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EUR/USD registers solid gains late in the North American session on Friday after rumors of an intervention in the FX markets to boost the Japanese Yen sent the US Dollar (USD) sliding, with losses of over 0.70%, according to the US Dollar Index (DXY). This, despite the economic data being moderately positive on Friday. At the time of writing, the pair trades at 1.1811 after hitting a four-month high of 1.1826 earlier during the day.

Euro rallies sharply as speculation of FX intervention sends the Dollar to multi-month lows

A Bloomberg headline, “Yen jumps most since August as risk of intervention ramps up,” broke late during the session amid speculation that Japanese authorities could be preparing to intervene in the markets.

The Bloomberg story mentions “traders reported that the Federal Reserve Bank of New York had conducted a so-called rate check with major banks to ask for indicative exchange rates — a move that was seen as an indication it may be preparing to assist with another intervention.“

Consequently, DXY, which measures the US currency value against other six, extended its losses to levels last seen in September 2025, down from 98.33, and lies at 97.53.

US economic data revealed that American consumer sentiment improved, according to a poll of the University of Michigan. Regarding business activity, S&P Global Flash Purchasing Managers Indices revealed signs of strength in the economy, yet S&P Chief Economist stated that economic growth for Q1 2026 in the US could decelerate further.

In Europe, HCOB Flash PMIs for the bloc were mixed, with the Composite and Services PMI dipping below estimates, while the Manufacturing PMI shows signs of a slight expansion.

Economic data for the next week

The schedule in Europe will feature Germany’s Business Climate and GfK Consumer. Gross Domestic Product (GDP) figures will be revealed for the bloc, Germany, Spain and France. Also, traders will eye speeches by European Central Bank (ECB) officials like Nagel, Lagarde, Elderson and Schnabel.

In the US, traders will focus on Durable Goods Orders, ADP Employment Change four-week average, the Federal Open Market Committee policy decision, and the subsequent press conference by Fed Chair Jerome Powell.

Daily digest market movers: Euro appreciates as the Dollar collapses

• The Consumer Sentiment of the University of Michigan on its final reading in December exceeded forecasts of 54, coming at 56.4. Joanne Hsu, the economist in charge, revealed that households remain pressured on purchasing power and are concerned about elevated prices and a weaker job market.
• The survey revealed that inflation expectations have eased. One-year expectations slipped to 4.0% from 4.2%, while five-year expectations fell to 3.3% from 3.4%.
• The S&P Global Composite PMI showed a modest uptick in December, rising to 52.8 from 52.7. However, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, warned that subdued new business growth across both manufacturing and services increases the risk that first-quarter growth could disappoint.
• Eurozone flash PMI data showed a weak services sector in January, with the index declining to 51.9, below both December’s reading and market expectations. Earlier releases from Germany surprised to the upside, with the Services PMI exceeding estimates in expansionary territory, while the Manufacturing PMI showed improvements, but remains below the expansion/contraction level.

Technical outlook: EUR/USD breaks 1.1800, sight on 1.200

EUR/USD technical picture shows a breakout of a downslope trendline drawn from the daily highs of September and December, which was cleared at around 1.1775, pushing the pair past the 1.1800 figure to reach yearly highs of 1.1826.

Momentum as measured by the Relative Strength Index (RSI) indicates that buyers are in charge. Also, the clear break above the December 24 swing high of 1.1807 shifted the trend from sideways to upwards.

For a bullish continuation, traders must clear 1.1850 with eyes set on the 2025 yearly peak at 1.1918. A breach of the latter opens the discussions to test 1.2000.

Downwards, the first key support is 1.1750, which could clear the way towards 1.1700.

(Click on image to enlarge)

EUR/USD Daily Chart

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