WASHINGTON, February 6, 2026 – The euro held steady at 1.1803 on Tuesday, bouncing back from a two-day slide, as surprisingly strong U.S. economic data and a shift in expectations for Federal Reserve policy provided a floor for the currency. the stabilization suggests the market is reassessing the outlook for interest rates and global economic growth.
Fed Policy and Economic Resilience Support Euro
The euro’s resilience comes despite a strengthening dollar, driven by expectations of a more cautious Federal Reserve under potential new leadership and robust U.S. industrial activity are supporting the euro.
- U.S. industrial activity unexpectedly expanded, signaling continued economic strength.
- The nomination of Kevin Warsh to lead the Fed is perceived as a more cautious approach to rate cuts.
- A new trade agreement between the U.S. and India includes reciprocal tariff reductions and a commitment from New Delhi to curtail Russian oil purchases.
- Friday’s U.S. labor market report, a key indicator, may be delayed due to the ongoing partial government shutdown.
Statistics revealed an unexpected expansion in U.S. industrial activity, suggesting the economy and corporate profits remain resilient despite concerns about a potential slowdown. Investor focus is now turning to Friday’s report on the U.S. labor market, though its release could be delayed due to the partial government shutdown currently underway.
The dollar began its ascent on Friday following President Donald Trump’s nomination of Kevin Warsh to head the Federal Reserve, replacing Jerome Powell. Market participants view Warsh as a relatively more hawkish candidate, suggesting he would be less inclined to aggressively cut interest rates compared to other potential nominees.
In a separate growth, Trump announced a trade deal wiht India that involves reciprocal tariff cuts. As part of the agreement, New Delhi has committed to halting purchases of Russian oil.
Technical Analysis Points to a Pause,not a Reversal
On the H4 chart, EUR/USD has entered a post-surge corrective phase after encountering resistance in the 1.2050-1.2100 area. The price has retreated to 1.1850-1.1870, while remaining above the previously broken 1.1830-1.1850 resistance level, which now acts as key support. Momentum is waning, as Bollinger Bands have stopped widening and the MACD histogram is shrinking, though the MACD remains in positive territory. This correction appears to be technical in nature, with no immediate signs of a broader trend reversal.
Looking at the H1 chart, the correction is forming a descending channel. The price is currently trading below the middle line of the Bollinger Bands, and the recovery is sluggish. The Stochastic oscillator has exited the oversold zone, suggesting a potential short-term rebound. However, as long as prices remain below the 1.1920-1.1950 zone, downward pressure is likely to persist. Maintaining the 1.1830 zone is crucial for preserving the bullish outlook on higher timeframes.
the EUR/USD pair is currently undergoing a technical pause following a important decline, finding temporary support around 1.1803. This stabilization is largely attributable to a recalibration of Fed expectations following the hawkish leadership nomination and the release of robust U.S. industrial data. While technical indicators suggest the current move is a correction within a larger uptrend, the immediate outlook remains cautious. The pair’s near-term direction will heavily depend on defending the critical 1.1830 support level and will likely be influenced by the upcoming U.S. labor market data, even with the possibility of delays.
