The Euro has gained slightly against the US Dollar, rising above 1.1500. However, it has struggled to go past 1.1525 due to poor Retail Sales data from the Eurozone. Retail Sales dropped 0.1% in September when an increase of 0.2% was expected, following a 0.1% decline in August. Strong employment and services data from the US reduced downward pressure on the Dollar, creating a more positive market outlook. The ADP Employment Report revealed that 42,000 new jobs were added in October, beating expectations. Additionally, the US ISM Services PMI increased from 50.0 to 52.4, indicating strong economic activity.

Federal Reserve Rate Cut Probability

The chance of a Federal Reserve rate cut in December decreased to 62%, down from 68% earlier in the week, reflecting growing confidence in the US economy. The final Eurozone Services PMI rose to 53.0 in October, showing improved corporate earnings in Europe. Q3 growth expectations have soared to 4.3%, well above the predicted 0.4%. The EUR/USD pair is currently correcting within a larger bearish trend, facing resistance near 1.1545. Key support levels to watch are at 1.1470, with further support around 1.1440 and 1.1390. The Euro’s value is influenced by various economic indicators and central bank policies, which dictate whether its value will rise or fall. As of November 6, 2025, we view the recent rise of the Euro as only a short-term correction, not a shift in the overall trend. The weak Eurozone retail sales data for September highlights ongoing issues in the region’s economy. Moreover, inflation data from October 2025 shows a slowdown to 2.9%, making it difficult for the European Central Bank to adopt a hawkish approach.

Robust US Economy

In contrast, the US economy appears stronger, supported by the positive ADP employment and ISM Services data for October 2025. US inflation remains high, with the latest Consumer Price Index steady at 3.2%. This difference strengthens the likelihood that the Federal Reserve will keep interest rates higher for a longer time, which should benefit the US Dollar. We expect that the EUR/USD will trend downward in the coming weeks. Key support levels to monitor are around 1.1470, and a drop below this level could lead to further declines toward 1.1440. Any upward movement toward 1.1545 should be seen as a chance to sell. For derivative traders, it could be wise to buy put options on EUR/USD. Consider puts with a strike price near 1.1450 expiring in late November or December to take advantage of a potential decline. This strategy offers limited risk while allowing exposure to expected downward trends. Alternatively, selling out-of-the-money call options or using a bear call spread can generate income while wagering that the pair will not exceed key resistance levels. A spread with a short strike above 1.1550 aligns with technical analysis, which indicates strong selling pressure at that price. This approach benefits from both price drops and time decay if the pair moves sideways or downwards. This scenario echoes late 2023 and early 2024 when differences in policy between the Fed and the ECB led to significant strength for the Dollar. During that time, the market consistently underestimated the US economy’s strength compared to Europe. We may be seeing a similar trend now, making short Euro positions more attractive. Create your live VT Markets account and start trading now.

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