EUR/USD Forecast: $1.1850 Support Under Siege as Eurozone Industry Slumps
The EUR/USD pair has been on the defensive this Monday in European trading hours , slowly easing its way towards 1.1860.
Quick overview
- The EUR/USD pair is declining towards 1.1860 due to a significant contraction in Eurozone industrial output.
- The US Dollar Index (DXY) is holding steady at 96.97, benefiting from a liquidity vacuum amid US market closures.
- Eurozone industrial production slowed to 1.2%, missing forecasts and indicating cautious business investment.
- The outlook for the EUR/USD pair remains bearish, with critical support at $1.1840 that traders should monitor closely.
The EUR/USD pair has been on the defensive this Monday in European trading hours , slowly easing its way towards 1.1860.
The underlying driving force for this euro bearishness is a pretty significant contraction in Eurozone industrial output, which is knocking the Euro back and sort of overshadowing the broader ‘risk on’ sentiment you usually see in holiday-thinned markets.
Eurozone Industrial Output Hits a Roadblock
- Industrial Production Takes a Dive: The US Dollar Index (DXY) is currently sitting solidly at 96.97 and it’s up 0.05%. Now despite the weaker inflation data, which was 2.4% for CPI, that might have given you a reason to think the Fed will cut rates later this year, the dollar is actually benefiting from a bit of a ‘liquidity vacuum.’
- With US traders absent, and the weak Eurozone data, the dollar is the default go to for people trying to preserve their capital.
- Slowing Down: On a yearly basis, output slowed to 1.2%, missed the 1.3% forecast, and marks a pretty significant drop from November’s 2.5% pace.
- Sector Breakdown: The fall was led by a 2% drop in capital goods, which is a bad sign – usually when you are investing less in the sorts of things that can drive growth in the future, it’s a sign businesses are getting more cautious.
US Dollar Resilience Amid “Presidents’ Day” Calm
1. The DXY 96.97 Pivot
The US Dollar Index (DXY) is currently holding firm at 96.97, up 0.05%. Despite weaker inflation data (2.4% CPI) fueling hopes for more Fed rate cuts later in 2026, the dollar is benefiting from a “liquidity vacuum.”
In the absence of US traders, the weak Eurozone data has made the USD the default choice for capital preservation.
2. Geopolitical De-escalation
With reports of progress in US-Iran nuclear talks and Ukraine peace initiatives, global uncertainty is receding.
While this typically hurts the “safe-haven” dollar, in the specific context of the EUR/USD pair, it highlights the Euro’s lack of a growth-driven catalyst to compete with a stabilizing US economy.
EUR/USD Technical Analysis: The $1.1850 “Must-Hold” Zone
| Support/Resistance | Price Level | Significance |
|
Major Resistance
|
$1.1929 | The recent swing high; a reclaim here invalidates the bear case. |
|
Immediate Support
|
$1.1853 | Current trading floor and trendline intersection. |
|
Dynamic Support
|
$1.1839 | The 200-period MA, offering a secondary defensive line. |
|
Bearish Target
|
$1.1809 | The primary target if the $1.1840 support fails. |
The Verdict: Weekly Bias
The outlook for the week of February 16, 2026, is Bearish to Neutral below $1.1890. The path of least resistance appears lower as the Euro struggles to digest the industrial slowdown. Traders should watch the $1.1840 level closely; a clean break below this would likely trigger a rapid test of $1.1800.
Trade Idea: Consider short positions below $1.1840, targeting $1.1809, with a stop-loss placed above the 50-MA at $1.1890.
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