EUR/USD has retraded previous losses and is trading at 1.1670, at the time of writing, after bouncing at 1.1655 lows earlier on the day. Some bullish comments by the New York Federal Reserve’s (Fed) President John Williams eased market concerns about the central bank’s independence and provided some footing to an ailing US Dollar (USD) on Monday’s US session and Tuesday’s Asian trading hours.
Previously, investors had sold the US Dollar across the board, as a report by the New York Times affirming that the US Government was initiating a criminal investigation against the Fed Chairman, Jerome Powell, boosted concerns about the independence of the US central bank.
The US government’s action is the last episode of a long-lasting conflict between US President Donald Trump and Jerome Powell, which raises questions about the central bank’s ability to set its monetary policy based solely on its dual mandate of maximum employment and stable prices.
Macroeconomic data is expected to return to the focus on Tuesday, as the US Bureau of Labour Statistics (BLS) releases the December US Consumer Price Index (CPI) report. Price pressures are expected to have remained well above the Fed’s 2% target, with core inflation ticking up. Barring surprises, these figures are likely to endorse the positions of the Fed’s hawkish party.
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 | -0.04% | -0.13% | 0.44% | -0.02% | 0.11% | -0.05% | -0.02% | |
| EUR | 0.04% | -0.08% | 0.50% | 0.03% | 0.16% | -0.01% | 0.02% | |
| GBP | 0.13% | 0.08% | 0.54% | 0.11% | 0.25% | 0.07% | 0.10% | |
| JPY | -0.44% | -0.50% | -0.54% | -0.44% | -0.32% | -0.49% | -0.44% | |
| CAD | 0.02% | -0.03% | -0.11% | 0.44% | 0.13% | -0.04% | -0.01% | |
| AUD | -0.11% | -0.16% | -0.25% | 0.32% | -0.13% | -0.17% | -0.13% | |
| NZD | 0.05% | 0.01% | -0.07% | 0.49% | 0.04% | 0.17% | 0.03% | |
| CHF | 0.02% | -0.02% | -0.10% | 0.44% | 0.00% | 0.13% | -0.03% |
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: Concerns about Fed’s independence keep weighing on the US Dollar
- The Euro (EUR) has lost ground but remains above Friday’s lows, with the US Dollar still vulnerable amid the US Government’s attacks on the Fed’s independence.
- Fitc Ratings warned on Monday that the Fed’s independence is a key factor supporting the US AA++ sovereign rating and that they will continue monitoring the governance, including “checks and balances,” in their assessment of the US ratings.
- S&P Global Ratings also said that Fed credibility is a key pillar of US sovereign creditworthiness. In a previous report, the rating agency also warned that the US rating would come under pressure if the strength of American institutions is undermined.
- New York Fed President Johnsn Williams provided some support for the US Dollar on Monday, stating that recent Fed decisions have moved “the modestly restrictive stance closer to neutral” and that he expects a healthy economy in 2026. Williams also said that he sees monetary policy well-positioned to support the stabilisation of the labour market, and that he sees no reason to cut interest rates anytime soon.
- The market is pricing a 95% chance that the Fed will keep interest rates unchanged at its January meeting, and hopes of a rate cut in March have dropped to 24% from 41% one week ago, according to data released by the CME Group’s Fedwatch tool.
- The release of the US CPI report, due later on Tuesday, might shed some more light on the Fed’s monetary policy path. Headline inflation is seen growing steadily at a 2.7% yearly pace, while core inflation, the most relevant from the monetary policy perspective, is seen ticking up to 2.7% YoY, from 2.6% in November.
Technical Analysis: EUR/USD holds within the descending channel
The EUR/USD pair keeps the broader bearish trend from late December highs intact. The pair failed to breach resistance at 1.1700 and returned to the mid-range of the 1.1600s.
Technical indicators are mixed on the 4-hour chart. The Moving Average Convergence Divergence (MACD) line remains above the signal line, but the histogram bars are contracting, which highlights a waning upside momentum. The Relative Strength Index (RSI) has pulled back below 50, showing a neutral-to-bearish stance.
The intraday low, at 1.1653, is likely to provide some support, ahead of Friday’s low of 1.1618 and the channel’s bottom, now at the 1.1600 area. To the upside, trendline resistance is now at 1.1694, a few pips below Monday’s high. A confirmation above this level clears the path towards the January 6 high, at the 1.1740 area.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
