The Eurozone’s HCOB Composite PMI rose to 52.5 in October, up from 52.2. This increase suggests growth in both manufacturing and service sectors in the area. In financial news, West Texas Intermediate (WTI) oil prices bounced back as geopolitical risks offset a rise in US oil inventories. The US ISM Services PMI is expected to climb in October, while the EUR/USD remains close to three-month lows due to risk aversion.

Mixed Employment Data

Employment data is mixed. The ADP Employment Report predicts slight job gains in October after a drop in September. The NZD/USD is stabilizing, with strong support above the 0.5600 level. The upcoming week will focus on changing risk sentiment and key US economic data. Meanwhile, Stellar’s price outlook suggests a potential 15% drop in demand, which could lead to further corrections. A variety of brokers are expected to thrive through 2025, especially those offering low spreads and high leverage. We’ve highlighted comprehensive guides to help you choose the best brokers for trading various currencies, including EUR/USD and gold, across different global regions.

Economic Growth and Policy Differences

The Eurozone’s October Composite PMI increased to 52.5, indicating modest and steady economic growth. However, Eurostat’s preliminary estimate for October inflation rose to 2.9%, making it unlikely for the European Central Bank to indicate rate cuts soon. This stabilization suggests a minimum value for the Euro, making deep out-of-the-money puts on EUR/USD less appealing. In contrast, the US’s October ISM Services PMI exceeded expectations at 54.1. This strength supports the Federal Reserve’s cautious approach, keeping demand for the dollar strong. As the EUR/USD hovered around three-month lows near 1.1500 in October, this pressure is expected to continue. Market anxiety is evident, as gold prices remain around the $3,970 mark we saw last month. This risk-aversion is further confirmed by the VIX index, which has stayed high at about 22, significantly above its historical average from 2020 to 2024. For options traders, this means higher premiums are available, presenting opportunities to sell volatility if you’re anticipating a period of stable trading. Geopolitical risks, particularly ongoing tensions in the Strait of Hormuz, are continuing to drive WTI crude prices up. This pressure on energy prices poses challenges for the European economy, which relies heavily on energy imports. This situation complicates the inflation outlook and might limit growth for European stocks, suggesting that bearish positions or hedging with index futures could be wise. Regarding specific currency pairs, the EUR/GBP is testing the 0.8800 support level we’ve been monitoring. Given the slow growth of both the Eurozone and UK economies, this support might hold in the near future. This scenario presents an opportunity to sell short-dated put options just below this support, allowing traders to collect premiums with the expectation that it will remain intact in the coming weeks. Create your live VT Markets account and start trading now.

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