Currency markets enter the week of February 17–21, 2026 in consolidation mode, but beneath the surface, important shifts are taking place.
After declining nearly 10% during 2025, the US dollar is attempting to stabilise. Meanwhile, the euro remains near multi-year highs, and sterling faces a pivotal week of UK inflation and wage data.
The question many are asking:
Will the dollar increase this week — or does further weakness lie ahead?
This comprehensive weekly currency forecast covers:
- US Dollar outlook (DXY)
- EUR/USD forecast
- GBP/USD forecast
- Key economic events
- Central bank positioning
- Next month’s USD outlook
- 2026 broader projections
- Practical guidance for large transfers
Forecast Summary – Week Ahead Snapshot
US Dollar (DXY): Neutral to slightly bearish
Projected DXY Range: 99.5 – 101.5
EUR/USD Forecast Range: 1.1780 – 1.2010
GBP/USD Forecast Range: 1.3550 – 1.3750
Highest Event Risk: Wednesday UK CPI, Friday US GDP & Core PCE
Base case: consolidation with volatility around data releases.
US Dollar Forecast This Week
The dollar remains under medium-term pressure but is showing signs of short-term stabilisation.
The Dollar Index (DXY) is currently trading between 100–101, holding above the psychological 100 level but well below its 2024–2025 highs.
Federal Reserve Position
The Federal Reserve held interest rates steady at 3.5%–3.75% during its January meeting. Policymakers signalled caution about cutting too quickly, but markets are pricing the first rate reduction around June 2026.
Consensus expectations:
- 2–3 rate cuts during 2026
- Federal funds rate potentially falling toward 3.0%–3.25% by year-end
The dollar’s near-term path depends on whether incoming data supports or challenges that easing trajectory.
Will the Dollar Increase This Week?
Short answer: Mixed trading is likely.
For a meaningful dollar rebound, markets would need:
- Strong US GDP (Friday)
- Firm Core PCE inflation
- Upbeat PMI data
If growth and inflation surprise higher, expectations for early rate cuts could be delayed, supporting USD.
If inflation cools further or PMI readings soften, traders may accelerate pricing for mid-year cuts, putting renewed pressure on the dollar.
Technical Outlook – DXY
- Immediate Support: 99.5
- Secondary Support: 98.8
- Resistance: 101.5
- Major Resistance: 102.8
A daily close above 101.5 would strengthen short-term bullish momentum.
A break below 99.5 would expose downside toward 98.
Momentum indicators suggest consolidation rather than a trend reversal.
Key Drivers of the Dollar This Week
1. Interest Rate Expectations
The primary driver of USD in 2026 remains rate differentials.
If the Fed cuts faster than the eurozone or UK, the dollar may remain under pressure.
2. Inflation Trajectory
Core PCE on Friday will be closely watched. Persistent inflation would support USD. A softer reading would reinforce easing expectations.
3. Growth Divergence
The US economy continues expanding at a moderate pace, limiting downside risk. However, improved momentum in parts of Europe and Asia reduces the dollar’s relative appeal.
4. Risk Sentiment
If global markets remain stable, the dollar’s safe-haven demand may remain muted. Any geopolitical escalation could temporarily boost USD.
EUR/USD Forecast – February 17–21
Current Rate: ~1.1860
The euro has appreciated more than 13% against the dollar since early 2025 and briefly touched 1.2081 in January before pulling back.
The European Central Bank maintained its policy rate near 2.0% at its latest meeting and appears comfortable with current conditions.
Week-Ahead Range: 1.1780 – 1.2010
EUR/USD movement will likely be driven more by US data than eurozone releases this week.
Key Levels
- Support: 1.1780
- Resistance: 1.1983
- Break above 1.20 opens 1.21–1.22
Many major banks project EUR/USD toward 1.20–1.24 later in 2026 if Fed easing proceeds as expected.
What Would Push EUR/USD Higher?
- Softer US inflation
- Weak US PMI
- Confirmation of mid-year Fed cuts
What Would Cap Gains?
