EUR/USD fell for a second straight day and traded near one-week lows around 1.1830. The pair extended its slide from last week’s 1.1925 peak, with selling pressure building after the latest ZEW survey.
Germany’s ZEW Economic Sentiment Index eased to 58.3 in February from 59.6 in January, well below the 65.0 forecast. The current situation gauge improved to -65.9 from -72.7, but still fell short of the -65.7 consensus.
The Eurozone Economic Sentiment Index dropped to 39.4 from 40.8, missing expectations of 45.2. In Germany, HICP fell 0.1% month-on-month in January, while annual inflation rose to 2.1% from 2.0% in December.
The US Dollar kept a slight upward bias as US markets reopened after a long weekend. Traders focused on the New York Empire State Manufacturing Index, with Fed minutes due Wednesday and US GDP and PCE inflation data due Friday.
From a technical view, EUR/USD broke a mid-January support area and tested 1.1830. On the 4-hour chart, the MACD stayed negative and the RSI slipped below 40. Support sits near 1.1775, while resistance is seen around 1.1870 and 1.1890.
Looking back to this time in 2025, EUR/USD was under heavy pressure as Eurozone sentiment weakened. Today, February 17, 2026, the story is starting to change, with recent data pointing to a cautious recovery. For example, Germany’s latest industrial production figures for December 2025 showed a modest 0.4% rebound, hinting that the slowdown may be easing.
The market debate around European Central Bank easing that dominated last year has flipped. With the Eurozone’s core HICP holding at 2.5% in the January 2026 reading, we think markets may be underpricing the chance of a more hawkish ECB later this year. That is a clear shift from the dovish tone that shaped most of 2025.
On the other side, the US Dollar’s mild bullish tone from early 2025 has faded. The Federal Reserve has left rates unchanged in the last two meetings, and the January jobs report showed wage growth cooling to 3.1% year-on-year, the slowest pace since mid-2024. This supports the view that the Fed’s tightening cycle is over.
For derivatives traders, this backdrop argues for reassessing Euro-bearish positions. We see value in medium-term EUR/USD call options with strikes above 1.2000 to position for a possible breakout later this spring. Historically, when the policy gap between the Fed and the ECB begins to narrow, EUR/USD has often moved into multi-month uptrends, as it did after 2021.
With that setup, we expect implied volatility to rise as markets weigh diverging central-bank paths. One way to express a cautiously bullish view is to sell out-of-the-money EUR/USD puts to collect premium. This approach can benefit if spot rises, and it can also benefit from time decay if the pair stays range-bound in the near term.
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