18.02.202609:36 Forex Analysis & Reviews: USD suffers pressure

Yesterday, despite a broad dollar rise through much of the day, the currency was actively sold in the middle of the US session.

The move followed remarks by the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, who expressed cautious optimism about the prospects for rate cuts later this year. He said that if inflation continued to move back toward the central bank's 2% target, the likelihood of further monetary easing would remain high. The comment was an important signal for financial markets, which are closely watching for any hints of future Federal Reserve action.

"If...we can show that we're on path to 2% inflation, I still think there's several more rate cuts that can happen in 2026," Goolsbee said in an interview.

Goolsbee, however, did not ignore existing risks. He noted in particular that price pressure in the services sector remains significant, which is a cause for concern. Nevertheless, he suggested that if the current rise in prices proves transitory and does not produce lasting inflationary effects, that would give Fed policymakers room to maneuver. Such a development would allow them to consider cutting rates without undermining overall price stability.

"I want some evidence that we're headed back to 2%, and then I think rates can keep coming down," Goolsbee said.

Recall that at its meeting last month, Fed officials left policy rates unchanged after three cuts in recent months aimed at offsetting a weakening labor market.

Goolsbee's remarks reflect the difficult balance the Fed faces: fighting inflation while supporting growth and the labor market. Flexibility in assessing inflationary factors is key to making timely and appropriate decisions.

Goolsbee also said he welcomed the planned nomination of Kevin Warsh to succeed Jerome Powell as Fed chair when Powell's term ends in May. "I am a big fan of his," Goolsbee said.

As for a technical outlook for EUR/USD, it suggests that buyers should consider reclaiming 1.1860. That would open the way to test 1.1890. From there, a move to 1.1925 is possible, although advancing beyond that without support from major players would be difficult. The extended target is 1.1957. On a decline, meaningful buying interest is likely near 1.1830. If buyers do not appear there, it would be prudent to wait for a new low at 1.1805 or to open long positions from 1.1770.

As for GBP/USD, buyers of the pound sterling should capture the nearest resistance at 1.3580. Only that will allow them to target 1.3605, above which a breakout would be challenging. The extended target is around 1.3630. If the pair falls, bears will try to seize control at 1.3550. If they succeed, a break of that range would deal a serious blow to bullish positions and could push GBP/USD down to 1.3520 with scope to extend to 1.3495.