North American session, down by 0.75% amid a session characterized by overall US Dollar strength, sponsored by Trump’s mild-hawkish pick to lead the Federal Reserve and an inflation report that warrants steady rates by the Federal Reserve. At the time of writing, the pair traded at 1.1882 down from daily highs of 1.1974.
Euro sinks below 1.19 as hawkish Fed leadership signals and sticky inflation crush rate-cut hopes
Kevin Warsh is Trump’s election to be the next Fed Chairman of the Federal Reserve, confirming rumors that leaked late on Thursday. The financial markets sent precious metals tumbling, while the Dollar nearly 1% according to the US Dollar Index (DXY), which tracks the buck’s performance against six peers.
The DXY is poised to end the day past the 97.00 figure. US Treasury yields rose with the 10-year yield rose nearly one basis points at 4.25%.
In addition to Warsh naming, US inflation in the producer side edged higher, distancing from the Federal Reserve’s 2% goal, justifying the Fed’s decision. Aside from the release of the Producer Price Index (PPI) figures for December, speeches by Federal Reserve officials grabbed the headlines.
Breaking news revealed that the US Senate reached a deal to get the government funding package through chamber tonight, averting a shutdown, according to Politico.
US Treasury yields are rising in a sign that speculators see fewer odds that Warsh could cut rates “indiscriminately” to please the White House. The US 10-year Treasury note yield is up one and a half basis points at 4.247% as of writing.
In Europe, the German economy rose by 0.4% YoY exceeding estimates. Better-than-expected Gross Domestic Product (GDP) figures in Germany and the Eurozone, and the uptick in German inflation, have failed to provide any significant support to the pair.
Next week, the US economic docket will feature a tranche of US jobs data, speeches by Fed officials and the ISM Manufacturing and Services PMIs for January. In Europe, HCOB Flash PMIs for the bloc and for Germany and France, and the European Central Bank monetary policy meeting, could trigger some volatility in the EUR/USD pair.
Euro Price This Month
The table below shows the percentage change of Euro (EUR) against listed major currencies this month. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.85% | -1.48% | -1.10% | -0.59% | -4.17% | -3.85% | -2.44% | |
| EUR | 0.85% | -0.69% | -0.18% | 0.32% | -2.98% | -2.95% | -1.53% | |
| GBP | 1.48% | 0.69% | 0.51% | 1.03% | -2.31% | -2.28% | -0.85% | |
| JPY | 1.10% | 0.18% | -0.51% | 0.42% | -3.01% | -3.24% | -1.24% | |
| CAD | 0.59% | -0.32% | -1.03% | -0.42% | -3.41% | -3.64% | -1.85% | |
| AUD | 4.17% | 2.98% | 2.31% | 3.01% | 3.41% | 0.03% | 1.50% | |
| NZD | 3.85% | 2.95% | 2.28% | 3.24% | 3.64% | -0.03% | 1.47% | |
| CHF | 2.44% | 1.53% | 0.85% | 1.24% | 1.85% | -1.50% | -1.47% |
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 market movers: The Dollar’s comeback, tumbles the Euro
- St. Louis Federal President Alberto Musalem stated that the central bank does not need to cut interest rates further at this time, as the current 3.50%-3.75% policy rate range is roughly at a neutral level. He said further reductions would only be justified if the labor market deteriorates sharply or inflation drops materially
- Fed Governor Stephen Miran said Kevin Warsh would be an excellent choice for the Fed, adding that the recent rise in producer prices has been driven mainly by housing costs and portfolio management fees.
- Meanwhile, Christopher Waller noted that the labor market remains weak despite steady economic growth. He argued that inflation would be close to 2% were it not for tariffs, which he said kept price growth near 3%, and added that monetary policy should be closer to neutral, around 3%.
- Atlanta Fed President Raphael Bostic urged patience on policy, saying rates should remain somewhat restrictive. He warned that the full inflationary impact of tariffs has yet to materialize and expects price pressures to remain persistent.
- The US Bureau of Labor Statistics showed Producer Price Index (PPI) inflation held steady at 3.0% YoY in December, unchanged from November and missing expectations for a slowdown to 2.7%. Core PPI, which excludes food and energy, accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline to 2.9%, underscoring continued upstream price pressures.
- Gross Domestic Product (GDP) for the last quarter of last year in the European Union expanded by 1.4% YoY, unchanged from Q3, but above forecasts of 1.2%. In Germany the economy in Q4 exceeded estimates of 0.3%, rose by 0.4% YoY, up from Q3 0.3% growth.
- Germany’s inflation in January as measured by the Harmonized Index of Consumer Prices (HICP) ticked a tenth up from 2% to 2.1%, but within the European Central Bank’s target.
Technical outlook: EUR/USD uptrend at risk, after diving below 1.1850
The EUR/USD technical picture shows that the uptrend is at risk after breaching 2025 yearly high of 1.1918, exacerbating a drop below 1.1850. The Relative Strength Index (RSI) showed that momentum shifted mildly bearish, which could pave the way for further downside in the pair.
In that outcome, the EUR/USD next support would be 1.1800 which if gives way, can send the pair to the 20-day SMA at 1.1743.
On the flip side, the EUR/USD first resistance is 1.1900. If reclaimed, the next key resistance would be 1.1950 followed by the yearly peak at 1.2082.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, 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 Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The United States (US) Federal Reserve (Fed) had a busy week. On Monday, the Fed asked local New York banks about their positions in USD/JPY, fueling speculation that the US may be preparing to work with Japan on the Japanes Yen's (JPY) weakness. The news triggered a sharp US Dollar (USD) sell-off at the beginning of the week.
