- EUR/USD remains steady in its near-term range as traders weigh their next moves.
- US information rules the financial discharge calendar this week.
- US recruitment, CPI, PPI inflation and consumer mood will be off during the week.
EUR/USD moved within familiar ranges on Monday, beginning the new trading week on a notably quiet note as traders awaited a data-heavy week from the U.S. Meanwhile, equity markets faced broad declines as investors grew cautious amid rising recession concerns. However, currency traders remained in wait-and-see mode, holding off on major moves until key U.S. inflation data is released later this week.
European economic reports this week are largely mid-tier or lower in importance, shifting market focus to a series of significant U.S. releases. The Job Openings and Labor Turnover Survey (JOLTS) kicks off the data releases on Tuesday, with job openings expected to rise slightly to 7.75 million in January from the previous 7.6 million. The U.S. Consumer Price Index (CPI) report follows, with investors hoping inflation pressures continue to ease after an unexpected rise earlier in 2025 caught markets off guard.
Despite Federal Reserve (Fed) officials maintaining a cautious stance on policy adjustments, markets continue to bet that cooling inflation could support additional rate cuts. Expectations point to a slight decline in key inflation figures: headline CPI is forecast to slow to 0.3% month-over-month from 0.5%, while core CPI is expected to ease to 0.3% from 0.4%. Year-over-year, headline CPI is projected to dip to 2.9% from 3.0%, while core CPI is expected to soften to 3.2% from 3.3%.
Tariff Uncertainty Pressures Markets
Investor sentiment remains under pressure as ongoing tariff discussions stir uncertainty. The U.S. administration has revisited plans for significant tariffs on major trading partners in an effort to offset budget deficits linked to proposed tax cuts. However, these measures face pushback, particularly from domestic businesses and consumers who are bracing for increased costs due to retaliatory trade actions.
President Donald Trump dismissed concerns over a potential recession, referring to economic difficulties as a “transition” phase in a Fox News interview over the weekend. However, he later acknowledged the possibility of a challenging period ahead. In response, his administration has sought to shift blame for rising inflation and market volatility onto the previous Biden administration, rather than attributing it to recent trade policy uncertainties.
EUR/USD Outlook
EUR/USD remained subdued on Monday, hovering near the 1.0850 region as bullish momentum showed signs of exhaustion. Last week, the pair broke decisively above the 200-day Exponential Moving Average (EMA) around 1.0630, marking a significant upward move.
From its previous swing low at 1.0360, EUR/USD has gained 5.1% (528 pips), but technical indicators suggest a possible pullback. With momentum oscillators lingering in overbought territory, the pair could be setting up for a corrective move to the downside.
