The US S&P Global Purchasing Managers’ Index (PMI) for January will be released at 14:45 GMT. Early estimates show that the US Composite PMI is expected to expand faster, with improvements in both manufacturing and services. In December, the Composite PMI was at 52.7. The new Flash Services PMI is projected to rise to 52.8 from 52.5, while the Manufacturing PMI is expected to increase to 52.1 from 51.8. A strong performance in the US private sector would support the US Dollar (USD), while weak results could hurt it. The EUR/USD is currently trading around 1.1738, forming a Symmetrical Triangle on the daily chart, which suggests lower volatility. The price is nearing the upper boundary of the pattern, located around 1.1770. The 20-day Exponential Moving Average (EMA) is rising at 1.1689, providing support for upward movement. The Relative Strength Index (RSI) is at 57, indicating momentum above the midline. If the price breaks above the January high of 1.1769, it could rise to 1.1800 and then 1.1900. If the price drops, the 20-day EMA will act as a key support level.

Focus on US PMI Data

Today’s main event is the release of the US S&P Global PMI data, which measures economic health. Analysts expect a strong reading that suggests the US private sector is growing, which would be good for the US Dollar. If the numbers come in better than expected, bullish sentiment about the dollar is likely to increase. Recently, EUR/USD has been trading in a narrow range, suggesting a significant price movement could occur soon. Today’s PMI data may trigger a breakout from this pattern. Traders should brace for increased volatility around the 14:45 GMT announcement. This release is crucial, especially after the December 2025 Consumer Price Index (CPI) report showed core inflation steady at 3.8%. This ongoing inflation puts pressure on the Federal Reserve to maintain its current policies. A strong PMI today wouldsupport the idea of a strong economy that can manage higher interest rates. For traders anticipating better-than-expected PMI data, buying EUR/USD put options with a strike price below 1.1700 could be a smart move to profit from a stronger dollar. On the other hand, if the data disappoints, buying call options with a strike price near 1.1800 could help capture a significant upward movement in the pair. The key is to prepare for potential volatility before the numbers are released.

Looking Back at the 2024-2025 Rate-Hiking Cycle

Reflecting on the rate-hiking cycle from 2024-2025, similar data releases often led to rapid and significant price changes in major currency pairs. Given the current low volatility in EUR/USD, traders might consider an options strategy like a long straddle to capitalize on a major price move, no matter which direction it goes. This strategy entails buying both a call and a put option at the same strike price and expiration date. Looking beyond today’s report, this data will play a big role in shaping sentiment leading up to next week’s Federal Reserve meeting. A strong economic signal would give the Fed more reason to appear hawkish, which could weigh on EUR/USD in the upcoming weeks. This underlying economic strength serves as a buffer against geopolitical risks and trade tariff concerns. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now