The EUR/USD exchange rate is experiencing a rollercoaster ride, with mixed signals from business activity data. Despite moderate losses, the EUR/USD pair is trading near 1.1740, holding onto most of its gains from the previous day and poised for its best weekly performance since June. However, the Eurozone's flash PMI data hasn't provided much support to the Euro, leaving the pair near multi-week highs.
The real game-changer is US President Trump's unexpected move towards Greenland. In a surprising turn of events, Trump claimed to have secured Greenland through a deal with NATO, following his speech at the Davos World Economic Forum. He backed off military action against NATO allies and withdrew tariff threats to the Eurozone countries, which initially improved market sentiment. But here's where it gets controversial: the US Dollar is taking a hit due to the deteriorating relationship between the US and the EU, its primary trading partner.
On the macroeconomic front, US Q3 GDP figures exceeded expectations, weekly Initial Jobless Claims rose less than anticipated, and the PCE Price Index indicated higher inflationary pressures in November. These data points support the US Federal Reserve's view of steady interest rates. However, the market seems more focused on geopolitical tensions, practically ignoring the economic indicators.
The Euro's performance today is highlighted in the table below, showing its percentage change against major currencies. Notably, the Euro gained the most against the Swiss Franc.
The heat map provides a visual representation of these currency changes, with the base currency on the left and the quote currency on top. For instance, the box where the Euro (base) meets the US Dollar (quote) shows the percentage change between these two currencies.
The Daily Digest Market Movers section focuses on the impact of EU-US tensions on the US Dollar. The US Dollar Index (DXY) is near three-week lows as the Greenland issue erodes confidence in the US as a global leader and the status of the US Dollar as a reserve currency. While market sentiment improved after Trump's softened tone towards the European Union, transatlantic relations have taken a severe hit, and the US Dollar is bearing the brunt of it.
Eurozone flash PMIs revealed a 51.6 pace of expansion in the Services sector in January, unchanged from December, meeting market consensus. The manufacturing PMI improved to 49.4 from 48.8 in December, but still below the 50-level contraction threshold. German PMIs, released earlier, exceeded expectations, with the services sector improving to 53.3 from 52.7 and the manufacturing PMI rising to 48.7 from 47.0.
US macroeconomic data supported the US Dollar on Thursday. The US Q3 GDP was revised up to 4.4% annualized growth, and the PCE Price Index accelerated to 2.8% year-on-year in November, as expected. Initial Jobless Claims rose to 200K in the week of January 17, but remained well below market expectations.
In the US, the S&P Global preliminary Services PMI is projected to tick up to 52.8 in January from 52.5 in December.
Technically, EUR/USD is retreating from a key resistance area at 1.1765. Technical indicators on the 4-hour chart are turning bearish, with the RSI dropping to 60 and the MACD histogram contracting. Intraday lows are at the 1.1725 area, with no clear support ahead of Thursday's low at 1.1670. Above the 1.1765 level, the next target is the December 24 high at 1.1808.
The Manufacturing Purchasing Managers Index (PMI), released monthly by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator of business activity in the Eurozone manufacturing sector. Survey responses from senior executives in the private-sector manufacturing companies reflect monthly changes and anticipate trends in official data series like GDP, industrial production, employment, and inflation. A PMI reading above 50 indicates expansion in the manufacturing economy, a bullish sign for the Euro, while a reading below 50 signals a decline in activity among goods producers, seen as bearish for the Euro.
The latest release of the HCOB Manufacturing PMI on January 23, 2026, showed an actual reading of 49.4, slightly above the consensus estimate of 49 and an improvement from the previous reading of 48.8.
And this is the part most people miss: the impact of geopolitical tensions on currency markets. While economic indicators provide a snapshot of a country's health, it's the political landscape that often drives currency movements. So, as we navigate these turbulent times, keep an eye on both economic and geopolitical developments for a more holistic view of the market.
