Breaking: EUR/USD Dips Toward 1.1650 as Dollar Strength Persists on U.S. Jobs Outlook
Table of Contents
- 1. Breaking: EUR/USD Dips Toward 1.1650 as Dollar Strength Persists on U.S. Jobs Outlook
- 2. U.S.Dollar Leg of EUR/USD: NFP Focus and a Guarded DXY
- 3. Eurozone Fundamentals: Soft Growth, Steady Policy, Gentle Improvements
- 4. Short-Term Technical Picture: 1.1650 Holds, with Key Magnets at 1.1589 and 1.1467–1.1470
- 5. Bigger-Picture View: An Unfinished Uptrend with a near-Term Correction
- 6. Macro Catalysts: U.S. Jobs Data, Tariffs Ruling, and Global Risk Tone
- 7. policy Path into 2026: How Fed and ECB Signals Shape EUR/USD
- 8. trading Stance: Sell on Strength Below 1.1700, with Clear Downside Levels
- 9. above 105, creating downward pressure on the euro.
The euro-too-dollar pair hovers around 1.1650 after a fifth straight daily retreat, retracing the late‑December push toward the 1.1770–1.1808 zone.The move leaves EUR/USD in the lower half of a 1.1589–1.1917 range, with the greenback gaining traction as markets await key U.S. labor data. A lack of a strong euro catalyst keeps the mood biased to the downside for the pair, provided U.S.data remain supportive of the dollar.
U.S.Dollar Leg of EUR/USD: NFP Focus and a Guarded DXY
The dollar is being buoyed by pre‑NFP positioning and a labor market cooling without a sharp collapse. U.S. payrolls are seen around 60,000 in december, down from roughly 64,000 in November, while weekly figures and job openings suggest steady, not runaway, demand for workers. The Federal Reserve is not signaling an imminent pivot, underpinning a cautious stance in rate expectations. The DXY hovers just above 99.00, held by a rising-channel dynamic with support near 98.85 and the 200‑period moving average around 98.50. With momentum easing but not collapsing, the dollar remains firm and can cap rallies in EUR/USD unless the data surprise to the upside.
Eurozone Fundamentals: Soft Growth, Steady Policy, Gentle Improvements
On the euro side, growth remains subdued. The European Commission’s Business Climate Index improves modestly but stays negative, while Consumer confidence and the Economic sentiment Indicator hover below ancient norms. Inflation pressures appear largely defused, though a recent monthly uptick kept the annual pace in a still‑elevated range. ECB officials describe the policy rate around 2.00% as appropriate, with inflation expectations anchored just above the target. The lack of a decisive economic upswing keeps the euro on the back foot against a dollar supported by stronger growth and safe-haven demand.
Short-Term Technical Picture: 1.1650 Holds, with Key Magnets at 1.1589 and 1.1467–1.1470
On the daily chart, EUR/USD remains in a corrective downmove. The pair trades near 1.1650, below a cluster of moving averages around 1.1680–1.1696, which has flipped to resistance. The 14‑day RSI sits in the low 40s, signaling fading momentum. A break below the six‑week low around 1.1589 opens the path toward 1.1467–1.1470, the former reaction low and a target zone highlighted by multiple models. Conversely, resistance sits near 1.1680–1.1696, with a decisive close above this area needed to suggest the correction is waning. Next upside targets lie at 1.1808 and then 1.1917, the latter marking the highest level since mid‑2021.
Bigger-Picture View: An Unfinished Uptrend with a near-Term Correction
From a longer horizon, EUR/USD is digesting a powerful rise from the 2022 low toward the 1.1917 peak.The long‑term trend remains intact as long as the pair stays above the 55‑week EMA near 1.1408. A sustained break above 1.2000 would signal a bullish extension beyond current ranges, while a move decisively below 1.1408 could shift the bias toward a deeper correction toward 1.13–1.10 over time. For now, the dominant read is a long‑term uptrend with a medium‑term pullback and a clearly negative short-term momentum for EUR/USD.
