EUR/USD pulls back from peaks as the US Nonfarm Payrolls report approaches.

As of Wednesday, the euro (EUR) is trading around 1.1900, having bounced back from earlier lows against the US dollar (USD) while encountering resistance at February peaks near 1.1925. Still, it sits about 1.1% higher than last week’s lows, amid fresh worries about the economic outlook following some disappointing US data. Everyone is now looking forward to the release of the postponed January non-farm payrolls (NFP) report.

Notably, US retail sales didn’t budge in December, hinting that consumer spending—which typically accounts for nearly 70% of GDP—might weaken its role in US economic growth for the last quarter of 2025.

Moreover, the deceleration in labor costs during the fourth quarter points to a more stable labor market, which may give the Federal Reserve more reasons to consider easing monetary policy.

With a relatively quiet economic calendar in the European session on Wednesday, attention will primarily be on the US non-farm payrolls report set to come out later. Additionally, Kansas City Fed President Jeffrey Schmidt, Vice Chair for Oversight Michelle Bowman, and Cleveland Fed President Beth Hammack will make appearances. European Central Bank (ECB) Commissioner Isabel Schnabel is also expected to address the media during US trading hours.

Daily Digest Market Movement: USD remains defensive due to soft data

• Tuesday’s US consumption figures further pressured an already weak US dollar. Retail sales were stagnant in December, following a 0.6% increase in November, and starkly opposite to anticipated growth of 0.4%. Core retail sales dipped by 0.1%, and November’s growth was revised down from 0.4% to 0.2%.
• The Bureau of Labor Statistics (BLS) also reported that the US employment cost index eased to 0.7% in the fourth quarter, down from 0.8% in the previous quarter, marking the slowest annual growth since 2021.
• This recent data aligns with a dovish view from the Federal Reserve, leading investors to increase expectations for monetary easing in 2026. Compared to the potential quarter-point reduction expected by the Fed, futures markets are suggesting nearly a 75% probability of a rate cut in June, along with two to three more by December, as per the CME FedWatch tool.
• The upcoming US NFP data, which is expected later today, indicates a forecasted increase of 70,000 jobs in January, up from December’s tally of 50,000. The unemployment rate is projected to hold steady at 4.4%, with annual wage growth likely to decrease from 3.8% in December to 3.6%.
• White House economic adviser Kevin Hassett stated on Monday that President Trump’s immigration policies, combined with rapid productivity gains, may contribute to slowing job growth in the near future, thereby damping optimistic expectations for the NFP report.

Technical analysis: EUR/USD recovery stalls below 1.1925

Looking at the 4-hour chart, the EUR/USD has been trading sideways between the 38.2% and 50% Fibonacci retracement levels of the decline from late January. Technical indicators suggest moderate momentum, although the short-term outlook remains positive.

While the Moving Average Convergence Divergence (MACD) is still in the positive zone, it seems on the verge of crossing below the signal line, which could signal a bearish trend. At the same time, the Relative Strength Index (RSI) is above 60, indicating mild bullish strength.

The 50% Fibonacci level and Monday’s high near 1.1925 are critical as they pave the way toward the January 30 high, approximately 1.1975. On the lower end, the 38.2% Fibonacci retracement aligns with the session low near 1.1885; if this level is broken, downward pressure could build towards Monday’s lows around 1.1815.

(The technical analysis in this story was assisted by AI tools.)