Mid-week, the Fed had its monetary policy meeting. The central bank held its target range for the federal funds rate unchanged at 3.50%-3.75%, as expected. Chairman Jerome Powell's press conference was focused on politics, Powell's future, and the subpoena, topics he declined to address. On a positive note, Powell highlighted clear improvements in economic growth and a decrease in risks related to both inflation and employment.
The US Dollar Index (DXY) is trading near the 96.90 price region, recovering almost all its weekly losses after US President Donald Trump finally nominated former Fed Governor Kevin Warsh as the next Fed Chair on Friday. The US Senate must now confirm the nomination. On another note, the US will publish next week the Institute for Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) for January, MBA mortgage applications, January Challenger Job Cuts, and Initial Jobless Claims.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.82% | 0.79% | 0.96% | 0.77% | 1.08% | 0.76% | 0.86% | |
| EUR | -0.82% | -0.03% | 0.11% | -0.05% | 0.26% | -0.10% | 0.04% | |
| GBP | -0.79% | 0.03% | 0.15% | -0.02% | 0.29% | -0.04% | 0.07% | |
| JPY | -0.96% | -0.11% | -0.15% | -0.19% | 0.11% | -0.22% | -0.11% | |
| CAD | -0.77% | 0.05% | 0.02% | 0.19% | 0.30% | -0.01% | 0.09% | |
| AUD | -1.08% | -0.26% | -0.29% | -0.11% | -0.30% | -0.32% | -0.22% | |
| NZD | -0.76% | 0.10% | 0.04% | 0.22% | 0.00% | 0.32% | 0.10% | |
| CHF | -0.86% | -0.04% | -0.07% | 0.11% | -0.09% | 0.22% | -0.10% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD is trading near the 1.1880 price zone after the USD recovered and claimed back almost all the ground lost in the week. Next week, the Hamburg Commercial Bank (HCOB) will publish the German and the Eurozone Manufacturing, Services, and Composite PMIs. The Eurozone will publish the ECB Bank Lending Survey and the Eurozone December Producer Price Index (PPI). Germany will offer December Factory Orders and Industrial Production data.
GBP/USD is trading close to the 1.3600 level as the Bank of England (BoE) is expected to announce its monetary policy decision on Thursday. BoE Governor Andrew Bailey’s press conference will follow, providing fresh insights on the central bank’s path forward on interest rates. The UK calendar includes the final S&P Global January PMIs and the Halifax House Prices report.
USD/JPY is trading near the 154.50 price zone, trimming back almost even after Tokyo CPI figures showed inflation cooling in January. Headline inflation rose 1.5% YoY after 2% in December, while underlying measures eased to 2%, below forecasts. This moderation in price pressures reduces the urgency for the Bank of Japan (BoJ) to raise interest rates.
USD/CAD is trading near the 1.3580 price zone, with the Canadian Dollar (CAD) sitting over the USD even after Canadian data showed that the economy stalled in November, with GDP flat on the month after contracting by 0.3% previously and missing expectations for a 0.1% increase.
The Canadian calendar will offer the January S&P Global PMIs and Ivey PMIs.
Gold is trading near the $4,880 price zone, having lost all weekly gains after reaching a record high of $5,598, as some traders took profits and the US Dollar (USD) rose sharply.
Anticipating economic perspectives: Voices on the horizon
Monday, February 2:
- BoE’s Breeden.
- Fed’s Bostic.
Tuesday, February 3:
- Fed’s Barkin.
Wednesday, February 4:
- Fed’s Cook.
Thursday, February 5:
- BoE’s Governor Bailey.
- Fed’s Bostic.
- Bank of Canada (BoC) Governor Macklem.
Friday, February 6 :
- European Central Bank’s (ECB) Cipollone.
- ECB's Kocher.
- BoE's Pill.
- Fed's Jefferson.
Central banks' meetings and upcoming data releases to shape monetary policies
Monday, February 2:
- German December Retail Sales.
- US ISM Manufacturing PMI
Tuesday, February 3:
- Reserve Bank of Australia (RBA) monetary policy decision.
- US December Jolts Job Openings.
Wednesday, February 4:
- Eurozone January Harmonized Index of Consumer Prices (HICP).
- US January ADP Employment Change.
Thursday, February 5:
- Australian December Trade Balance.
- Eurozone December Retail Sales.
- Bank of England (BoE) monetary policy decision.
- European Central Bank (ECB) monetary policy decision.
Friday, February 6 :
- Canada January Net Change in Employment.
- US January Nonfarm Payrolls.
- US February Michigan Consumer Sentiment Index.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Unconfirmed reports suggest that China may inject RMB 200 billion into large insurers to bolster their capital buffers, alongside an additional RMB 300 billion into major banks. This move aims to support the banking sector amid downward pressure on net interest margins. The PBoC's USD/CNY fixing has remained below the 7.0000 level, aided by a weaker Dollar, note Lin Li, Asian Head of Global Markets Research and Khang Sek Lee, Research Associate at MUFG Bank.
Government support for banking sector
"If true, it is considered timely as the China Banking and Insurance News reported in November that more than two-thirds of the 173 insurers that have reported experienced a decline in their solvency ratios in 3Q from the prior quarter."
"Currency wise, the PBoC USD/CNY fixing has firmly remained below 7.0000 level this week partially helped by a weaker dollar, following the breakthrough of the level last Friday."
"Looking ahead, we think the RMB appreciation (if the market determines so) will be a modest one guided by PBoC USD/CNY fixing to avoid overshooting risks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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