EUR/USD Forecast: Bulls Eyes 1.1900 as Eurozone Sentiment Hits Post-Recession High
During Monday's European session, the EUR/USD pair stayed strong above the 1.1862 support level and reached highs near 1.1870.
Quick overview
- The EUR/USD pair remains strong above the 1.1862 support level, reaching highs near 1.1870 due to rising Eurozone investor confidence.
- The Sentix Investors’ Sentiment Index rose to 4.2 in February, indicating a potential recovery from recession in the Eurozone.
- The US dollar is under pressure as expectations for Federal Reserve rate cuts grow, with a near 70% chance of a reduction by June.
- Traders should monitor upcoming US economic data, as weak reports could further weaken the dollar and boost the EUR/USD pair.
During Monday’s European session, the EUR/USD pair stayed strong above the 1.1862 support level and reached highs near 1.1870. This upward move is driven by rising Eurozone investor confidence and growing expectations of US Federal Reserve rate cuts.
Eurozone Investor Sentiment Surges to 4.2 in February
The euro got a boost after the Sentix Investors’ Sentiment Index rose to 4.2 in February. This is the first positive reading since July, up from -1.8 in January and well above the expected -0.2.
Analysts say this data suggests the Eurozone may be moving past its recession phase. Along with the ECB’s firm stance at its February 5th meeting, where President Christine Lagarde emphasized a data-driven approach, the euro remains strong against a weaker US dollar.
US Dollar Wilts Under Fed Easing Expectations
Meanwhile, the US dollar is under pressure as markets expect a more dovish Federal Reserve. After weak jobs data, investors are now expecting bigger interest rate cuts in 2026.
Key Fed Watch Data:
- March Cut Probability: Now stands at approximately 17%, up from 10% last week.
- June Cut Probability: Markets are currently pricing in a near 70% chance of a rate reduction, according to the CME FedWatch Tool.
Fed Officials in Focus: A Divided Front?
Key Federal Reserve officials will speak during the US session. Traders expect strong debate about the future of US monetary policy.
- Governors Christopher Waller and Stephen Miran, who recently supported a rate cut, are likely to repeat their call for lower rates to help the labor market.
- Atlanta Fed President Raphael Bostic is expected to stay cautious, focusing on controlling persistent inflation rather than immediate job concerns.
Technical Analysis: EUR/USD Reclaims $1.18 Support
On the 4-hour chart, EUR/USD has stayed above the rising trendline from mid-January. After rebounding from the $1.1760–$1.1780 demand zone, the price moved past resistance at $1.1835.
Since the RSI is above 50, momentum is on the bulls’ side. The pair is now targeting the 1.1900 level, and a clear break above it could lead to a move toward 1.1995.
Trading Strategy: Buy the Dip
- Entry: Pullback near $1.1835
- Target: $1.1995
- Stop Loss: Below $1.1760
Economic Calendar: High-Impact Events Ahead
Investors should watch for a busy week of US data, which could trigger the next big move in the market:
- Tuesday: US Retail Sales
- Wednesday: Delayed January Nonfarm Payrolls (NFP)
- Friday: Consumer Price Index (CPI)
If these reports show the US economy is slowing, the US dollar could fall further, sending EUR/USD much higher.
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