EUR/USD Slides Amidst ECB Uncertainty & Strong US Data

The EUR/USD pair has reversed its late-January rally, falling approximately 2.5% and reaching a four-week low, currently struggling around the 1.1750 level. This decline is driven by a combination of factors: increasing expectations of ECB rate cuts following softer Eurozone inflation data, uncertainty surrounding President Lagarde’s future, and robust US economic indicators. Specifically, US Jobless Claims fell unexpectedly, and the Philadelphia Fed Manufacturing Survey surged, bolstering the US Dollar. Eurozone Manufacturing PMI exceeded forecasts at 50.8, but Services PMI underperformed at 51.8, creating a mixed economic picture. Rising oil prices, particularly in the event of further Iran escalation, are also seen as a negative catalyst for the Euro. While some analysts point to increased hedging of Dollar risk via EUR options, suggesting continued Euro support, others anticipate a potential drop to 1.160. Key upcoming US data releases – including core PCE, advance GDP, and personal income/spending – are expected to significantly influence the pair’s trajectory.