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    The Euro weakened against the Dollar, trading at 1.1642 due to strong US labor statistics.

    by VT Markets
    /
    Jan 14, 2026

    US Economic Data Overview

    The EUR/USD pair has had a tough time against the resistance at the 20-day SMA, dropping below 1.1650. Sellers are still strong, with a risk of dropping further to the 200-day SMA at 1.1575. If the pair crosses above the 50 and 100-day SMAs, it may recover and aim for the 20-day SMA at 1.1716. The Euro, mainly influenced by the ECB, is affected by various economic factors, like inflation and trade balance, which shape its value. The recent decline in EUR/USD below 1.1650 indicates that the US dollar is gaining strength. This is mainly due to a surprisingly strong American labor market, shown by the December 2025 Nonfarm Payrolls report that added 353,000 jobs, far exceeding expectations. Despite low US inflation, the strength in the labor market makes it less likely for the Federal Reserve to cut rates soon. In 2025, the Fed lowered rates because of a weak job market, even while inflation remained high. Now, the opposite is true: we have a strong labor market, and core inflation is still above target, ending December 2025 at 3.9% year-over-year. This situation makes it hard for the Fed to justify the steep rate cuts that were expected.

    Rate Expectations and Market Impact

    Due to this, we are witnessing a significant change in rate expectations for 2026. The chance of a rate cut in March has dropped sharply, and many are now predicting the first 25-basis point cut for the second quarter, possibly as late as June. This change is boosting the dollar’s value against the euro. Meanwhile, the Eurozone is showing signs of economic divergence. The most recent Harmonized Index of Consumer Prices for the area was 2.8%, much lower than US inflation, giving the European Central Bank more flexibility to cut rates sooner. Additionally, important data, like the 0.7% month-over-month decline in German industrial production for December 2025, indicates a weaker economic situation. Create your live VT Markets account and start trading now.

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