Adjusted Q3 GDP Figures from Eurostat

Eurostat will soon publish adjusted Q3 GDP figures. The expectation is for a 0.2% increase from the previous quarter and a 1.3% increase from last year. Analysts believe the Euro will remain strong against other currencies, as the European Central Bank (ECB) is likely to be cautious while macroeconomic conditions stay steady. The EUR/USD exchange rate is holding steady, partly because the US dollar is weak due to delays in US data collection after the government shutdown. Technical signals suggest the EUR/USD has a positive trend, with important levels around 1.1650. The Euro is the official currency of Eurozone countries and is the second most traded currency globally. Its value is influenced by global market factors, including GDP and inflation. These economic indicators are crucial as they impact ECB monetary policies. Additionally, the Eurozone’s trade balance affects the Euro’s strength against global transactions.

Weak Economic Fundamentals Analysis

Eurozone Q3 GDP growth is confirmed at a slow 0.2%. This suggests that the European Central Bank will keep interest rates unchanged, as the low growth makes rate hikes less likely. Currently, the market sees almost no chance of an ECB rate increase until the second half of next year. The weak GDP numbers are supported by other recent data indicating a wider slowdown. For instance, the flash manufacturing PMI for the Eurozone dropped to 45.2 in October 2025, showing contraction for five straight months. Also, German factory orders unexpectedly fell by 1.1%, signaling ongoing industrial challenges. While the ECB raised rates aggressively in 2023 to combat inflation, the current situation is quite different. Inflation is now just above the ECB’s 2% target, and growth is stalling. The focus has shifted from managing prices to preventing a recession. This situation may keep the Euro trading within a narrow range against major currencies. The recent strength of the EUR/USD, moving towards 1.1650, seems to be more about US dollar weakness than true Euro strength. The US government impasse has brought uncertainty and delayed crucial economic data, making the dollar less appealing and offering temporary support to the Euro. In this context, traders might consider selling short-dated call options on the EUR/USD with strike prices close to the recent high of 1.1778. This strategy allows them to earn a premium, believing the Euro’s upside is limited due to weak economic conditions. The trade will profit if the pair moves sideways or decreases in the coming weeks. However, implied volatility for this currency pair has been falling. The 1-month volatility index recently hit 5.8%, a multi-year low. This means buying protection is relatively cheap. Traders might also think about buying puts with a strike below the psychological level of 1.1600 to guard against a sudden drop if US political issues get resolved and the focus shifts back to the Eurozone’s stagnant economy. Create your live VT Markets account and start trading now.

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