EUR/USD stays steady as mixed US economic data offers no clear direction. The US Services PMI rose to 54.4 in December, exceeding expectations and suggesting strong business activity at the year’s end. While the service sector remains robust, US labor market indicators hint at possible weakness. Private payrolls added 41K jobs in December, falling short of the anticipated 47K. Additionally, job openings dropped to 7.146 million, lower than expected.

The US Dollar Index

The US Dollar Index is around 98.60, reflecting its value against six major currencies. Mixed economic signals prompt the Federal Reserve to proceed cautiously, particularly ahead of its January meeting. The rise in service activity could delay aggressive easing, but signs of a weakening labor market support gradual rate cuts. Currently, there are expectations for about two rate reductions in 2026. EUR/USD is stabilizing near 1.1690 as the market processes the conflicting signals from the US economy. The strong services data counters immediate Federal Reserve rate cuts, while weak ADP and JOLTS jobs data from last year indicate labor market softness. This creates uncertainty for the Fed’s meeting at the end of January. The key event coming up is the official US Non-Farm Payrolls (NFP) report for December 2025, set to be released on Friday, January 9th. The consensus estimate is for a gain of only 80,000 jobs, with recent jobless claims rising to an average of 235,000 per week in December, up from 210,000 in the third quarter of 2025. A payroll number below 100,000 may confirm a weakening labor market, likely pushing EUR/USD higher.

Market Volatility and Options Strategies

This uncertainty has caused one-week implied volatility on EUR/USD options to rise to 8.2%, up from 6.5% in late December 2025. This suggests that options markets expect larger than usual price swings after Friday’s NFP release. The current situation is suited for strategies that benefit from significant moves in either direction. A long straddle, which involves purchasing both a call and a put option with the same strike price and expiry date, could effectively capitalize on the NFP event. This strategy will profit if EUR/USD shifts sharply away from the current 1.1690 level, whether the jobs data is strong or weak. The main risk is the cost of the options if the market stays flat after the announcement. Looking ahead, the next important data point will be the December 2025 Consumer Price Index (CPI) report, due around January 15th. In November 2025, core CPI inflation slowed to a 3.8% annual rate. Another soft reading would reinforce expectations for the two Fed rate cuts anticipated this year, serving as a crucial piece of information for the Fed’s decision on January 28th. Create your live VT Markets account and start trading now.

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