EUR/USD Forecast: A Potential Slide Below 1.1780-1.1770 Confluence
The EUR/USD pair is trading just above the mid-1.1700s during the Asian session on Friday, not far from a one-month low set the previous day. This downward trend is supported by several factors.
US macro data indicates a robust labor market, and the January FOMC meeting minutes, along with hawkish comments from Federal Reserve officials, have led investors to reduce their bets on aggressive policy easing. This, coupled with rising geopolitical tensions, is bolstering the safe-haven US Dollar (USD), pushing it to its highest level since January 23. As a result, the EUR/USD pair is under pressure.
Additionally, renewed speculation about an interest rate cut by the European Central Bank (ECB) is weakening the Euro (EUR) and adding to the downward pressure on the EUR/USD pair. Traders are now focusing on the release of flash PMIs from the Eurozone and the US for short-term opportunities, but the key directional impetus will come from the Advance US Q4 GDP report and the US Personal Consumption Expenditure (PCE) Price Index.
From a technical perspective, the EUR/USD pair has found acceptance below the 1.1780-1.1770 confluence, a critical area that includes the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 61.8% Fibonacci retracement level of a significant upswing from the January swing low. This confluence is expected to act as a pivotal point, limiting any recovery attempts in the face of the underlying USD bullish sentiment.
The Moving Average Convergence Divergence (MACD) line remains below the Signal line and below the zero mark, with a narrowing negative histogram, suggesting that downside momentum may ease. The Relative Strength Index (RSI) is at 29, indicating oversold conditions. While the short-term bias remains fragile, an oversold RSI and stabilizing MACD could lead to a corrective bounce if momentum improves. A recovery could target the 50% retracement level at 1.1828.
Furthermore, a break above this level would improve market sentiment, while failure to reclaim it would keep sellers in control of the pullback.
(The technical analysis in this report was generated with the assistance of an AI tool.)
EUR/USD 4-hour chart
Economic Indicator: HCOB Composite PMI
The Composite Purchasing Managers' Index (PMI), released monthly by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator for private-business activity in the Eurozone's manufacturing and services sectors. The data is derived from surveys of senior executives, with responses weighted according to company size and contribution to sector output. Survey results reflect month-over-month changes and can anticipate trends in official data series like GDP, industrial production, employment, and inflation.
The index ranges from 0 to 100, with 50.0 signaling no change. A reading above 50 indicates economic expansion, a bullish sign for the Euro (EUR). Conversely, a reading below 50 suggests declining activity, seen as bearish for EUR.
Next release: Friday, February 20, 2026, at 09:00 (Preliminary)
Frequency: Monthly
Consensus: 51.5
Previous: 51.3
Source: S&P Global
