Growth in the US is seen as stronger than in Germany, causing doubts about a rising EUR/USD in the coming months. The slower growth in Germany is mainly due to lower investment, especially after the euro crisis. Since 2012, private investment has lagged behind the US. From 2015 to 2019, Germany’s investment share was already low but similar to the US. This situation worsened after the pandemic and Russia’s actions in Ukraine, with US investment in GDP increasing while Germany’s fell. The German government’s fiscal plans are crucial for boosting investment, aiming for an 11.5% share of GDP by 2027, up from 11.0% now.

US Investment Growth

The US investment growth is mainly driven by the IT sector, with little change in other areas like industrial equipment or transport. If Germany can close its investment gap, it could improve growth and strengthen the euro against the US Dollar. Hopes for better results next year may lead to the euro appreciating by 2026. Currently, the market is skeptical about a stronger EUR/USD, as US growth seems much more robust. This perspective is supported by expectations that the European Central Bank may lower rates more aggressively in 2026 than the US Federal Reserve, keeping pressure on the euro for much of the second half of 2025. We are looking for signs of change, especially from Germany. Though Germany’s investment share in GDP dropped after 2022, the government’s plans for next year aim to reverse this trend. The recent rise in the German IFO Business Climate index to 88.5 may indicate that sentiment is starting to improve.

US Investment Picture

While the overall investment picture in the US looks strong, a closer look reveals some weaknesses. Recent data from Q3 2025 shows that over 70% of business investment growth came from information processing equipment. Key sectors like industrial and transport equipment have been stagnant, suggesting a narrow and possibly fragile expansion. For derivative traders, the expected narrative shift for 2026 is crucial. With 3-month implied volatility for EUR/USD at a multi-year low of 5.8%, options are relatively inexpensive. This situation presents a chance to establish positions, like buying call options expiring in the first or second quarter of 2026, to take advantage of potential upward movements that the market hasn’t yet recognized. The focus in the coming weeks should not be on daily fluctuations but on positioning for a possible revaluation of the euro. If the gap between US and German economic growth starts to narrow as expected in 2026, these early investments could be significant. The current market negativity offers a prime opportunity for those with a contrarian view. Create your live VT Markets account and start trading now.

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