EUR/USD stays close to its lowest point in seven months as investors evaluate US economic reports, with the Dollar maintaining its strength

Euro Recovers Some Losses as US Data Shapes Market Sentiment

The Euro (EUR) regained some ground against the US Dollar (USD) on Friday, as investors assessed the latest batch of US economic reports. At the time of reporting, EUR/USD hovered near 1.1472, rebounding from an earlier dip to around 1.1433—its lowest point since August 2025.

US Inflation and Economic Indicators

The US Personal Consumption Expenditures (PCE) Price Index climbed 0.3% month-over-month in January, matching both forecasts and December’s result. Year-over-year, the PCE Price Index advanced 2.8%, just under the anticipated 2.9% and the previous reading.

The core PCE Price Index, which the Federal Reserve (Fed) closely monitors as its preferred inflation measure, also increased by 0.4% month-over-month in January, aligning with expectations and mirroring December’s pace.

Annually, core PCE rose 3.0%, slightly below the projected 3.1% and unchanged from the prior month.

These figures indicate that inflationary pressures remain persistent. Rising Oil prices have reignited inflation worries, strengthening the argument that the Fed may maintain higher interest rates for an extended period.

Signs of Slowing US Growth

Other US data pointed to a cooling economy. The second estimate for fourth-quarter Gross Domestic Product (GDP) showed annualized growth of 0.7%, falling short of the 1.4% forecast and revised down from the initial estimate.

Durable Goods Orders in the US dropped by 1.4% in January, following a revised 0.9% decrease in December (previously reported as -1.4%). Personal Income increased by 0.4% month-over-month, just below the expected 0.5% but above December’s 0.3% rise. Personal Spending also grew by 0.4%, surpassing the 0.3% forecast and equaling the prior month’s gain.

Market Reaction and Global Factors

Following these releases, the US Dollar softened slightly, though its decline was limited. Ongoing geopolitical tensions in the Middle East continued to bolster the Greenback. The US Dollar Index (DXY), which measures the Dollar against six major currencies, traded near 100—its strongest level since November 2025.

At the same time, persistent conflict has kept Oil prices high, intensifying inflation fears and prompting traders to scale back expectations for Fed rate cuts. This dynamic has lent further support to the US Dollar. Meanwhile, although markets have fully priced in a European Central Bank (ECB) rate hike by July, the Euro has struggled to gain traction. Concerns over potential Oil supply disruptions continue to cloud the economic outlook for Europe, which relies heavily on energy imports.