EUR/USD fell for a fourth straight day on Thursday. It hit its lowest level since 23 January and traded near 1.1748. The decline came as traders scaled back expectations for near-term US rate cuts, which supported the US Dollar. The US Dollar Index traded near 98.00, its highest level since 6 February. US Initial Jobless Claims fell to 206K in the week ending 14 February. This beat the 225K forecast and improved from 229K previously. The four-week average also eased to 219K from 220K.

Us Data And Dollar Momentum

The Philadelphia Fed Manufacturing Survey rose to 16.3 in February. This was above the 8.5 forecast and up from 12.6 in January. US trade data was weaker. The Goods and Services Trade Balance came in at $-70.3 billion in December, compared with a $-55.5 billion forecast and $-53 billion previously. The Goods Trade Balance deficit also widened to $-99.3 billion from $-86.9 billion. Focus now shifts to Friday’s Core PCE Price Index, the advance estimate of Q4 US GDP, and preliminary February PMI data. Markets still price in nearly two US rate cuts this year. However, the Fed’s January minutes showed no rush to cut, with inflation still above 2%. The minutes also noted that further hikes could be considered. The ECB is widely expected to keep rates unchanged through 2026. Eurozone consumer confidence and flash PMIs are also due. As we assess EUR/USD today, 19 February 2026, the situation looks familiar but the drivers have changed. The US Dollar is still strong, yet the economic story is different from a year ago. The policy gap between the Federal Reserve and the European Central Bank that began forming in early 2025 has widened further, creating clearer opportunities.

Policy Divergence And Trade Setup

In February 2025, US Jobless Claims were very strong at 206K. That strength helped support a hawkish Fed tone. Today, the latest claims reading is 218K. This is still low by historical standards, but it suggests the labor market is cooling slightly. That small shift is an important difference from the much hotter conditions seen a year ago. As a result, the debate has moved. Instead of discussing whether the Fed might hike again, markets are now focused on when cuts will begin. In early 2025, the Fed was “in no hurry.” Now, with Core PCE inflation at 2.8% for January 2026, markets are pricing in at least one rate cut by summer. This is very different from last year, when another round of tightening was still a live topic if inflation picked up again. In the Eurozone, growth remains weak, matching the concerns raised in 2025. The flash manufacturing PMI for February 2026 was just 46.5. That extends more than a year of contraction for the sector. With this persistent weakness, the ECB is more likely to move before the Fed, which adds downside pressure to the Euro. With the policy gap widening, we expect EUR/USD to stay weak in the coming weeks. Traders may consider bearish strategies that benefit from further downside, such as buying puts or setting up bear put spreads on EUR/USD. The 1.1700 level is a key psychological support area and could be tested soon. Attention now turns to US inflation data next week and to ECB messaging after the March meeting. If US inflation stays stickier than expected, Fed cuts could be delayed and EUR/USD could fall faster. If Eurozone data surprises to the upside, EUR/USD could bounce in the short term, but we still see the medium-term trend as clearly negative. Create your live VT Markets account and start trading now.

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