EUR/USD slipped below 1.1900 during the North American session after comments from Federal Reserve officials lowered hopes for near-term rate cuts. The pair traded at 1.1895 after topping out at 1.1928 earlier in the day. US stocks also moved lower.
US Retail Sales for December were flat (0% MoM), missing forecasts of 0.4% and down from November’s 0.6%. The Employment Cost Index rose 0.7% QoQ in Q4 2025, down from 0.8% and below estimates.
Fed Stance Supports Dollar
Dallas Fed President Lorie Logan said policy is near neutral, and that inflation risks still lean to the upside. Cleveland Fed President Beth Hammack said rates should stay unchanged until inflation reaches 2%. She also said tariffs remain a factor.
Europe had no major data releases on Tuesday. ECB President Christine Lagarde said inflation should stabilise near 2% over the medium term. Money markets priced nearly 60 basis points of Fed cuts, while traders expected the ECB to keep rates unchanged through the year. The first ECB move is still seen as a hike.
On 12 February, the Eurozone calendar includes speeches from Mario Cipollone and Isabel Schnabel. The US calendar includes Nonfarm Payrolls, the Unemployment Rate, and remarks from Jeffrey Schmid, Michelle Bowman, and Beth Hammack.
From a technical view, EUR/USD remains range-bound after peaking at 1.20979 and bottoming at 1.1765. RSI momentum has softened. Resistance levels are 1.1900, 1.1974, 1.1996, and 1.2000. Support sits at 1.1850, 1.1800, 1.1765, the 100-day SMA at 1.1681, and the 200-day SMA at 1.1625.
Strategy And Risk Considerations
The US dollar is strengthening as Federal Reserve officials stay firm on inflation. That has pushed EUR/USD below 1.1900. This is happening even though recent US data looked weak. Right now, markets are reacting more to the Fed’s message than to signs of slower growth.
Late in 2025, consumer spending paused, with retail sales showing zero growth. But January 2026 inflation came in at 3.2%, still well above the 2% target. That supports the Fed’s cautious approach. The mix of slower growth and stubborn inflation suggests the dollar may keep rising.
The main theme is a widening policy gap between the Fed and the European Central Bank. Markets recently priced more than half a percentage point of Fed cuts this year, but officials are now pushing back. This looks like past periods of policy divergence that tended to support the dollar, especially when the ECB stayed on hold.
In this setup, buying EUR/USD put options could help protect against a drop below 1.1800. The upcoming Nonfarm Payrolls report is a key event. Strong jobs data could pull the pair back toward the 6 February low near 1.1765. Volatility often rises around this release, which can make options useful for managing risk.
If you have a stronger bearish view, short EUR/USD futures offer a more direct trade. Watch 1.1850 as the first downside level. If that breaks, it could set up a move toward 1.1800 in the weeks ahead.
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