The Euro is holding steady this week, thanks to widening interest rate differences and a neutral stance from the European Central Bank (ECB). After breaking past the 50-day moving average, the EUR is trading between 1.1650 and 1.1750, and it might be heading towards resistance at 1.18. Euro-area retail sales data for October were unchanged at 0.0%, showing minimal impact on the Euro. The EUR has bullish momentum, indicated by an RSI over 60. Key resistance levels to watch are at 1.17, 1.1750, and 1.18. Insights come from the FXStreet Insights Team, which gathers market observations from experts. The information provided is for informational purposes only and carries risks. It’s not an investment recommendation, and readers should do their own research before making any decisions. Risks in open markets can include losing your principal and emotional distress. The views expressed do not necessarily reflect those of FXStreet or its advertisers. The Euro is likely to keep its gains as the interest rate gap between the Fed and the ECB grows. Recent data shows that US core PCE inflation has dropped to 2.8%, while the Eurozone’s HICP remains at 3.1%. This difference is currently supporting the Euro. With bullish momentum, we are considering options strategies to take advantage of a potential increase in EUR/USD. Buying call options with a strike price near 1.1750 could be a direct play for a move towards the 1.18 resistance level. A bull call spread might offer a more conservative way to manage costs while still profiting if the pair stays within its new range. Expectations for a more dovish Fed are becoming stronger, with the market now estimating over a 75% chance of a rate cut at the December 17th meeting. This comes after last week’s weaker Non-Farm Payrolls report, indicating a cooling labor market in the US. This reinforces our belief that the US dollar is likely to weaken against the Euro. Current yield spreads have hit 14-month highs, a level not seen since mid-2023 when the Euro was trading lower. The recent break above the 50-day moving average, now around 1.1612, confirms this new bullish trend. We will monitor the 1.1650 level as a key support point in the days ahead.

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