The EUR/USD pair enters the second week of February with a constructive technical bias, currently trading around the 1.1820-1.1830 zone. This intraday bullish momentum is fundamentally reinforced by a widening policy divergence between the European Central Bank (ECB) and the Federal Reserve, alongside a general softening of the US Dollar. While the technical structure on the daily and hourly timeframes favors further upside, the medium-term H4 framework remains in a consolidation phase, awaiting a decisive catalyst. The market narrative is currently dominated by the anticipation of a cluster of high-impact US economic data, including a delayed Non-Farm Payrolls (NFP) report, which serves as the primary risk to the current bullish trajectory. Technical price action aligns with the fundamental backdrop to favor a "buy-the-dip" strategy, provided the pair can clear immediate structural resistance at 1.1836 during the London or early New York sessions.
Technical Analysis
Multi-Timeframe Market Structure
The dominant structure on the daily (D1) chart remains decidedly bullish. Price action is currently sustained above the 20-day Exponential Moving Average (EMA) at 1.1807 and the 50-day EMA at 1.1756. This alignment suggests that the broader uptrend remains intact, with the 200-day EMA at 1.1600 acting as a formidable long-term floor. The MACD profile on the daily timeframe maintains a positive orientation, supporting the narrative of sustained buying pressure despite recent consolidation.
On the H4 timeframe, the market exhibits a neutral-to-bullish consolidation. Price is currently engaging with the 50-period EMA at 1.1822, which serves as a critical short-term pivot. A sustained breach of this level would synchronize the H4 momentum with the bullish D1 trend. The RSI, currently at 54.46, indicates that momentum is balanced but tilting toward the upside. Deep structural support is found at the H4 200-period EMA (1.1765), which aligns with the rebound seen late last week.
Short-term intraday charts (H1/M30) confirm the bullish bias. Price is trading above both the H1 EMA20 (1.1818) and EMA50 (1.1810). The MACD histogram on the H1 chart is expanding, and the RSI at 64.44 suggests that bulls are in control of the immediate price action. The M30 micro-structure shows a tight consolidation just below the 1.1836 resistance, suggesting a breakout may be imminent if buying volume persists.
Critical Price Levels & Momentum Assessment
The technical framework identifies several key levels that will dictate price action in the coming sessions:
- Resistance 1: 1.1836 (Intraday High and H1 EMA200 confluence)
- Resistance 2: 1.1860 (Major structural resistance zone)
- Resistance 3: 1.1900 (Psychological level and previous daily swing high)
- Support 1: 1.1815 (Confluence of H4 EMA50 and M30 EMA50)
- Support 2: 1.1800 (Psychological floor and D1 EMA20)
- Support 3: 1.1750 (D1 EMA50 and previous structural low)
Momentum quality is currently characterized as moderate. While short-term oscillators are bullish, the H4 MACD remains slightly negative, indicating that the market has not yet achieved full timeframe synchronization. The ADX on lower timeframes (M5/M15) is elevated near 50, reflecting strong micro-trend strength, but the H1 ADX at 21.38 suggests that a broader trend expansion is in its early stages. Volatility remains relatively low, with the H1 Average True Range (ATR) at 8.5 pips.
Fundamental Market Drivers
Central Bank Policy & Economic Outlook
The fundamental backdrop provides significant support for the Euro, primarily through the lens of policy divergence. The ECB has maintained a steady hand since concluding its rate-cutting cycle in June 2025. Despite Eurozone inflation falling to 1.7% in January—below the 2% target—the Governing Council appears in no rush to resume easing. Resilient economic growth across the bloc has removed immediate pressure for further stimulus, though dovish members like Piero Cipollone have noted that the ECB will assess the impact of Euro strength on inflation dynamics in the upcoming March forecasts.
In contrast, the Federal Reserve is facing increasing pressure to ease policy. Markets are currently pricing in at least two 25-basis-point rate cuts for 2026, driven by signs of a cooling US labor market. This divergence in expectations creates a natural tailwind for EUR/USD. The technical recovery from the 1.1765 region aligns with this fundamental shift, as traders move away from the Greenback in anticipation of a more accommodative Fed stance.
Market Sentiment & Risk Environment
Global risk sentiment has improved following the conclusion of a round of talks between the US and Iran, which has significantly eased Middle East conflict concerns. This "risk-on" environment has weighed on the safe-haven US Dollar Index (DXY), allowing the Euro to scale higher for a second consecutive day. The upbeat market mood, combined with the technical breakout above a key bearish trend line at 1.1810, reinforces the bullish outlook.