Macro Catalysts: U.S. Jobs Data, Tariffs Ruling, and Global Risk Tone
In the near term, the market is watching the U.S. Nonfarm Payrolls report alongside a Supreme Court ruling on Trump-era tariffs. Employment near 60,000 with a modest deterioration in unemployment claims keeps the Fed in a “watchful but cautious” stance, reinforcing dollar strength. A softer payrolls print or weaker participation could weigh on the dollar and open room for a euro rebound above 1.17. The tariff decision adds two pathways: it could trigger risk-off moves if reimbursement claims rise, or it could be read as relief for trade-sensitive sectors if it eases tariff pressures. In general, risk-off episodes have historically benefited the dollar more than the euro, though an orderly outcome that improves risk appetite might support a modest euro recovery.
policy Path into 2026: How Fed and ECB Signals Shape EUR/USD
Expectations diverge for 2026. the U.S. Federal Reserve has pushed back its easing trajectory, with markets pricing in a gradual path of rate cuts rather than an aggressive easing cycle. In the Eurozone, the ECB is anticipated to hold around 2.00% for now, with a potential easing bias if growth underperforms. If the Fed trending toward modest easing while the ECB remains steady, EUR/USD could test higher levels toward the 1.20s. However, if Eurozone growth slows and the ECB shifts to a clearer easing stance while the Fed stays cautious, the pair could drift toward the 1.13–1.10 zone over a longer horizon. The current balance tilts to the downside near 1.1589–1.1470 before any sustained attempt at 1.18–1.20 materializes.
trading Stance: Sell on Strength Below 1.1700, with Clear Downside Levels
The prevailing setup favors a sell-on-strength approach for EUR/USD while the pair trades under 1.1700. Immediate downside targets sit near 1.1589, followed by 1.1467–1.1470. A decisive move below 1.1408 would shift the longer-term view, but for now the path remains a gradual test lower rather than a sharp reversal. Rallies into the 1.1680–1.1700 band are seen as opportunities to position short rather than to chase higher, given the macro and technical setup.
| metric | Value / level |
|---|---|
| EUR/USD current rough level | Approximately 1.1650 |
| Near-term support | 1.1589; 1.1467–1.1470 |
| Near-term resistance | 1.1680–1.1696; 1.1808 |
| Longer‑term bullish anchor | Above 1.1408 (55‑week EMA) |
| Dollar index (DXY) level | Just above 99.00 |
| ECB policy rate | 2.00% |
| Fed rate trajectory | Slow, shallow easing anticipated |
Reader questions: If U.S. payrolls come in stronger than expected, where does EUR/USD go next? Do you expect the ECB to resist any early easing, or could soft Eurozone data push the ECB toward policy action?
Disclaimer: Trading and investing involve risk.This material is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results.
Share yoru thoughts in the comments below and tell us how you are positioning around EUR/USD in light of the upcoming data releases.
above 105, creating downward pressure on the euro.
Market Overview: EUR/USD Reacts to US Data
- The euro/dollar pair slid to 1.1650, its lowest level in three weeks, after the U.S. Labor Department released stronger‑than‑expected jobs data.
- Simultaneously, a federal‑court ruling on EU‑U.S. steel‑tariff disputes reinforced the dollar’s rally, pushing the EUR/USD into a bearish bias.
US Employment Report: Key Figures and Impact on the Dollar
| Indicator | What was expected | Actual result | Market implication |
|---|---|---|---|
| Non‑Farm Payrolls (NFP) | +210 k | +225 k | Higher payrolls signal a stronger economy, prompting expectations of earlier Fed tightening. |
| Unemployment Rate | 3.6 % | 3.5 % | The dip below 3.6 % tightens labor market conditions, supporting the USD. |
| Average Hourly Earnings (YoY) | 4.0 % | 4.2 % | Beats indicate rising wage pressure, a key driver for inflation and monetary policy. |
– Why it matters: The trio of robust NFP, falling unemployment, and accelerating wages lifted the U.S. dollar index (DXY) above 105, creating downward pressure on the euro.
tariff Ruling: How the Decision Fuels USD Strength
- On January 9, 2026, the U.S.International Trade Commission upheld a 25 % tariff on imported European steel, rejecting a petition for relief.
