EUR/USD fell during North American trading. It first touched 1.1804, then traded near 1.1845, down 0.07%.
Risk-off sentiment supported the US Dollar as US–Iran tensions stayed high. This was despite nuclear talks resuming on Tuesday and reports of progress.
The US also sent a fleet to the Middle East. US data pointed to a firmer labour market. The ADP Employment Change 4-week average rose to 10.3K from an upwardly revised 7.8K.
Market Pricing For Fed Cuts
The New York Empire State Manufacturing Index slipped to 7.1 from 7.7, but beat the 6.0 forecast. Markets scaled back expectations for Federal Reserve rate cuts. Prime Market Terminal showed 57 basis points of easing priced in through end-2026.
In the Eurozone, Germany’s ZEW Economic Sentiment dropped to 58.3 from a prior five-year high, missing the 65.0 estimate. Eurozone industrial production growth slowed to 1.2% YoY in December 2025 from 2.2%, and came in below the 1.3% forecast.
On February 18, the Eurozone calendar includes ECB speeches by Mario Cipollone and Isabel Schnabel. In the US, the focus is on Durable Goods Orders, housing data, Industrial Production, and the FOMC minutes.
The gap between the US and Eurozone economies appears to be widening, which supports a stronger Dollar versus the Euro. The January 2026 Nonfarm Payrolls report showed a blockbuster 350,000 job gain two weeks ago. This reinforced the view that the US economy remains resilient. With that strength, it is hard for the Federal Reserve to justify aggressive rate cuts anytime soon.
Eurozone Growth Drag
In contrast, the outlook for the Euro is weakening as core Eurozone data stays soft. German factory orders fell sharply at the end of 2025, and that trend is weighing on the region’s industrial engine. This weakness suggests the European Central Bank will be much less willing to tighten policy, creating a clear policy gap versus the Fed.
Given this backdrop, we should consider buying EUR/USD put options to position for a potential move lower, with strikes below 1.1800. The release of the January FOMC minutes is a key catalyst. It could confirm a hawkish Fed and drive the next leg lower. This approach helps define risk while keeping exposure to a downside move.
Renewed US–Iran tensions add another layer of uncertainty that tends to favour the safe-haven Dollar. Implied volatility on EUR/USD options may start to rise, so it may be better to act before hedges become more expensive. The VIX, a measure of market fear, is edging up from recent lows below 14, suggesting traders are becoming more cautious.
Technically, the pair is consolidating, but the descending trend line near 1.1863 is strong resistance. A break below the recent low at 1.1804 could be used as a trigger to add to shorts or bearish option structures. Until that break happens, selling out-of-the-money call options above 1.1950 could be a sensible way to collect premium.
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