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Minneapolis Fed President Neel Kashkari said today that the Fedis close to achieving its dual mandate of stable prices and full employment, though it has not fully reached either objective. He acknowledged that progress has been made on both inflation and labor market stability, but emphasized that the job is not yet complete.

On monetary policy, Kashkari suggested the current stance is near neutral. “My guess is we’re pretty close to neutral,” he said, indicating that policy may no longer be meaningfully restrictive. That framing reinforces the view that the Fed is entering a more balanced phase, where future moves will depend heavily on incoming data rather than a preset easing path.

Kashkari also expressed skepticism about stablecoins and broader crypto narratives. He criticized what he described as “buzzword salad” often used to promote digital assets, urging observers not to accept vague or unsubstantiated claims about their benefits. His comments underscore ongoing caution within parts of the Fed regarding financial innovation and regulatory oversight.

Markets

Brent crude prices extend yesterday’s rally with another $2/b move, this time from $70/b to $72/b and confirming a technical break above the $70/b resistance zone. The oil price trades at its highest level since last summer when they spiked towards $80/b in the wake of Operation Midnight Hammer, the US’s strikes on Iranian nuclear sites. Markets are again on high alert over the Iranian situation. Talks in Geneva earlier this week didn’t really result in hoped-for progress, but a two-week deadline instead. The UN’s nuclear watchdog today warned that the US military build-up in the region means that Iran’s window to reach a diplomatic agreement over its atomic activities is at risk of closing. The US gathered the most air power in the Mideast since the 2003 Iraq invasion, according to flight-tracking data and confirmed by a US official to the WSJ. Markets become more aware of the looming threat. Core bonds fail to really play a safe haven role with higher energy prices interfering. Risk sentiment on stock markets sours with European indices losing around 1%. That’s only one day after the EuroStoxx50 set a new all-time high. US stock markets open 0.25% lower. The greenback shines on FX markets for a second straight session. The US currency plays it safe haven role with near term Fed rate cut bets (March) reduced to nearly 0% following last week’s eco data. The trade-weighted dollar (DXY) tests first resistance at 97.99 (from a start at 97.73). EUR/USD (1.1750) is currently already giving away similar support at 1.1761. The same goes for cable which changes hands at 1.3440, below 1.3509 support. EUR/GBP is about to reach a new YtD top north of 0.8750. Even the Japanese yen fails to keep track with the mighty USD, finding its way north of 155, but remains well below first support at 157.76.

US December trade balance data offered a final piece of tomorrow’s US Q4 GDP puzzle. Exports of goods dropped by more than 3%, but this decline can be explained by non‑monetary gold exports. Imports grew strongly again (+3.6% M/M), this time less influenced by gold trade. Our KBC nowcast now predicts 2.74% Q/Qa growth for Q4 (vs +3% consensus); however, if we filter out the gold effects, only 1.6% Q/Qa would remain. Non‑residential investments remain a strong component of our in-house nowcast on the back of AI‑related investment. Weaker December retail sales pushed personal consumption slightly down, but we still expect annualized Q/Q-growth of 2.82% for this component. A first look at Q1 is weaker, based on the data already available, with growth at 1.55%. However, filtering out the gold effects, we would have 1.89% for Q1.

News & Views

Belgian consumer confidence, after reaching its highest point since 2021 in January, saw a fresh decline in February to 1 from 4, the National Bank of Belgium’s monthly survey showed. The composite indicator remains well above the long-term average though. Concerns about year-ahead unemployment in particular have risen sharply. We should add that this worsening comes after consumers in January were never more optimistic on the labour market than at any other point in time in the series’ 40-year history. Households are also more pessimistic about their capacity to save but simultaneously turned more positive on the general economic situation.

A set of below-consensus Polish January economic data reinforce bets for a rate cut by the central bank (NBP) as soon as March. FRA pricing suggests that after lowering the policy rate to 3.75% next month, more cuts may follow further down the line to perhaps as low as 3.25% (50-50% chance) by 2025H2. The zloty weakens slightly to EUR/PLN 4.22 to nevertheless remain near the strongest levels of the past decade. Gross wages last month tumbled 6.1% m/m to be up the same percentage in a yearly perspective, which was the slowest pace in five years. Employment also unexpectedly dropped 0.2% m/m, extending the trend seen in all of 2025 (barring the one-off 0.1% uptick in November). The amount of people having a job is now 0.8% lower than in January of last year. Industrial sales missed expectations big time, dropping 6% m/m (-3% expected) and -1.5% annually, with unusually cold weather said to have had a serious negative impact. Finally, producer prices slipped a monthly 0.3% and push the yearly print to a one-year low of -2.6%.

Daily Pivots: (S1) 153.64; (P) 154.25; (R1) 155.44; More...

Intraday bias in USD/JPY remains on the upside at this point. Further rally should be seen to 157.65 resistance first. Break there will target a retest on 159.44 high. On the downside, below 154.33 minor support will turn intraday bias neutral and bring consolidations. Overall, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact rise from 139.87 is expected to resume through 159.44 at a later stage.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 151.77) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 0.7708; (P) 0.7721; (R1) 0.7744; More….

