EURUSD is poised to rebound in anticipation of Fed’s hints

The EURUSD pair continues to slide as the dollar recovers, drawing strength from recently revised market expectations regarding the US Federal Reserve’s (Fed) monetary policy path. Investors are growing increasingly doubtful about three rate cuts this year. The more hawkish the regulator sounds, the more support the greenback receives.

Moreover, the eurozone is now facing its own uphill battle. Germany’s ZEW Economic Sentiment Index surprisingly dropped to 58.3, reflecting worsening expectations among investors. At the same time, the country’s inflation rate climbed to 2.1%. On top of that, the region’s industrial production has been nosediving for some time. Clearly, stagflation risks are high.

However, the US dollar is not entirely out of the woods. Markets have priced in rate cuts of about 59–61 basis points by year-end. In the meantime, major institutions, such as JPMorgan and Bank of America, remain skeptical about the USD’s steady growth. Moreover, analysts from Insight Investment believe that the Trump administration takes a keen interest in a weaker greenback as a powerful lever in global trade relations. This role is now capping the dollar’s upside.

From a technical standpoint, the pair is stuck in a downtrend, with the Stochastic Indicator confirming this dynamic. However, its lines are now approaching oversold territory, which could give buyers enough strength to stage a temporary rebound. The Chaikin Oscillator is also hinting at a probable reversal, having entered the positive zone with no significant selling pressure. The indicator’s recent ascent amid falling prices forms bullish divergence—a sign that major players may be quietly building up their positions behind the scenes. This makes a rebound or consolidation phase more likely in the near future.

All in all, traders remain cautious, waiting for the upcoming release of the FOMC meeting minutes. These data are expected to shed light on the central bank’s future easing cycle.

Take into account the trading strategy presented below:

Buy EURUSD at the current price. Place Take profit at 1.19300 and Stop loss at 1.17750.

The forecast is valid from February 18 till February 26, 2026.