EUR/USD Retreats From Highs as PMIs and Politics Drive Risk

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: January 23, 2026

Key Moments

EUR/USD trades near 1.1740 on Friday, easing from weekly highs but still set for its strongest week since June.
US Q3 GDP was revised up to 4.4% annualized, while PCE inflation for November reached 2.8% year-on-year. However, markets focused more on geopolitical headlines.
Eurozone and German PMIs improved in January, but manufacturing remains below 50, indicating ongoing contraction.

Euro Retreats but Holds Weekly Gains

EUR/USD is posting modest losses on Friday, hovering around 1.1740. The pair is giving back part of the prior session’s advance. Still, it holds most of those gains and remains on track for its best weekly showing since June.

So far, the euro has been underpinned more by USD weakness than by domestic data. Traders remain focused on political developments tied to US President Trump’s stance on Greenland. These developments continue to weigh on the dollar.

Political Developments Overshadow US Data

Trump said on social media that he secured “total and permanent access” to Greenland in an agreement with NATO. This came after he stepped back from threats to use military force against NATO allies. He also withdrew earlier threats to impose tariffs on Eurozone countries.

On the data side, several US macro releases on Thursday pointed to a stronger USD backdrop. US Q3 GDP was revised higher to 4.4% annualized, up from 4.3%. Weekly initial jobless claims rose to 200K, still below the 212K expected.

Meanwhile, the PCE Price Index rose 2.8% year-on-year in November, matching expectations. The core PCE also accelerated to 2.8%. These figures support the Fed’s stance on steady rates. However, traders largely ignored them because geopolitical and transatlantic tensions dominated sentiment.

Euro Performance Versus Major Currencies

The euro’s relative strength has shown up in cross-asset moves. According to the daily snapshot, the EUR posted its strongest gain against the Swiss franc among the major currencies tracked.

Euro Price Snapshot
Base currency	EUR
Strongest performance against	CHF
Compared currencies	USD, EUR, GBP, JPY, CAD, AUD, NZD, CHF

Below is a heat map that shows percentage changes between major currencies. The base currency comes from the left column, and the quote currency comes from the top row.

Daily Digest: Market Drivers and EU-US Tensions

The US Dollar Index (DXY) is near three-week lows, as worsening US-EU relations reduce the dollar’s reserve appeal.
Risk sentiment improved after Trump adopted a softer tone toward the EU, sparking a relief rally. Still, the damage to ties remains significant, so the dollar stays under pressure.
Eurozone flash PMIs showed services at 51.6 in January, unchanged from December and matching forecasts. Manufacturing rose to 49.4, above expectations but still below 50.
German PMI releases surprised to the upside. Services rose to 53.3, while manufacturing improved to 48.7, though it remained in contraction.
In the US, Q3 GDP was revised to 4.4% annualized from 4.3%, above Q2’s 3.8% growth.
The US PCE Price Index accelerated to 2.8% year-on-year in November, matching expectations. Core PCE also hit 2.8%.
Initial jobless claims rose to 200K, below the 212K expected.
Looking ahead, the S&P Global preliminary Services PMI is forecast to rise to 52.8 in January from 52.5.

Technical Picture: Resistance Caps EUR/USD Upside

From a technical standpoint, EUR/USD is pulling back after testing resistance near 1.1765. On the 4-hour chart, momentum indicators show weakening bullish strength. The RSI has slipped to 60, moving toward the neutral midline, while the MACD histogram is narrowing.

On the downside, intraday support sits near 1.1725. Below that, there is limited technical backing until Thursday’s low at 1.1670. On the upside, a break above 1.1765 would expose the next resistance at the Dec. 24 peak of 1.1808.

(The technical analysis of this story was written with the help of an AI tool.)

Eurozone Manufacturing PMI: Latest Reading

The HCOB Manufacturing PMI, compiled by S&P Global and Hamburg Commercial Bank, is a leading gauge of manufacturing conditions in the Eurozone. The survey asks senior executives at manufacturing firms to compare activity in the current month with the prior month. Readings can foreshadow moves in GDP, output, employment, and inflation.

The index ranges from 0 to 100, with 50 marking no change. Values above 50 signal expansion, which is generally supportive for the euro. Levels below 50 indicate contraction, which can weigh on the currency.