EUR (Euro) – The euro is stuck at the end of a triangle pattern, awaiting a change in directionEUR (Euro) – The euro is stuck at the end of a triangle pattern, awaiting a change in direction

Data released on Monday showed that Germany's Ifo Business Climate Index rose to 88.6 in February, the highest level since August 2025, slightly higher than the market expectation of 88.4, indicating that the momentum of Europe's largest economy is improving. The index measuring current conditions rose from 85.7 to 86.7, while the expectations index rose from 89.6 to 90.5, reflecting increasing optimism about the outlook for the coming months.

In U.S., data released on Monday showed that factory orders fell 0.7% month-on-month in December, failing to meet the expected increase of 1.1%, compared to a previous increase of 2.7%. Additionally, Federal Reserve Governor Krivole expressed support for a 25 basis point rate cut, citing signs of weakness in the labor market. He pointed out that labor demand is falling faster than labor supply, suggesting that the weakness in the employment situation may persist. According to the CME FedWatch tool, the market expects a 96.0% probability that the Fed will keep interest rates unchanged at its March meeting, while the probability of a 25 basis point rate cut has fallen to 4.0%. By June, the probability of a cumulative 25 basis point rate cut is approximately 47%, indicating that market expectations for a mid-year rate cut remain, but have shifted significantly later and narrowed compared to previous expectations.

The U.S. dollar initially fell before rebounding on Monday as investors assessed the chaotic policy outlook following the Supreme Court's overturning of Trump's tariff plan. Trump subsequently announced a temporary tariff increase to 15%, but the new measures have a weak legal basis and require congressional approval, creating further uncertainty. Increased policy confusion could accelerate "de-dollarization," negatively impacting the dollar.

After a sharp rise in January, the euro's volatility against the dollar has gradually narrowed in February, with a noticeable downward shift in the trading range, forming a descending trendline currently at 1.1820. Together with the 25-day moving average at 1.1840, this level will serve as an important reference. If the exchange rate breaks above this area, it may reverse its recent weakness; the next support levels are expected to be 1.1930 and 1.20. Conversely, the 1.1740 level serves as short-term support. A break below this level would likely indicate a continuation of the euro's downward trend, with potential targets at the 100-day moving average of 1.1690 and 1.16, followed by the 250-day moving average at 1.1550 and 1.15.

Forecast range:
Resistance 1.1820/40* - 1.1930 – 1.2000 – 1.2079
Support 1.1740 – 1.1690 – 1.1600 - 1.1550 – 1.1500

News Summary

23 / 2 European Parliament Suspends Approval of EU-US Trade Agreement

Germany's February Ifo Business Climate Index Rises to 88.6, a Six-Month High

Focus:

Wednesday
Germany GFK March Consumer Confidence Index (15:00)
Germany Q4 GDP (15:00)
Eurozone January CPI (18:00)

Thursday
Eurozone February Economic Confidence Index (18:00)

Friday
Germany January Import Price Index (15:00)
Germany January Employment Data (16:55)
Germany February CPI (21:00)

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