The euro (EUR) remained stable against the US dollar (USD) on Wednesday, with traders showing a subdued reaction to the mixed economic data emerging from the United States. As of now, EUR/USD is hovering around 1.1691, maintaining its position after a slight dip of about 0.30% the previous day.
The Institute for Supply Management (ISM) reported that the U.S. services PMI increased to 54.4 in December, surpassing the anticipated figure of 52.3 and up from 52.6 in November. This indicates a strengthening momentum in the U.S. services sector, with business activity finishing 2025 in relatively robust shape and sustaining expansion for the tenth month in a row.
Notably, the December employment index bounced back from 48.9 to 52, returning to positive territory and suggesting that employment conditions stabilized towards year-end. New orders also showed strong growth, jumping from 52.9 to 57.9. Conversely, the price paid index saw a decline from 65.4 to 64.3.
While the ISM survey indicated a resilience in activity, indicators from the labor market painted a softer picture. According to ADP data, private sector jobs increased by 41,000 in December, which was below the expected 47,000. Additionally, figures were revised down to 29,000, reversing the previous month’s drop of 32,000.
In another report, the JOLTS survey highlighted that job openings in November fell from 7.449 million to 7.146 million, missing the market’s expectation of 7.6 million.
The US Dollar Index (DXY), which evaluates the dollar’s strength against a basket of six major currencies, is currently trading around 98.60.
From a monetary policy standpoint, signals are mixed. The Federal Reserve appears to be taking a cautious approach as it looks ahead to its meeting on January 27-28. While the recovery in services activity suggests there’s no need for hasty aggressive easing, the signs of a softer labor market support the case for gradual rate cuts. Market sentiment reflects this balanced outlook, with traders pricing in roughly two rate cuts in 2026.
