Published by Global Banking & Finance Review®
Posted on February 18, 2026
4 min readLast updated: February 18, 2026
Add as preferred source on GoogleThe dollar holds steady as markets focus on Fed minutes and geopolitical tensions, including U.S.-Iran nuclear talks and U.S.-Ukraine negotiations.
By Chuck Mikolajczak
NEW YORK, Feb 18 (Reuters) - The euro stumbled on Wednesday after a report that European Central Bank (ECB) President Christine Lagarde planned to step down early, while the dollar strengthened further following a batch of economic data and the minutes from the Federal Reserve's January meeting.
The Financial Times reported Lagarde plans to leave her job early, ahead of next year's French presidential election, to give outgoing French leader Emmanuel Macron a say in picking her successor.
However, the ECB said that Lagarde had not yet made a decision on the end of her term and Executive Board Member Piero Cipollone said he had “no news” about a resignation before the end of her term.
"There is some discussion about who the next ECB president is going to be but I'm not sure that it's going to be something that markets are going to be overly focused on," said James Lord, global head of FX & EM strategy at Morgan Stanley.
"Currency markets are going to be mostly focused on the near-term data, the near-term monetary policy outlook and so, the news about Lagarde may then not be market moving."
The dollar strengthened after a flurry of U.S. economic data was stronger than anticipated, likely driven by an AI investment boom.
The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6%, above the 0.4% forecast of economists polled by Reuters.
In addition, the Federal Reserve said manufacturing output rose 0.6% last month, the largest gain since February 2025, after being unchanged in December, topping the 0.4% estimate.
The dollar index, which measures the greenback against a basket of currencies, rose 0.6% to 97.71, with the euro down 0.57% at $1.1786.
The greenback was on track for its third straight advance and biggest daily percentage gain since January 30.
Sterling weakened 0.52% to $1.3499 after official figures showed Britain's annual rate of consumer price inflation fell to 3.0% in January, in line with the estimate of economists polled by Reuters, from 3.4% in December.
FED MINUTES, GEOPOLITICS IN FOCUS
The minutes from the Fed's most recent policy meeting showed policymakers were in near-unanimous agreement to keep interest rates on hold, but remained split over the next steps, with "several" of them open to rate hikes if inflation remains elevated, while others were willing to cut rates further if inflation retreats.
Markets are not pricing in more than a 50% chance of a cut of at least 25 basis points from the Fed until its June meeting, according to CME's FedWatch Tool, the first after current Chair Jerome Powell's term ends.
Focus also remains on geopolitics, with Iran and the U.S. reaching an understanding on the main "guiding principles" in a second round of indirect talks over their nuclear dispute on Tuesday, although a deal is not imminent, Iranian Foreign Minister Abbas Araqchi said.
YEN SOFT, KIWI SLUMPS
Against the Japanese yen, the dollar strengthened 0.98% to 154.78.
The Trump administration announced three projects valued at $36 billion to be financed by Japan, the first of some $550 billion in projects Tokyo agreed to undertake in order to lower U.S. tariffs.
Elsewhere, the kiwi weakened 1.39% versus the greenback to $0.5961, its biggest drop since September 19 after the Reserve Bank of New Zealand held its key rate unchanged at 2.25% in its first meeting chaired by Governor Anna Breman, and said policy would likely stay accommodative for some time.
"The statement largely downplayed most of the recent improvement in the domestic data, with the recovery in the growth data seen as still being at an early stage, and continued confidence in headline inflation returning to target after recent upside surprises," said analysts at Goldman Sachs in a note.
(Reporting by Chuck Mikolajczak; additional reporting by Samuel Indyk in London and Rocky Swift in Tokyo. Editing by Mark Potter, Nick Zieminski and Chizu Nomiyama )
Foreign exchange, or forex, refers to the global marketplace for trading national currencies against one another, facilitating international trade and investment.
A central bank is a national institution that manages a country's currency, money supply, and interest rates, often overseeing monetary policy.
Currency volatility refers to the fluctuations in the value of a currency over time, which can impact international trade and investments.
Economic growth is the increase in the production of goods and services in an economy over a period, typically measured by GDP.
Fed minutes are the official records of the meetings held by the Federal Reserve's Open Market Committee, detailing discussions on monetary policy.
Explore more articles in the Finance category
