On Wednesday, February 18th, the euro struggled against the dollar below 1.1850, trading around 1.1830 during the European session. Looking back at Tuesday's movements, market sentiment was like a rollercoaster ride. In the first half, global risk appetite plummeted, with funds flowing into the dollar for safety, causing a sharp pullback in the euro; however, as US stocks stabilized and panic subsided, the dollar's offensive weakened, and the euro recovered its losses, ultimately closing almost flat.



This extreme balance between bullish and bearish forces precisely illustrates that the market is currently in a period of uncertainty regarding its direction. Although Chicago Fed President Goolsby made a statement about "considering multiple rate cuts in 2026," this statement, which was heavily based on preconditions, failed to ignite bullish enthusiasm in the market. The euro lacked a core driving force for sustained upward movement and could only fluctuate repeatedly within a narrow range.

The central bank governor's "early departure" sparks policy speculation.

Just as the market was caught up in short-term fluctuations, a major piece of news shattered the calm. Media reports revealed that European Central Bank President Christine Lagarde plans to step down before the end of her term, earlier than the 2027 French presidential election. As the "helmsman" of the Eurozone's monetary policy, Lagarde's sudden move instantly sparked speculation about the policy leanings of her successor: would the new president be a staunch "hawk" or a moderate "dove"? This uncertainty undoubtedly cast a new shadow over the already fragile euro. However, analysts at Danske Bank remained remarkably calm. They pointed out that EU leadership has historically been adept at maintaining a hawkish-dove balance within central banks, and with frequent high-level personnel changes expected in the next two years, there is ample time to select a new central bank. Therefore, while this event brings medium-term suspense, the risk of a precipitous policy shift is relatively manageable. Investors need not panic excessively, but only be wary of the emotional disturbances it may cause.

Data Showdown: US Manufacturing Becomes the Decisive Factor in Today's Battle

Wednesday evening's US economic data will be a key variable determining short-term market trends. The market is holding its breath awaiting the release of December durable goods orders and January industrial production data, both of which act as a "microscope" for understanding the health of the US manufacturing sector. Strong data will strongly support the Federal Reserve's stance of maintaining high interest rates, and the dollar will inevitably rebound, further suppressing the euro. Conversely, if the data falls short of expectations, the dollar's strength will falter, and the euro may gain a valuable respite. In addition, the minutes of the Fed's January monetary policy meeting will also be released simultaneously. Given that the market currently expects a 92% probability of maintaining interest rates unchanged in March, the minutes will likely only confirm the existing facts and are unlikely to cause significant disruptions. The real focus remains on the strength of the real economic data.

Technical warning: The downtrend remains unchanged, and key defenses are in grave danger.

From a technical perspective, the short-term outlook for the euro against the US dollar remains pessimistic. On the daily chart, the price has been declining since reaching a high of 1.2081, breaking through the important support level of 1.1900 and hovering around 1.1830. The MACD histogram is deeply below the zero line, with the DIFF and DEA lines crossing downwards, clearly indicating that bearish momentum still dominates. Although the RSI indicator is slightly above the 50 midline, indicating that the market has not yet entered extreme oversold territory, it also means a lack of strong rebound momentum. Analysts believe that if the euro cannot quickly regain the 1.1900 level, the downside potential will be further opened up, with the 1.1765 level becoming the last line of defense for the bulls. Once this level is breached, a deeper correction may begin.