EUR/USD is looking for direction ahead of US private employment data

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EUR/USD is looking for direction ahead of US private employment data

EUR/USD ticks lower to 1.1815 and turns negative on the day.
Eurozone HICP confirms that inflation growth eased to 1.7% in January.
Previously, Eurozone and German Services PMIs were revised lower.

The Euro has pulled back from session highs but remains above 1.1800, trading at 1.1820 against the US Dollar (USD), at the time of writing, practically flat on the day. The Eurozone inflation and services activity data have failed to provide any significant support to the Euro, and investors are now shifting their focus to the US ADP Employment Change.

Preliminary Eurozone HICP figures revealed that consumer inflation slowed down to a 16-month low of 1.7% in January, although the core inflation, more relevant from a monetary policy point of view, remained steady. Beyond that, producer prices posted a slightly shorter-than-expected contraction, which might have kept the Euro from retreating further.

The US Dollar remains steady. US President Trump has signed a bill into law that ends a two-day government shutdown, easing markets, which are still celebrating the pick of Kevin Warsh as the replacement for Federal Reserve Chairman Jerome Powell. Warsh is a respected policymaker who is expected to be cautious with rate cuts and guarantee the central bank's autonomy.

Investors maintain a cautious mood on Friday, awaiting the release of the ADP Employment Change report, due later on Wednesday, which will be observed with particular interest, as the key Nonfarm Payrolls report will be delayed due to the recent government shutdown. Later on, the US ISM Services PMI will also have some impact on US Dollar crosses.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.00%	-0.17%	0.61%	0.12%	-0.12%	0.41%	0.05%
EUR	-0.01%		-0.18%	0.63%	0.11%	-0.12%	0.40%	0.03%
GBP	0.17%	0.18%		0.80%	0.30%	0.06%	0.58%	0.22%
JPY	-0.61%	-0.63%	-0.80%		-0.48%	-0.71%	-0.20%	-0.55%
CAD	-0.12%	-0.11%	-0.30%	0.48%		-0.24%	0.28%	-0.07%
AUD	0.12%	0.12%	-0.06%	0.71%	0.24%		0.52%	0.16%
NZD	-0.41%	-0.40%	-0.58%	0.20%	-0.28%	-0.52%		-0.36%
CHF	-0.05%	-0.03%	-0.22%	0.55%	0.07%	-0.16%	0.36%

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 Digest market Movers: Weak services data and soft inflation hurt the Euro's recovery

The Euro turned lower after Eurostat data revealed that yearly inflation eased to 1.7% in January from 2% in December. The core inflation, however, grew at a steady 2.3% year-on-year pace. The monthly HICP accelerated to 2% from 0.2% in the previous month. The core HICP grew at a 0.3% monthly rate, unchanged from December.
Eurozone's Producer Prices index contracted 0.3% in December, as expected, from a 0.7% growth in November. Year-on-year, the PPI fell by 2.1% following a 1.4% conttraction in November, but above market expectations ops a sharper, 2.3% contracion.
Earlier on Tuesday, HCOB Services Purchasing Managers Index (PMI) data revealed that the sector's activity slowed down to a four-month low of 51.6, below the preliminary expectations of a 51.9 reading, down from December's 52.4.
Likewise, the German HCOB Services PMI has been revised lower to 52.4 from preliminary estimations of a 53.3 reading, and also down from the 52.7 reading seen in December. These figures confirm that business activity in the Eurozone's main economy remains sluggish.
In the US, the focus will be on January's ADP private payrolls report, which will be the main employment data this week. Net job creation is expected to have increased to 48K last month from 41K in December, still at relatively low levels.
Somewhat later, the US ISM Services PMI is forecast to show a moderate slowdown to 53.5 in January, from 54.4 in December, while the Employment Index is seen edging up to 52.3 from 52.0 in December.

Technical Analysis: EUR/USD must break above 1.1875 to confirm a trend shift

EUR/USD shows a moderate recovery from Monday's lows at 1.1775, with indicators on the 4-hour chart highlighting a fading bearish pressure. The Moving Average Convergence Divergence (MACD) line seems about to cross above the signal line, in what would be a bullish move, and the Relative Strength Index (RSI) has reached levels right below the 50 line, which divides the bearish from the bullish area.

Price action, however, remains trapped within Monday's trading range. Bulls would need to break the weekly top at the 1.1875 area to confirm the pair's recovery and aim for the resistance area between the January 29 high, at 1.1995, and the 1.2000 psychological level.

Immediate support is at the February 2 and 3 lows, in the mentioned 1.1775 area. Further down, bears might be attracted by the January 21 low, near 1.1660.

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

Economic Indicator

ADP Employment Change

The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.

Economic Indicator

ISM Services PMI

The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector, which makes up most of the economy. The indicator is obtained from a survey of supply executives across the US based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that services sector activity is generally declining, which is seen as bearish for USD.

Why it matters to traders?

The Institute for Supply Management’s (ISM) Services Purchasing Managers Index (PMI) reveals the current conditions in the US service sector, which has historically been a large GDP contributor. A print above 50 shows expansion in the service sector’s economic activity. Stronger-than-expected readings usually help the USD gather strength against its rivals. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are also watched closely by investors as they provide useful insights regarding the state of the labour market and inflation.