The EUR/USD pair has transitioned from a sideways movement to a trending phase. The pair is currently positioned between 1.1811 and 1.1826, marking a four-month peak, following a decisive breach of the 1.1775 trendline that linked the September and December highs, as well as surpassing the previous significant high at 1.1807. This action is not a slow process; it coincides with the most significant weekly decline in the US Dollar Index since May, as DXY has decreased over 1.6% for the week and is currently probing the 97.50–97.70 range. The current level is positioned slightly beneath the disrupted support range of 98.00–98.15 and marginally above the subsequent structural floor located around 97.10–97.25. The catalyst was a combination of softer US macroeconomic indicators, declining inflation expectations, and an intervention-led surge in USD/JPY that affected the broader dollar landscape. In light of recent developments, EUR/USD has successfully breached a six-month congestion pattern and is currently exhibiting a clear trend movement, rather than remaining within a range trade. The dollar side is performing the significant work. US Services PMI for January recorded 52.5, compared to the anticipated 52.8, remaining steady from the previous month and still indicating expansion, though it is evidently not gaining momentum. The S&P Global composite PMI increased slightly from 52.7 to 52.8, indicating growth, though not reaching boom conditions. The University of Michigan consumer sentiment index rose to 56.4, surpassing the consensus of 54. This indicates that households are feeling less pessimistic, yet they continue to express concerns about elevated prices and a weaker job market. Inflation expectations have shown a decline: one-year expectations decreased from 4.2% to 4.0%, while five-year expectations fell from 3.4% to 3.3%. The interplay of softer inflation expectations alongside steady yet moderating economic activity enables the Fed to maintain its current stance, sustaining the anticipation of potential rate cuts later this year. The current pricing for Fed funds suggests a probability of approximately 92–97% that the FOMC will maintain rates during the forthcoming meeting on January 27–28; the focus lies on the statement and Powell’s tone rather than the actual rate level.
The transformation of a typical soft-dollar week into a significant flush was driven by the risk of FX intervention. A headline regarding the yen states – “jumps most since August as risk of intervention ramps up” – and references New York Fed “rate checks” with major banks. The market perceived that as a possible indication of US backing for another yen-support initiative. DXY, already showing a downward trend, moved swiftly from approximately 98.33 to the 97.45–97.70 range as traders actively closed their dollar long positions. The EUR/USD represents the most significant and liquid manifestation of that unwind, with the pair’s daily increase of over 0.70% indicating the extent of crowded positioning that had developed. Regarding the Euro, the narrative is not one of explosive growth; rather, it is characterized as “good enough when the dollar cracks.” The Euro Area Services PMI decreased from 52.4 in December to 51.9 in January, falling short of the 52.6 consensus and indicating a deceleration in service-sector growth. The Manufacturing PMI has shown signs of recovery from significant contraction levels and is approaching the 50 mark, suggesting a potential for slight expansion. The overall scenario indicates a sector that is steering clear of recession, yet it is far from exhibiting strong growth. The consensus for Q4 2025 Eurozone GDP is approximately 0.1% quarter-on-quarter. Upcoming GDP data for the bloc, Germany, France, and Spain will determine if the region is stagnating or showing signs of improvement. The ECB is currently adopting a stance that can be described as “patient but not panicked” in terms of political and interest rate considerations. Inflation has moderated sufficiently to reduce the immediate need for further aggressive tightening; however, growth remains too sluggish to warrant a significant shift towards cuts. This position maintains low yet stable real yields in Europe. As the dollar faces pressure from intervention concerns and a shift towards safer assets, even subpar Eurozone data can bolster EUR appreciation.
