The Euro (EUR) is stable, trading around the middle of its daily range. It gets support from stronger-than-expected industrial data from Germany and France, and analysts suggest it might rise toward 1.18. German Factory Orders led to a temporary increase in EUR, but gains paused in the upper 1.16s. Eurozone GDP figures were slightly upwardly revised to 0.3% quarter-over-quarter for Q3, keeping a positive outlook for the Euro.

Market Observations

The FXStreet Insights Team shares market observations from both external and internal analysts. They provide insights on potential EUR movements but advise doing thorough research before any investments. The information is mainly for educational purposes and highlights the risks involved in investing. It does not give direct advice for buying any discussed assets, encouraging independent decision-making and awareness of risks. The Euro shows strength due to better-than-expected industrial data from Germany and France. Although it has stalled in the upper 1.16s, technical indicators suggest it could rise. The key is whether it can break through recent resistance. The larger trend involves the weakening US dollar, influenced by expectations of another Federal Reserve rate cut. The latest US inflation report for November 2025 showed a decrease to 3.1%, leading markets to believe there’s over an 85% chance of a 25-basis-point cut in the upcoming FOMC meeting on December 16-17. This is a stark contrast to early 2024 when rate hikes were the big concern.

Central Bank Policy Divergence

At the same time, the European Central Bank is holding steady, facing persistent inflation at 2.8% in the latest Eurozone HICP data. This difference in policy, with the Fed easing while the ECB stays firm, provides strong support for the EUR/USD exchange rate, potentially driving it toward 1.18. For traders, this outlook suggests positioning for a rise in EUR/USD over the coming weeks. Buying call options with strike prices around 1.1750 or 1.1800 that expire in late December or January might be a good strategy to benefit from this shift. Implied volatility is increasing ahead of the Fed decision, so acting quickly could be advantageous. We’ve seen similar situations in the past, like during the Fed’s easing cycle in 2019 when ongoing rate cuts lowered the dollar’s value. Since the market expects the current Fed funds rate of 3.75-4.00% to decrease further, this historical context supports a continued optimistic view on the Euro. This strategy puts us in a position to gain from a trend that seems just beginning. Create your live VT Markets account and start trading now.

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