FX.co ★ Euro Steadies as Investors Weigh Fed–ECB Policy Signals

The euro remained close to $1.165, its lowest point since December 9, as investors absorbed a series of economic reports and re-evaluated the monetary policy outlook for 2026. In the United States, the most recent employment data presented mixed messages. Nonfarm payrolls increased by only 50,000 in December, missing the forecasted 60,000, yet the unemployment rate dropped to 4.4%, better than anticipated. These indicators point to a labor market that remains strong, supporting the view that the Federal Reserve is unlikely to reduce interest rates any time soon. In contrast, diminishing inflation pressures in the eurozone have dampened expectations for the European Central Bank to implement more restrictive monetary policies. According to Eurostat, headline inflation decelerated to 2.0% in December, reaching a four-month low and aligning with the ECB’s target, while core inflation edged down to 2.3%, which was slightly below projections.