Dollar Pulls Back After Jobs Data, CPI in Focus

Key Moments

US Dollar: Strong Data Meets Market Skepticism

The US Dollar briefly advanced after a robust US Nonfarm Payrolls (NFP) report, as markets scaled back Federal Reserve rate cut expectations to a degree. However, the currency subsequently surrendered all of those gains. The move suggests that participants either remain convinced that labor market conditions will weaken further, or prefer to wait for confirmation from the upcoming US CPI release.

So far this year, the flow of economic data has been indicating better overall conditions that, on its face, do not support additional rate cuts. The next major test for this view is the US CPI report scheduled for tomorrow.

If the CPI figures come in stronger than expected, the author sees little scope for markets to ignore the signal in the same way they did with the NFP reaction. In that scenario, a more pronounced hawkish repricing would be likely, potentially driving a more durable rally in the US Dollar. Conversely, softer CPI data is not seen as a major driver of fresh repricing, but it could maintain downside pressure on the greenback.

Euro and ECB: Policy Steady, Focus on Inflation

On the euro side, the landscape is described as essentially unchanged. At its most recent meeting, the European Central Bank (ECB) kept interest rates on hold, in line with broad expectations, and reiterated its data-dependent, meeting-by-meeting approach.

ECB officials have also moderated their public tone on the euro after the currency weakened below the 1.20 level against the dollar. Even ECB’s de Guindos, previously seen as setting a line at 1.20, downplayed the earlier strength in January as “not dramatic”.

Inflation remains the central focus for policymakers, with the ECB repeatedly stressing that it will not react to minor or short-lived deviations from its 2% target. Should inflation data begin to soften, traders may start to assign some probability to a rate cut scenario at some point in the second half of 2026.

EURUSD Technical Outlook – Daily Chart

On the daily timeframe, EURUSD is trading in a consolidation phase around the 1.19 level as the market waits for the US CPI figures. A move back toward the 1.1768 low could attract buyers seeking to position for an advance toward the 1.21 region, with risk parameters defined just below that low.

Sellers would likely focus on a downside break below 1.1768, aiming to extend the decline toward the 1.16 area if bearish momentum accelerates.

EURUSD Technical Outlook – 4-Hour Chart

On the 4-hour chart, EURUSD is locked in rangebound trading between support at 1.1830 and resistance at 1.1910. Market participants are expected to continue trading this range as long as price remains contained within these boundaries.

A breakout above 1.1910 or below 1.1830 is likely to require a catalyst, with the upcoming US CPI report tomorrow seen as the most probable trigger.

EURUSD Technical Outlook – 1-Hour Chart

On the 1-hour timeframe, the picture is largely an extension of the broader consolidation. The expectation is that this sideways price action will persist into the US CPI release, unless there is a substantial surprise in today’s US Jobless Claims data.

The chart also highlights a red line marking the average daily range for the current session, which helps frame intraday expectations while the market remains in wait-and-see mode.

Key Data Ahead

The immediate catalyst on the calendar is the release of US Jobless Claims today. Market attention then shifts to tomorrow, which features Eurozone Q4 GDP alongside the highly anticipated US CPI report, both of which could set the tone for EURUSD and broader FX price action.