**US Economic Indicators Show Mixed Signals**
US economic indicators, like manufacturing activity from the Institute for Supply Management, improved in January. However, the government’s partial shutdown delayed the release of important job data, including the Job Openings and Labor Turnover Survey and the Nonfarm Payrolls report for January.
In Europe, German Retail Sales saw slight growth, but the HCOB Manufacturing PMI remained in contraction territory. Upcoming events from the European Central Bank include a Lending Survey, inflation data, Retail Sales updates, and a monetary policy meeting.
Technical analysis indicates that EUR/USD could test the 1.1700 support level after falling below 1.1800. A close above 1.1800 might lead to higher resistance levels being tested.
We observed a similar trend in 2025 when strong US economic data consistently benefited the dollar against the euro. The drop below the 1.1800 level clearly showed a difference in economic momentum. This trend seems to be returning as we enter the new year.
**US Jobs Report Surpasses Expectations**
This perspective is supported by last Friday’s US jobs report, which revealed an impressive addition of 353,000 jobs in January 2026, far exceeding expectations. Such strong data makes it hard for the Federal Reserve to consider lowering interest rates soon, keeping the advantage with US dollars.
In contrast, the economic situation in Europe remains weaker, strengthening the case against the euro. Recent data from late 2025 showed that Germany, the largest economy in the bloc, contracted by 0.3%. Although Eurozone inflation has decreased, the recent reading of 2.8% for January 2026 is still above the ECB’s target, complicating their position.
For derivative traders, this suggests strategies that could gain from a further decline in the EUR/USD. Purchasing put options near the 1.1700 level provides a way to speculate on this downward trend with a defined risk. The cost of these options will reflect the market’s expectations for future price changes.
We should also pay attention to the upcoming European Central Bank meeting, as any dovish remarks could speed up the euro’s decline. Given the current economic data, the most likely direction for EUR/USD is downwards. The technical setup from 2025, targeting the 50-day moving average around 1.1717, remains a significant target in the coming weeks.
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