EUR/USD steadies as Fed divide offsets shutdown drag

• EUR/USD holds near 1.1740 as the US government shutdown delays key reports, including Nonfarm Payrolls.
• Fed officials diverge: Logan is hawkish on sticky services inflation, while Miran is dovish, stressing forward-looking policy.
• US ISM Services stalls at neutral, while S&P Global shows modest expansion in business activity.

EUR/USD consolidates on Friday amid a quiet trading session due to the lack of a fresh catalyst, sponsored by a US government shutdown that seems poised to extend beyond the current week. The pair trades at 1.1738, up 0.28%, at the time of writing.

Shared currency consolidates with light data and split Fed rhetoric keeping traders cautious

The US economic docket has been light, featuring speeches by Federal Reserve (Fed) officials, as the Nonfarm Payrolls report for September had been delayed. Vice-Chairman Philip Jefferson said that although it is not ideal not to get job data, they have enough information to do their job.

In the meantime, Dallas Fed Lorie Logan remained hawkish. She said that tariffs have been contributing to inflation and that she is worried that non-housing services' inflation has been elevated and remains high.

Fed Governor Stephen Miran remained dovish, saying that access to data is important to set monetary policy and he remains hopeful the Fed will have access to economic releases. Nevertheless, he acknowledged that Fed policy should be forward-looking.

Chicago Fed President Austan Goolsbee acknowledged that risks to the dual mandate are balanced, adding that although the markets had priced in rate cuts, the central bank should remain data dependent.

Data-wise, the docket released the Purchasing Managers Index (PMI) for September, by the Institute for Supply Management (ISM) and S&P Global. Prints were mixed, with the ISM revealing that the services survey clung to its expansion/contraction neutral level, while S&P Global showed that the economy expanded.

Daily market movers: EUR/USD rises despite Fed hawkish commentary

• Jefferson added that he expects the effects of tariffs on inflation, employment, and economic activity will show in the coming months. He added that the recent cut moved the Fed to a neutral stance. He expects the disinflation process to resume after this year and inflation to return to the 2% target in the coming years.
• Logan said that good prices risks are tilted to the upside after the tariff effect fades. She noted that risks that tariffs effects are more prolonged, risks the rise of long-term inflation expectations. She recognized that monetary policy is likely just modestly restrictive.
• The ISM Services PMI fell short of expectations in September, slipping from 52 to 50 versus forecasts of 51.7, pointing to a slowing economy. Survey respondents signaled expectations for only "moderate or weak growth," with the employment sub-index subdued as firms delayed hiring.
• By contrast, S&P Global's Services PMI declined to 54.2, beating forecasts, but below August's 54.5 reading, highlighting resilience in parts of the sector.
• Money markets are fully pricing a 25-basis-point Fed cut at the October 29 meeting, with odds standing at 96%, according to Prime Market Terminal's interest rate probability tool.

Technical outlook: EUR/USD holds firm waiting for a fresh catalyst

EUR/USD trades sideways above the 1.1700 figure for the fifth consecutive day. Although the pair is bullish biased, traders must clear the current week's high of 1.1778 before challenging the 1.1800 figure. A breach of the latter will expose the July 1 high of 1.1830 ahead of testing the yearly peak at 1.1918.

Conversely, a move below 1.1700 would target 1.1650, followed by the 100-day SMA near 1.1605.