- Strong US GDP
- Hawkish Fed commentary
- Eurozone growth disappointment
GBP/USD Forecast – February 17–21
Current Rate: ~1.3650
Sterling faces the highest event risk this week due to UK data releases.
The Bank of England cut rates to 3.75% in December 2025. The most recent meeting delivered a 5-4 vote split, indicating a cautious stance.
UK Economic Calendar
Tuesday: Average Earnings
Wednesday: CPI Inflation (Expected ~3.4%)
Friday: Flash PMI
Week-Ahead Range: 1.3550 – 1.3750
If inflation undershoots expectations, markets may increase bets on further rate cuts, pressuring GBP/USD toward 1.35.
If CPI remains firm and wages show resilience, sterling could retest 1.37–1.38.
Medium-term projections for 2026 place GBP/USD between 1.36–1.40.
Detailed Event Risk Analysis
Tuesday – UK Labour Data
Wage growth remains central to inflation persistence. Elevated wage growth may delay rate cuts.
Wednesday – UK CPI & US FOMC Minutes
UK CPI could shift sterling expectations sharply.
US FOMC minutes may clarify the Fed’s comfort level with current policy.
Thursday – Eurozone GDP
Growth momentum remains modest. Any downside surprise could limit euro gains.
Friday – US GDP, Core PCE & Global PMI
This represents the most significant volatility window of the week.
Strong GDP + firm inflation = USD rebound risk.
Weak PMI + cooling inflation = renewed dollar softness.
USD Forecast for February–March 2026
Looking beyond this week, the dollar faces structural headwinds:
- Anticipated Fed easing mid-year
- Narrowing yield differentials
- Improved growth stability outside the US
DXY is projected to consolidate around 100–102 in February, with potential drift toward 98–100 into March if inflation moderates.
However, any surprise resilience in US data could produce temporary recovery phases.
2026 Full-Year Outlook
Consensus among major institutions suggests gradual USD weakness through 2026.
Projected ranges:
- EUR/USD: 1.20–1.24
- GBP/USD: 1.36–1.40
- DXY: Potential move toward 95–98
Importantly, most forecasts anticipate at least one meaningful dollar recovery phase during the year rather than a straight-line decline.
Major Risks to Watch
Upside Risks for USD
- Persistent US inflation
- Strong labour market resilience
- Renewed geopolitical tensions
Downside Risks for USD
- Faster-than-expected rate cuts
- Weak PMI readings
- Softer consumer demand
What This Means for Large Currency Transfers
Even modest exchange-rate changes can materially impact high-value transactions.
A 2–3% move on a $100,000 transfer equals $2,000–3,000 difference.
For GBP to USD Transfers
Current levels sit near mid-range. Consider waiting until after Wednesday’s CPI if timing allows.
For USD to GBP Transfers
Look for temporary dollar strength around Friday’s US data releases.
For EUR to USD Transfers
EUR/USD remains elevated historically. Consider staged transfers to manage risk.
Frequently Asked Questions
Will the dollar go up this week?
Mixed trading expected. Upside depends on strong US GDP and inflation data.
Why has the dollar weakened?
Markets anticipate rate cuts and narrowing interest-rate differentials.
Is it a good time to buy USD?
Depends on timing needs. Current levels are neither extreme highs nor lows.
What affects exchange rates most?
Interest rates, inflation trends, growth momentum and risk sentiment.
Final Thoughts – February 17–21 Outlook
The week ahead is unlikely to produce a structural trend shift, but volatility around data releases may create tactical opportunities.
Base case:
- USD: Consolidation
- EUR/USD: Stable to modestly firm
- GBP/USD: Event-driven volatility
For large transfers, planning matters more than attempting to pick the exact top or bottom.
If you are arranging a high-value international payment, speaking with a currency specialist can help you structure your timing effectively.
Request a live quote or discuss your transfer requirements with Cambridge Currencies to review available options.
