EUR/USD drifts lower despite bright economic, industrial confidence data

The EUR/USD is trading at 1.1950 at the time of writing, down from session highs in the area of 1.200 ahead of the Eurioean session opening, but above Tuesday’s lows near 1.1900. The pair is practically flat in the daily chart, despite bright Eurozone sentiment figures, with downside attempts limited, as US recovery attempts lack follow-through.

The Federal (Fed) left interest rates on hold, with Chairman Jerome Powell showing more confidence about the economy and the labor market, adding to the case for a steady monetary policy in the coming months. The market, however, keeps pricing at two rate cuts this year, according to data by the CME Group’s Fed Watch Tool

Apart from that, US Treasury Secretary Scott Bessent mended US President Donald Trump’s comments, affirming that Washington pursues a “strong-Dollar” policy. These comments provided some support to the Greenback, but failed to trigger a solid recovery.

In the economic US Trade Balance figures, Factory Orders, and the weekly Jobless Claims data might provide some guidance to the US Dollar later on the day.

Daily Digest Market Movers: Euro consolidates gains, the US Dollar remains vulnerable

• The US Dollar drew some support from Wednesday’s Fed hawkish stance and US Treasury Secretary Bessent’s comments. The Greenback’s upside attempts, however, remain limited, with investors pricing further rate cuts from May on, when Trump replaces Powell with a more dovish Fed Chairman.
• The US Dollar Index, which measures the value of the Greenback against a basket of currencies, remains more than 2% down in 2026 so far, weighed by Trump’s erratic trade policies and the attacks on the Fed’s independence, two of the main pillars of the US Dollar’s status as reserve currency.
• Eurozone Consumer Confidence met expectations with a steady -12.4 reading in January. The Economic Sentiment Index rose to 99.4 from 97.2 in December, beating expectations of a mild decline to 97.0. Likewise, Industrial Confidence improved to -6.8 from -8.1 in the previous month, and Services Sentiment jumped to 7.2, from 5.8, well above the 6,0 reading anticipated by the market.
• Regarding interest rates, ECB officials’ view that monetary policy is in a good place is starting to show its first cracks. ECB member and Austrian central bank governor Martin Kocher mentioned interest rate cuts for the first time since June last year, and German Chancellor Friedrich Merz complained that USD weakness is a burden for German exports. If the stance of the European Central Bank changes, the Euro might see a deeper correction.
• In the US, Initial Jobless Claims are expected to have increased to 205K last week, from the 200K reading in the previous week.
• At a later time, US Factory Orders are expected to show a rebound to 1.6% in November, following a 1.3% contraction in October.
• The US Goods and Services Trade Balance, on the contrary, is forecasted to show a widening deficit of $40.5 billion in November, from the $29.4 billion trade gap seen in October.

Technical Analysis: EUR/USD consolidates between 1.1900 and 1.2000

EUR/USD is in a consolidation phase after the reversal from the 261.8% Fibonacci extension of the January 16-20 uptrend, at 1.2085, was contained at the 1.1900 area.

Technical indicators are mixed. The Relative Strength Index (RSI) stands near 60 on the 4-hour chart, highlighting a moderately positive trend, although the Moving Average Convergence Divergence (MACD) has crossed below the signal line, with the histogram turning negative, which points to a fading upside momentum.

Support levels are at Wednesday’s low in the area of 1.1900, and the January 27 low, at 1.1850. On the upside, the 1.2000 psychological level is holding bulls at the present time, ahead of the 1.2082 long-term high hit on Tuesday.

(The technical analysis of this story was written with the help of an AI tool.)