EUR/USD experiences significant upward movement towards the end of the North American trading session on Friday, following speculation regarding a potential intervention in the foreign exchange markets aimed at strengthening the Japanese Yen. This development led to a decline in the US Dollar, which recorded losses exceeding 0.70%, as indicated by the US Dollar Index. This occurred, even with the economic data showing moderate positivity on Friday. Currently, the pair is trading at 1.1811, following a peak of 1.1826 reached earlier in the day, marking a four-month high.
EUR/USD surges more than 0.70% as speculation of intervention prompts significant selling of the US Dollar. DXY declines to September 2025 lows following reports of Fed-related rate assessments that ignite market speculation. The attention now turns to ECB speakers, Eurozone GDP, and the forthcoming FOMC meeting for guidance.
> The Euro experiences a significant surge as speculation surrounding foreign exchange intervention drives the Dollar to its lowest levels in several months: “Yen jumps most since August as risk of intervention ramps up,” emerged late in the session, fueled by speculation that Japanese authorities might be gearing up to intervene in the markets. The story notes that “traders reported that the Federal Reserve Bank of New York had conducted a so-called rate check with major banks to ask for indicative exchange rates — a move that was seen as an indication it may be preparing to assist with another intervention.” As a result, DXY, which assesses the value of the US dollar relative to six other currencies, has further declined to levels not observed since September 2025, decreasing from 98.33 to 97.53. The latest US economic data indicates an enhancement in American consumer sentiment, as reported by a poll conducted by the University of Michigan. In terms of business activity, S&P Global Flash Purchasing Managers Indices indicated a degree of strength in the economy; however, the Chief Economist at S&P noted that economic growth for Q1 2026 in the US may experience further deceleration. In Europe, the HCOB Flash PMIs for the bloc presented a mixed picture, with the Composite and Services PMI falling short of estimates, whereas the Manufacturing PMI indicates a modest expansion. The upcoming schedule in Europe includes Germany’s Business Climate and GfK Consumer indicators. Gross Domestic Product figures are set to be disclosed for the bloc, along with Germany, Spain, and France. Additionally, market participants will focus on remarks from European Central Bank officials such as Nagel, Lagarde, Elderson, and Schnabel. In the US, market participants will concentrate on Durable Goods Orders, the four-week average of ADP Employment Change, the policy decision from the Federal Open Market Committee, and the following press conference led by Fed Chair Jerome Powell.
Latest FX Rate Trends: The Euro strengthens while the Dollar declines
- The Consumer Sentiment of the University of Michigan on its final reading in December surpassed expectations of 54, registering at 56.4. Joanne Hsu indicated that households continue to face challenges regarding purchasing power, expressing concerns over high prices and a declining job market.
- The survey indicated a decline in inflation expectations. One-year expectations decreased to 4.0% from 4.2%, while five-year expectations declined to 3.3% from 3.4%.
- The S&P Global Composite PMI indicated a slight increase in December, moving up to 52.8 from the previous 52.7. Chris Williamson cautioned that the lackluster new business growth in both manufacturing and services heightens the risk of disappointing growth in the first quarter.
- Eurozone flash PMI data indicated a sluggish services sector in January, as the index fell to 51.9, underperforming both December’s figure and market forecasts. Recent data from Germany has outperformed expectations, as the Services PMI surpassed forecasts, indicating growth, while the Manufacturing PMI demonstrated progress, although it still falls short of the threshold separating expansion from contraction.