EUR/USD steady as ECB holds rates, US labor data sends mixed signals

• The Euro trades without a clear direction after a largely expected monetary policy decision in the Eurozone.
• The European Central Bank highlights a resilient economy but acknowledges a more uncertain global environment.
• Mixed US indicators keep doubts alive about the momentum of the labor market.

EUR/USD trades around 1.1800 on Thursday at the time of writing, virtually unchanged on the day, as investors digest the European Central Bank’s (ECB) decision and a series of mixed economic releases from the United States (US).

The European Central Bank announced on Thursday, following its February policy meeting, that it kept its key interest rates unchanged, in line with market expectations. The interest rate on the main refinancing operations remains at 2.15%, the marginal lending facility rate at 2.4%, and the deposit facility rate at 2%. In its statement, the ECB said that the Eurozone economy remains resilient in a challenging global environment, supported by low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defense and infrastructure, and the supportive effects of past interest rate cuts.

At the same time, the central bank acknowledged that the outlook remains uncertain, particularly due to ongoing geopolitical tensions and persistent uncertainty surrounding global trade policies.

Speaking at the press conference, ECB President Christine Lagarde emphasized that risks to growth and inflation are broadly balanced. She reaffirmed the institution’s determination to ensure that inflation stabilizes at its 2% target over the medium term and stressed that future decisions will remain strictly data-dependent and taken on a meeting-by-meeting basis, without pre-committing to a specific rate path.

Christine Lagarde also noted that the Euro (EUR) strength is incorporated into current projections and that a stronger Euro could bring inflation down faster than currently expected, while reiterating that the ECB has no exchange rate target, even though it closely monitors developments in foreign exchange markets.

In the United States, recently released data have sent mixed signals. The Institute for Supply Management (ISM) Services Purchasing Managers’ Index (PMI) confirmed on Wednesday that activity continued to expand at a solid pace in January, but the Employment component edged lower, fueling concerns about the labor market. These worries were reinforced by the ADP Employment Change report, which showed that private sector job creation was well below expectations in January.

On Thursday, the weekly report from the US Department of Labor showed that Initial Jobless Claims rose to 231,000 from 209,000 in the previous week, while Continuing Jobless Claims also increased. Adding to the softer labor market signals, the Job Openings and Labor Turnover Survey (JOLTS) showed that job openings fell to 6.542 million in December, down from a revised 6.928 million in November and well below market expectations of 7.2 million.

Against this backdrop, currency traders appear reluctant to take strong directional positions on EUR/USD. The lack of surprises from the European Central Bank and the conflicting signals coming from the US economy are keeping the pair in a consolidation phase.