The weekly G10 performance table indicates that the EUR has appreciated approximately 1.97% against the USD, increased by 0.05% relative to the GBP, experienced a slight decline against the AUD and NZD, and has shown a marginal weakening against the CHF. That is precisely what one anticipates when the dollar is the asset being divested, rather than the euro being pursued at any cost. The current macro context for EUR/USD is significantly influenced by the sharp repricing in metals. Gold has fluctuated within a range of $4,964–$4,987 following an intraday peak of $5,009, with February futures settling close to $4,979.70. At one point, the metal experienced an increase of nearly 20% within a 24-hour period – a remarkable shift in a substantial, global asset. Just days earlier, spot gold surpassed $4,900 for the first time; now discussions in the market are shifting towards $5,400 and beyond. Silver has followed the trend and exceeded it in percentage terms. It has surged past the $96 mark and entered triple-digit territory, with perpetual contracts reflecting around 103.53, an increase of over 3.5% in just one session. The disparity in performance compared to other assets following Donald Trump’s November 2024 election victory is stark: Bitcoin at −2.6%, gold at +83%, silver at +205%, Nasdaq at +24%, and S&P 500 at +17.6%. Metals serve as the main safeguard against policy risk, sovereign debt, and geopolitical tensions; cryptocurrency does not fulfill this role. The primary factor contributing to the breakdown of DXY is identified here. When global investors seek protection against a weakening dollar, their focus is not primarily on Bitcoin at $89,400 – instead, they are acquiring gold above $4,900, silver over $100, and in certain instances, tokenized gold exposure such as XAUT.
The movements in capital validate the narrative. On Bybit, a trader transferred 7 million USDT into 843 XAUT, approximately $4.17 million, to achieve direct exposure to gold at these unprecedented levels. Physical markets reflect this sentiment. In India, local gold prices have reached a historic level of 159,226 rupees per 10 grams, with dealers imposing premiums as high as $112 an ounce over official domestic prices. This surge comes as buyers anticipate a potential increase in import duties in the upcoming February 1 budget. When household and central-bank demand exhibits such insensitivity to price, it is the marginal buyer of metals that is being replaced, not the marginal seller of dollars. The outcome is a pronounced, widespread decline in USD, with EUR/USD currently reflecting this through a breakout instead of a gradual movement. The cryptocurrency aspect serves as a significant contrast rather than a direct influence.
Bitcoin is currently priced at $89,400.52 and facing challenges in regaining the resistance range of $90,000–$93,500. It continues to be approximately 30% lower than its peak in October 2025, even with the presence of a US spot ETF complex and a previous rise above $100,000. The microstructure illustrates that significant long-term holders utilized the psychological $100,000 level as a distribution trigger, releasing sufficient supply to counterbalance new ETF and institutional demand, thereby capping the movement. The projections for BTC in 2026 vary significantly. Ultra-bullish targets are concentrated in the range of $150,000 to $250,000, as indicated by figures from notable figures such as Charles Hoskinson, Robert Kiyosaki, Galaxy Digital, Arthur Hayes, Brad Garlinghouse, VanEck, JPMorgan, Tom Lee, Standard Chartered, Bernstein, Bitwise, and Citigroup, with estimates varying from $143,000 to $250,000. Conservative and pessimistic projections range from $75,000 (Jurrien Timmer at Fidelity) to $56,000–$70,000, further declining to $25,000 and $10,000. The spread indicates that, in contrast to gold, there is a lack of agreement regarding crypto as a macro hedge. Altcoins underscore the significant imbalance in risk exposure. Marina Protocol is currently priced at approximately €0.03438, reflecting a 20.74% increase in the last 24 hours and a 60.78% rise over the past week. However, it remains down 79.80% compared to one year ago, with a market capitalization of around €6.88 million. The total and maximum supply stands at 1.00 billion BAY, with 200 million currently in circulation. Bitget’s technical screen categorizes BAY as a “strong buy” on the 4-hour chart and a “buy” on the daily chart, yet it indicates a “sell” on the weekly chart – a typical short-term squeeze within a long-term downtrend. That is irrelevant information. For EUR/USD, the essential insight from the cryptocurrency market is straightforward: the clear, consensus hedge flows are directed towards gold and silver, rather than Bitcoin or micro-cap assets. The adjustment responsibility falls on the USD side, thereby bolstering a stronger EUR as the primary foreign exchange counterpart.