USD/CHF's outlook is unchanged and intraday bias remains neutral. Consolidations from 0.7603 is extending and stronger rebound could be seen. But upside should be limited by 55 D EMA (now at 0.7849) to complete the pattern. On the downside, break of 0.7603 will resume larger down trend, and target 0.7382 projection level next. However, sustained break of 55 D EMA will indicate that a larger scale corrective bounce in underway and target 0.8039 resistance next.

In the bigger picture, down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8123 resistance holds.

Daily Pivots: (S1) 1.3463; (P) 1.3522; (R1) 1.3554; More...

GBP/USD's fall from 1.3867 is still in progress and intraday bias stays on the downside. Current development suggests that the decline is at least correcting the uptrend from 1.2099. Break of 1.3342 support will solidify this case, and target 161.8% projection of 1.3867 to 1.3507 from 1.3711 at 1.3129. For now, risk will stay on the downside as long as 1.3711 resistance holds, in case of recovery.

In the bigger picture, rise from 1.0351 (2022 low) still in progress and should target 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. For now, outlook will stay bullish as long as 1.3008 support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.1756; (P) 1.1808; (R1) 1.1833; More….

EUR/USD's fall from 1.2081 resumed by breaking 11764 support and intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 1.1763) will raise the chance of reversal on rejection by 1.2, and target 1.1576 support for confirmation. For now, risk will stay mildly on the downside as long as 1.1928 resistance holds, in case of recovery.

In the bigger picture, as long as 55 W EMA (now at 1.1485) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Dollar jumped in early US session after jobless claims came in much stronger than expected, reinforcing signs of labor market resilience. The data added fresh fuel to a rally that had already begun following yesterday’s more hawkish-than-expected FOMC minutes. The greenback’s strength is most visible against European majors with EUR/USD sliding through the near-term low set in early February.

Markets appear to be getting more comfortable with the idea that Fed may not need to cut rates again in first half of year. The combination of firm labor data and cautious Fed tone raises the bar for further easing. yesterday’s FOMC minutes already suggested that additional cuts are far from automatic. The mention by some participants that rate hikes could even be discussed under certain inflation scenarios shifted perceived risk asymmetry back in favor of Dollar. Today’s labor figures reinforce that narrative. With initial jobless claims falling sharply, evidence of labor market deterioration remains limited. That reduces urgency for policy accommodation.

Besides, some uncertainty centers on leadership at Fed. US President Donald Trump’s nomination of Kevin Warsh to replace Jerome Powell is facing potential delays amid political standoff in Senate. If confirmation is prolonged, Powell could remain in role slightly longer than anticipated. Alternatively, Vice Chair Philip Jefferson could serve as acting chair during transition.

Either scenario could slow policy adjustments, as institutional continuity tends to favor stability over rapid change. That, in turn, may delay next rate cut even further.

For week so far, Dollar leads performance table and momentum is building. Aussie follows, supported by firm employment data. Loonie benefits from rebound in oil. Yen is now weakest after renewed selling, followed by Sterling and Kiwi, while Euro and Swiss Franc trade in middle of pack.

In Europe, at the time of writing, FTSE is down -0.57%. DAX is down -0.91%. CAC is down -0.76%. UK 10-year yield is up 0.008 at 4.383. Germany 10-year yield is up 0.009 at 2.752. Earlier in Asia, Nikkei rose 0.57%. Hong Kong and China were on holiday. Singapore Strait Times rose 1.28%. Japan 10-year JGB yield rose 0.001 to 2.141.

US initial jobless claims fall to 206k vs exp 229k

US initial jobless claims fell -23k to 206k in the week ending February 14, well below expectation of 229k. Four-week moving average of initial claims fell -1k to 219k.

Continuing claims rose 17k to 1,869k in the week ending February 7. Four-week moving average of continuing claims rose 1k to 1,845k.

BoE's Mann: Inflation improving, but jobless rise ‘very much of a concern’

BoE MPC member Catherine Mann described this week’s inflation data as “good numbers,” though she cautioned that underlying pressures had not improved as much as policymakers had hoped. While headline CPI continues to slow, Mann signaled that the central bank remains focused on whether the disinflation trend is sustainable rather than temporary.

She pointed to the rise in unemployment as "very much of a concern", added that the MPC is approaching a point where policy must carefully balance inflation control with labor market risks. That framing suggests internal debate is shifting from solely combating inflation toward weighing growth considerations more seriously.

However, Mann stopped short of endorsing a March rate cut. She questioned whether the projected fall of inflation toward 2% in coming months truly reflects a durable return to target.

Mann voted with the majority to hold rates in the recent 5-4 decision and indicated the time for a cut is drawing nearer.