However, sentiment remains cautious ahead of the "data cluster" from the United States. The delayed Non-Farm Payrolls report is the focal point for the week. With a forecast of only 70K new jobs, any further signs of labor market fragility would likely accelerate the USD sell-off and propel EUR/USD toward the 1.1900 handle. Conversely, the Euro faces internal headwinds from policymakers like Finland’s Olli Rehn, who has expressed concern over a prolonged inflation undershoot, suggesting that Euro strength itself could eventually trigger a dovish ECB response.
Integrated Trading Execution
Primary Trading Scenario
- Bias: Bullish breakout supported by USD weakness and ECB policy resilience.
- Trigger/Entry: Buy Stop at 1.1839 (clearing the intraday high and H1 EMA200).
- Stop-Loss: 1.1826 (providing a 1.5x H1 ATR buffer below the entry).
- Profit Targets:
- Target 1: 1.1860 - Major structural resistance where initial profit-taking is expected.
- Target 2: 1.1890 - Alignment with the previous daily swing high and psychological resistance.
- Session Context: This scenario is best executed during the London or early New York sessions to capture maximum liquidity before the high-impact US data releases tomorrow.
Alternative Market Scenario
- Invalidation: A failure to sustain price above the 1.1836 resistance or a hawkish surprise in US Retail Sales data.
- Bias: Neutral-to-bearish range play within the H4 consolidation framework.
- Trigger/Entry: Sell on a bearish engulfing or pin bar rejection at the 1.1836 level on the M30 timeframe.
- Stop-Loss: 1.1848 (placed above the immediate resistance zone).
- Profit Targets:
- Target 1: 1.1815 - Confluence of H4 and M30 EMA50 support.
- Target 2: 1.1800 - Psychological support and D1 EMA20.
- Session Context: Likely to occur during the New York session overlap if technical momentum fades or US Dollar short-covering begins ahead of tomorrow's data.
Risk Management & Catalyst Analysis
Trade Risk Assessment
The primary risk to the bullish technical setup is the upcoming cluster of high-impact US economic data. While the current trend is upward, the proximity of Retail Sales and NFP data suggests that volatility spikes could easily trigger stop-losses before the primary trend resumes. Traders should employ a strict stop-loss protocol, utilizing a 1.25x to 1.5x H1 ATR buffer to navigate the current low-volatility environment. Position sizing should be conservative; it is recommended to reduce exposure by 50% if the primary scenario has not reached its first profit target by the start of tomorrow's New York session, as event risk will heighten significantly.
Economic Calendar & Event Impact
The following high-impact events are critical for the EUR/USD trajectory this week:
- US Core Retail Sales m/m (Tomorrow, 13:30 UTC): Forecast 0.4%, Previous 0.5% - A stronger-than-expected reading would likely spark a USD recovery and challenge the 1.1800 support.
- US Retail Sales m/m (Tomorrow, 13:30 UTC): Forecast 0.4%, Previous 0.6% - Key indicator of US consumer strength and Fed policy expectations.
- US Non-Farm Employment Change (February 11, 13:30 UTC): Forecast 70K, Previous 50K - The primary catalyst for the week; a weak number would validate the bullish EUR/USD breakout.
- US Unemployment Rate (February 11, 13:30 UTC): Forecast 4.4%, Previous 4.4% - Crucial for assessing the degree of labor market cooling.
- US Unemployment Claims (February 12, 13:30 UTC): Forecast 222K, Previous 231K - Provides a mid-week pulse on labor market stability.
- US CPI y/y (February 13, 13:30 UTC): Forecast 2.5%, Previous 2.7% - Critical inflation data that will dictate the medium-term trend for the remainder of the month.
Synthesized Market Outlook
The technical structure of EUR/USD combined with the current fundamental backdrop supports a bullish outlook in the near term. The pair’s ability to hold above the 1.1800 psychological level and the 20-day EMA suggests that the path of least resistance is higher. Easing geopolitical tensions and the anticipation of a dovish shift from the Federal Reserve provide the necessary fundamental tailwinds to challenge the 1.1860 and 1.1900 levels. However, traders must remain vigilant as the market enters a high-volatility window. The immediate focus remains on the 1.1836 resistance level; a clean break here confirms the intraday bullish bias, while a failure would signal further consolidation. Monitoring the 1.1800 support and the upcoming US NFP figures will be essential for assessing the sustainability of any upward move.