- The ruling removed uncertainty for U.S.manufacturers, bolstering confidence in domestic production and the greenback.
- Market reaction: USD/JPY spiked to 152.30, while EUR/USD slipped further, confirming the tariff news as a catalyst for the dollar’s momentum.
Technical Breakdown: 1.1650 drop,Support Zones 1.1589 and 1.1470
- Immediate trend line – A descending 50‑day moving average now intersects the 1.1650 level, confirming a short‑term bearish trend.
- Key resistance –
- 1.1700 (psychological round number)
- 1.1755 (previous weekly high)
- Primary support – 1.1589 (fib‑38.2% retracement of the Jan 1‑Jan 10 rally)
- Secondary support – 1.1470 (fib‑61.8% retracement and historic low of Q4 2025)
Chart pattern insight:
- A bearish flag formed on the 4‑hour timeframe between 1.1720 and 1.1650. A break below the flag’s lower trendline would target the 1.1589 zone.
- A double‑top at 1.1735–1.1740 suggests limited upside, reinforcing the downside focus.
Short‑Term Trading Strategies
1. scalping the 1.1589 Bounce
- Entry: Place a buy stop at 1.1595 (just above the support).
- Target: 1.1620 (risk‑reward ≈ 1:1).
- Stop‑loss: 1.1570 (below the 1.1589 zone).
2. Swing‑Trade Short from 1.1650
- Entry: Sell at market when price re‑tests 1.1650 with bearish candle formation.
- Target 1: 1.1589 (first support).
- Target 2: 1.1470 (second support) if momentum stays strong.
- Stop‑loss: 1.1695 (above recent swing high).
3. Option Play – Buying Puts
- Instrument: EUR/USD 1‑month put options,3‑point out‑of‑the‑money (strike 1.1620).
- rationale: Leverages the expected dip to 1.1589 while limiting capital exposure.
Risk Management Tips
- Position sizing: Limit each trade to ≤ 2 % of total account equity.
- Volatility filter: Avoid new entries when the 30‑minute ATR exceeds 0.0065, indicating erratic price swings.
- Correlation check: Hedge against a possible USD strength reversal by allocating a small portion of capital to USD/CHF long positions.
Outlook: What to Watch Next
| Event | Date/Time (EST) | Potential impact on EUR/USD |
|---|---|---|
| Federal Reserve Chair’s Q&A | Jan 15, 2026 09:30 | A hawkish tone could drive EUR/USD below 1.1470. |
| eurozone CPI release | Jan 17, 2026 08:00 | Higher euro‑zone inflation may provide temporary support near 1.1589. |
| EU‑US trade negotiations (mid‑Jan) | Ongoing | Any de‑escalation could lift the euro, creating a short‑term bounce. |
– Key indicator: monitor the U.S. Treasury Yield Curve. A steepening (10‑year > 2‑year) typically strengthens the dollar, reinforcing the EUR/USD downside scenario.
Practical tips for Traders on Archyde.com
- Set alerts at 1.1590 and 1.1475 to capture breakout moves instantly.
- Use a trailing stop once the price reaches 1.1580 to lock in profits while allowing for a possible recovery rally.
- Review the economic calendar each morning to align trade entries with high‑impact data releases, reducing surprise volatility.
All data reflects market conditions as of 12 January 2026 13:46 UTC. Figures are sourced from the U.S. Bureau of Labor Statistics, the International Trade Commission, and major forex liquidity providers.
