The Eurozone’s current account balance for October was better than expected, coming in at €25.7 billion, compared to the forecast of €19.6 billion. This indicates a stronger economy than predicted. There were notable changes in the financial markets. The EUR/USD pair moved toward 1.1700, while the GBP/USD remained under 1.3400 after updates from the Bank of England and new US inflation data. Gold traded below $4,350, influenced by a strong US dollar. Meanwhile, Bitcoin, Ethereum, and Ripple saw price corrections due to the Bank of Japan’s recent interest rate decision.

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Monetary Policy Divergence

The European Central Bank has kept interest rates steady for four meetings in a row. This is due to November’s core inflation rate holding steady at 2.3%. In contrast, the Bank of England recently cut rates after confirming the UK’s Q3 GDP growth for 2025 was just 0.1%. This growing difference in monetary policy could weaken GBP/EUR, making it a potentially profitable pair for short positions in the coming weeks. Despite the strong data from the Eurozone, the EUR/USD is influenced by fiscal issues in France, keeping it around 1.1710. France’s proposed 2026 budget faced a warning from the European Commission about its deficit, creating challenges for the Euro. It might be wise to consider hedging long Euro positions with options to protect against possible political fallout. The US dollar continues to show overall strength because the Federal Reserve is not expected to lower rates anytime soon. Even though the latest US CPI for November 2025 was slightly below expectations at 3.0%, it still exceeds the Fed’s target and is far from the sub-2% rates experienced before the inflation rise in 2022-2023. This situation supports holding long dollar positions against currencies from more dovish central banks, like the Australian dollar. Gold remains in a narrow range below $4,350, a significant price considering it was closer to $2,000 just a few years ago. The strong US dollar is limiting its gains. However, the high price indicates ongoing demand as a hedge against inflation. We should be ready to trade a breakout from this stable range since a shift in Fed sentiment could lead to substantial market movements. Create your live VT Markets account and start trading now.

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