The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
US government funding again in the eye of the storm
Demand for the US Dollar (USD) faded amid mounting concerns about a partial United States (US) government shutdown, which was finally resolved on Wednesday, when US President Donald Trump signed a funding bill. The measure funds most government agencies until the end of the fiscal year in September, but the Department of Homeland Security (DHS) will be funded only until February 13 without a new agreement. The DHS includes multiple subsidiary agencies, such as Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), the Coast Guard and Secret Service.
As an immediate impact on financial markets, the Bureau of Labor Statistics (BLS) delayed the release of first-tier data. The January Nonfarm Payrolls (NFP) report and the Consumer Price Index (CPI) for the same month have been delayed to next week. Financial markets seemed little worried about the US funding issue at the time.
Nevertheless, the 2025 government shutdown was long enough to become a major issue: US October and November data have been released up to two months late, if not skipped altogether. The absence of a macroeconomic background left investors without monetary policy clues and the fact that current Chairman Jerome Powell will soon be replaced by Trump’s nominee Kevin Warsh.
Most of the recent USD weakness results from uncertainty stemming from the data silence in the last quarter of 2025.
European Central Bank unnoticed, Eurozone data encouraging
Regarding the Euro (EUR), the shared currency cannot attract speculative interest, despite some encouraging data.
The Hamburg Commercial Bank (HCOB) upwardly reviewed the January Manufacturing Purchasing Managers’ Indexes (PMIs), confirming the Eurozone index at 49.5, slightly better than the flash estimate of 49.4. The German index was reported at 49.1, up from the previous estimation of 48.7. The Services PMI in the bloc was downwardly revised to 51.6 from 51.9 in the same period, still indicating expansion in the sector. Finally, the Composite PMI was confirmed at 51.3, slightly below the flash estimate of 51.5.
More relevantly, Eurostat reported that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 1.7% in the year to January, as expected, but eased from the 1.9% posted in December. The core HICP, which excludes volatile components such as food or energy, rose by 2.3% as anticipated, matching the previous month’s figure.
Other than that, the European Central Bank (ECB) announced its decision on monetary policy on Thursday. As widely anticipated, the ECB left the interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility unchanged at 2.00%, 2.15% and 2.40%, respectively. The accompanying statement maintained the well-known tone, declaring that the “updated assessment reconfirms that inflation should stabilize at its 2% target in the medium term,” to finally add that the Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilizes at its 2% target in the medium term. President Christine Lagarde repeated officials belief that the central bank is “in a good place.”
The decision had no impact on the EUR, neither macro data released throughout the week, but it was enough to limit the downside for the EUR.
US economy grows, labor market loosening
US data released over the last few days showed that the economic performance of the world’s largest economy is no concern.
S&P Global published the final estimate of the January Manufacturing Purchasing Managers’ Index (PMI) revised from 51.9 to 52.4. 5. The S&P Global Services PMI was confirmed at 52.7, slightly better than the previous 52.5 estimate, while the Composite PMI resulted at 53.
The Institute for Supply Management (ISM) reported its own PMI versions for the same month, with manufacturing output improving from 47.9 to 52.6, also beating the market expectation of 48.5. The same report showed that the Manufacturing Employment Index rose to 48.1 from 44.9, while the Prices Paid Index surged to 59 from 58. The ISM Services PMI printed at 53.8, surpassing the expected 53.5.
Employment-related data was mixed. On the one hand, the ADP Employment Change survey showed that the private sector added 22K new positions in January, following a downwardly revised 37K in December. Additionally, Initial Jobless Claims for the week ended January 31 unexpectedly jumped to 231K, much worse than the previous 209K.
Finally, the number of job openings on the last business day of December stood at 6.542 million, while for November it was downwardly revised to 6.928 million, according to the Job Openings and Labor Turnover Survey (JOLTS) report.
Finally, the University of Michigan Consumer Sentiment Index showed consumer confidence improved to 57.3 according to preliminary data in February, from 56.4 in January.
What’s next in the docket
The new week will start with the release of the Eurozone Sentix Investor Confidence Index and a speech from ECB President Christine Lagarde. The European macroeconomic calendar will remain empty until Friday, when a preliminary version of the Q4 Gross Domestic Product will be out.
The American macroeconomic calendar, on the contrary, will be much busier. The US will publish December Retail Sales on Tuesday, and the January NFP report on Wednesday, expected to announce 70K new jobs were added in the month. CPI data for the same period will be out on Friday, expected to post a modest monthly uptick.
US data may help dissipate some of the uncertainty-related fog, but it is unlikely to clear the picture.
Other than that, the week will be flooded with central bankers’ speeches from both shores of the Atlantic.
EUR/USD technical outlook
Technically, the EUR/USD pair is neutral to bullish. The daily chart shows the pair has found support near the 20-day Simple Moving Average (SMA), which is above the 100- and 200-day SMAs. The 20-day SMA at 1.1773 offers relevant dynamic support, while the 100-day SMA at 1.1678 underpins the structure. Meanwhile, the Momentum indicator remains positive, though it has cooled, signaling steady but moderating upside strength. Finally, the Relative Strength Index (RSI) indicator sits directionless at 52.
The bullish stance would persist while EUR/USD holds above its short-term average, whereas a daily close below it could trigger a corrective phase toward the longer measures. The broader trend is supported by the rising 200-day SMA at 1.1620.
In the weekly chart, EUR/USD buyers refuse to give up. The pair develops well above all moving averages, although the 20-week Simple Moving Average (SMA) turned flat at around 1.1674, reflecting fading upward strength. At the same time, the 100- and 200-week SMAs tick higher, supporting a bullish backdrop. The Momentum indicator edges higher in positive territory, while the RSI advances at around 59, both supporting the bullish bias.
(The technical analysis of this story was written with the help of an AI tool.)
