🌐 Dollar Buying Wave Pauses — Euro Rebounds as Focus Shifts to U.S. Jobs Data
— Slowing German inflation quietly weighs on the euro (London)
The dollar rally that gathered momentum into the New Year is finally cooling.
On the back of concerns over Venezuela and potential spillovers into Latin America, the market had been in a mode of:
“Risk → Move into dollars”
But that phase is now giving way to a search for a more stable equilibrium.
Even the Trump administration’s renewed hardline stance — including the Greenland issue — looks increasingly priced in.
🔁 Current price action: mainly corrective dollar selling
In London trade, the reversal of recent dollar strength has become more visible:
-
USD/JPY: stabilizing in the mid-156 range
-
EUR/USD: recovering into the 1.17s
-
GBP/USD: firm in the 1.35 area
The dollar index slipped back below its 21-day moving average after briefly breaking above it yesterday — a move that looks like:
“Unwinding an overextended, geopolitics-driven dollar run.”
Attention is already turning toward this week’s U.S. employment report.
🇩🇪 German CPI: clearer signs of disinflation
German state CPI figures for December released during London hours mostly showed slower growth:
-
North Rhine–Westphalia: +1.8% (prev. +2.3%)
-
Saxony: +1.9% (prev. +2.2%)
Price momentum is clearly fading.
Nationwide CPI later in the session is expected to show the same trend:
-
Headline: +2.1%
-
Core: +2.2%
If core inflation undershoots expectations:
→ ECB rate-cut expectations will strengthen,
→ and euro upside could become heavy again.
📅 Ahead: a wave of PMI releases
Next up, final services PMIs for:
-
France
-
Germany
-
Eurozone
-
United Kingdom
-
United States
Plus:
-
France CPI (flash)
-
Germany CPI (flash)
However, with the ECB firmly in wait-and-see mode, market reactions are likely to be short-lived headline moves rather than sustained trends.
🗣 Policy speakers: single comments may move prices
Speeches from:
-
Villeroy (Banque de France)
-
Cipollone (ECB)
-
Barkin (Richmond Fed)
-
Marron (Fed Governor)
A more hawkish tone could support the dollar;
a dovish leaning could pressure it — a setup traders tend to react to quickly.
💷 Sterling: supported by equities
Sterling remains resilient:
-
GBP/USD: up to 1.3568
-
EUR/GBP: trending lower (pound-positive)
-
GBP/JPY: holding in the 211 range
Behind this is the milestone that:
The FTSE 100 topped 10,000 for the first time.
Equity strength is feeding into broader confidence toward the currency.
🔍 Summary
-
The Trump-driven dollar bid has eased for now
-
EUR/USD has rebounded into the 1.17s
-
German CPI slowdown reinforces ECB rate-cut expectations
-
Markets shift toward job-data positioning rather than fresh bets
-
Sterling stays supported by record U.K. equity strength
