EUR/USD Slides Below 1.1850 After Eurozone Sentiment Drops to 96.3

Published: 2026-02-17 11:34:28 |

EUR/USD fell below the key 1.1850 level, trading near 1.1825 after the European Commission’s Economic Sentiment Indicator (ESI) for March 2025 unexpectedly dropped to 96.3 (consensus 98.1; February 97.8). The decline marks the third consecutive monthly fall in sentiment and was driven by weaker manufacturing (manufacturing component -8.5 from -6.2) and softer services confidence (9.1 from 10.3). Institutional trading volumes rose about 18% above the 30-day average as investors cut euro exposure. Technical indicators show RSI near 38 (approaching oversold) and broken support at 1.1850; key intraday levels to watch are support at 1.1800, 1.1775 (50‑day MA) and 1.1720, with resistance at 1.1850, 1.1880 and 1.1925 (100‑day MA). Fundamental drivers include ECB–Fed policy divergence (markets price ~50bp ECB easing vs ~75bp Fed easing in 2025), narrower current-account surplus, energy security risks, and pre-election political uncertainty. Major banks have trimmed EUR/USD forecasts (Deutsche Bank, Deutsche: 1.17–1.20 for Q2; Morgan Stanley, Citi, UBS also lowered targets). Options markets show elevated demand for euro puts into April, signaling bearish positioning. Near-term catalysts: Eurozone inflation (Apr 3), U.S. non‑farm payrolls (Apr 4) and ECB President Lagarde’s speech (Apr 5). For traders: the pair is under bearish pressure but technically oversold — short-term momentum favors further downside absent positive Eurozone surprises; confirmation of a break below 1.1775 would open paths toward 1.1650, while a recovery above 1.1880–1.1925 is needed to shift bias.

Bearish

The article describes a clear bearish setup for EUR/USD: weak Eurozone sentiment (ESI 96.3), institutional repositioning (volumes +18%), and policy divergence that favors the dollar. Technicals confirm the move — support at 1.1850 has flipped to resistance and RSI is near oversold but not yet signaling strong reversal. Options positioning (elevated euro puts) and downgraded bank forecasts reinforce downside conviction. Historically, similar sentiment-driven deteriorations in the Eurozone coincided with wider EUR/USD ranges and extended declines until confirmed macro stabilization or a pivot in ECB expectations. Short-term impact: increased volatility and higher probability of further declines toward 1.1775–1.1650 absent positive data. Long-term: persistent weak sentiment and ongoing ECB–Fed differential could sustain euro underperformance until growth or policy outlook improves. Traders should watch upcoming inflation, U.S. payrolls and ECB commentary for triggers to either accelerate declines (bad EU data / stronger US data) or prompt corrective rallies (positive EU surprises or reduced Fed easing bets).