Australia unemployment rate unchanged at 4.1%, jobs solid enough to keep RBA May hike in play

Australia added 17.8k jobs in January, slightly below expectations of 20.3k, but the details were firm. Full-time employment rose a strong 50.5k, while part-time positions fell -32.7k. Unemployment rate held steady at 4.1%, undershooting forecasts for a rise to 4.2%, with participation unchanged at 66.7%. Monthly hours worked increased 0.6% mom, reinforcing signs of steady labor demand.

The composition matters. The shift toward full-time employment and higher hours worked suggests underlying strength rather than softening. Taken together, the data indicate the labor market remains relatively tight, with the economy still operating close to capacity.

From the RBA’s perspective, the failure of employment conditions to weaken keeps inflation risks front and center. A cooling labor market would have allowed policymakers to shift focus toward growth risks. Instead, today’s figures reinforce the view that wage pressures may remain sticky.

The base case remains for another 25bps rate hike in May, pending Q1 CPI confirmation. Whether further tightening is needed beyond that remains an open question. But for now, the labor market is not providing the RBA with any comfort that inflation pressures will fade on their own.

RBNZ’s Silk: Growth and disinflation can coexist amid spare capacity

Following the RBNZ’s decision to keep the OCR at 2.25% yesterday, Assistant Governor Karen Silk emphasized that the economy can grow even as inflation moderates.

She acknowledged that the idea may appear counterintuitive but argued that the output gap provides room for above-trend growth without reigniting price pressures. But, according to Silk, the presence of spare capacity allows output to grow above potential temporarily without reigniting inflation.

Silk described risks around the projected cash-rate path as balanced. While some sectors are showing signs of recovery, consumption remains subdued. At the same time, she warned of upside inflation risks if firms facing squeezed margins begin raising prices more aggressively.

The RBNZ estimates the neutral cash rate at around 3%, suggesting policy is still accommodative. Current projections show only a gradual move toward that neutral level by late 2027. “That’s a reflection of that spare capacity that exists within the economy and the time it will take for that to be absorbed,” Silk said.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1756; (P) 1.1808; (R1) 1.1833; More….

EUR/USD's fall from 1.2081 resumed by breaking 11764 support and intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 1.1763) will raise the chance of reversal on rejection by 1.2, and target 1.1576 support for confirmation. For now, risk will stay mildly on the downside as long as 1.1928 resistance holds, in case of recovery.

In the bigger picture, as long as 55 W EMA (now at 1.1485) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

US initial jobless claims fell -23k to 206k in the week ending February 14, well below expectation of 229k. Four-week moving average of initial claims fell -1k to 219k.

Continuing claims rose 17k to 1,869k in the week ending February 7. Four-week moving average of continuing claims rose 1k to 1,845k.

Full US jobless claims release here.

• GBP/USD has broken a key ascending trendline, potentially leading to a 470-pip decline.
• The four-hour chart RSI is oversold, hinting at a short-term rebound before a potential continuation of the downtrend.
• If the current US Dollar rally wanes, this could see the potential setup face significant headwinds.
• The bearish setup is invalidated if the daily candle closes above the 1.3700 swing high.

GBP/USD has continued to slide thanks in part to the US Dollar resurgence this week as well as renewed hopes of rate cuts from the Bank of England (BoE).

Scenario 1

Cable has been on a downward trend printing lower highs and lower lows since the peak of 1.38700 printed on January 27, 2026.

The pair has staircased its way lower since then and has finally breached the medium-term ascending trendline with a daily candle close yesterday.

This sets up a potential drop of as much as 470-odd pips moving forward.

GBP/USD Daily Timeframe, February 19, 2026

Source: TradingView

Dropping down to a four-hour chart, GBP/USD is printing a fresh low while the RSI-period 14 hovers in oversold territory.

That is a concern and may hint at a pullback in the near-term before a bearish continuation.

Keep an eye on the swing highs around 1.3573 and potentially 1.3651 which lines up with the 100-day MA on the H4 chart.

GBP/USD Four-Hour Timeframe, February 19, 2026

Source: TradingView

Scenario 2

The concern for this setup is the US dollar which is enjoying a renaissance this week which has driven a part of this breakout.

Later today markets will focus on US data releases of initial jobless claims and the December trade surplus report.

If today’s data confirms a narrower-than-expected deficit for December, it would likely boost growth projections for the fourth quarter of 2025 and provide the US dollar with a short-term lift.

Despite this potential for a bounce, the broader outlook for the greenback remains challenged. While the US Dollar Index (DXY) may drift toward the 98.00 level on positive data, a pervasive "sell the rally" sentiment continues to dominate the market.

Many market participants expect the currency’s strength to be fleeting, as long-term expectations for Federal Reserve policy and global trade shifts maintain downward pressure on the dollar's overall trajectory.

This overarching theme around the US dollar is a major concern and could be the one to scupper a potential deeper selloff in GBP/USD.

In order for the bearish setup to be invalidated, a daily candle close above the 1.3700 swing high on the daily chart is needed to put bulls back in control.

GBP/USD Daily Timeframe, February 19, 2026

Source: TradingView

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