On the euro side, on February 9, renowned research institute Sentix released its latest monthly survey results, indicating a key turning point in Eurozone investor confidence. The survey, which covered 1,091 market participants from February 5 to 7, showed that the core confidence index rose for the third consecutive month, breaking above the breakeven line to reach its highest level since July 2025. The overall confidence reading jumped from -1.8 points in January to 4.2 points, significantly higher than the market consensus forecast of 0.0 points, signaling a strong recovery. Sub-indices also improved: the expectations index, reflecting the outlook for the next six months, rose from 10.0 points to 15.8 points, while the current conditions index climbed from -13.0 points to -6.8 points. In its official statement, Sentix noted that the Eurozone recession phase is nearing an end, with recovery momentum gradually building, a view consistent with the recent rebound in high-frequency data. The turnaround in confidence from negative to positive, along with three consecutive months of improvement, marks a phase shift in how markets price the Eurozone economy. For over a year, high interest rates constrained credit, energy cost volatility, and weakening external demand pushed the region into a mild recession, keeping investor sentiment in the contraction territory. This three-month recovery is not a short-term bounce but the result of alignment between the policy environment, inflation trends, and real economic activity. Inflation has continued to fall, creating room for a policy pivot: in January, Eurozone CPI fell to 1.7% year-on-year, below the ECB's 2% medium-term target, with core inflation also slowing. Easing price pressures have reduced household burdens and gradually alleviated cost-side pressure on businesses, providing fundamental support for confidence recovery. The ECB's decision to keep rates steady removed policy uncertainty, reducing fears of aggressive tightening, easing valuation pressure on risk assets, and encouraging capital back into Eurozone assets, all reinforcing optimistic expectations. This positive feedback loop between expectations and reality has pushed the confidence index past a critical threshold, shifting market pricing from a "defensive contraction" framework to one of "mild expansion."

On the dollar side, San Francisco Fed President Mary Daly said in a recent interview that the Federal Reserve may need to cut interest rates once or twice more to address weakness in the U.S. labor market. She noted that American workers are struggling as rising prices erode wage gains, while new job opportunities remain scarce. "I think we have to keep an open mind, a very open mind on rates," Daly told the media on February 6 (local time), marking her first interview since the Fed held rates steady at the end of last month. Daly supported the decision to pause rate cuts, but she believed there are reasons to go further and make additional cuts. "To cut rates, you have to be pretty confident, like really confident, that the effects of the tariffs will roll off ... that inflation is really on a downward trajectory," Daly explained. Currently, U.S. inflation remains above the Fed's 2% target, but some Fed officials expect goods inflation to ease by mid-year, leading to a broader slowdown in inflation. Another driver for further Fed rate cuts, according to Daly, is the expectation that the labor market outlook is more fragile than current data suggests. While risks between the Fed's dual mandate of price stability and full employment appear "relatively balanced," Daly noted that current vulnerabilities lean more toward the labor market. If businesses find that expected demand fails to materialize, layoffs could increase, but given stable inflation expectations, she does not anticipate a significant rise in inflation. "To cut rates, you also have to be really worried that the labor market is more challenged than we currently see in the data," she said. Daly also highlighted another key labor market indicator: the number of parents coming to her expressing difficulty finding jobs for their children, a trend reflected in recent data showing higher unemployment among recent college graduates compared to the overall workforce. "That's an indicator about just the precariousness" of the job market, she said. "At this point, given what I'm seeing in the economy, I lean towards, you know, additional cuts: whether that's one or two is hard to say."

Based on the daily chart, EUR/USD's Bollinger Bands are expanding upward, and moving averages are diverging higher. After the MACD formed a golden cross signal, prices surged strongly with a large bullish candle. Overall, the uptrend remains intact, with resistance near previous highs at 1.20 and 1.208. The RSI stands at 60, indicating strong bullish sentiment, and higher lows are being established. The 4-hour chart also suggests that Bollinger Bands are expanding upward, moving averages diverge upward, and the MACD and signal lines have broken above the zero axis, signaling the market is in a bullish zone. Prices are rising strongly along the Bollinger Upper Band, with no signs of weakening in the short term. The RSI is at 69, approaching overbought territory, but as long as prices fail to break below the 12-period EMA, the uptrend will continue. In the short term, buying at lows is preferred.

Trading direction: Buy

Entry Price: 1.19

Target Price: 1.21

Stop Loss: 1.18

Support: 1.18/1.16/1.15

Resistance: 1.2/1.208/1.21