The EUR/USD is trading at 1.1648, down 0.14% and staying close to the 1.1700 level. Speculation about a potential meeting between Trump and Putin, which might lead to a ceasefire in Eastern Europe, is positively affecting market sentiment. The Euro is holding strong despite a more robust US Dollar and speculation of changes at the Federal Reserve. Recent US employment figures and a weakening labor market are lifting the Euro’s prospects, increasing the chances that the Federal Reserve will resume its easing cycle.

Economic Data and Market Impacts

Upcoming economic data from the EU and the US may affect future currency movements. In the US, rising jobless claims indicate a softening labor market, raising concerns about stagflation. The Euro is currently above its 20-day simple moving average (SMA). However, any upward movement could be challenged by a rebound in the US Dollar Index. Key upcoming EU data includes inflation rates and GDP, while the US will focus on Fed statements and consumer sentiment. The European Central Bank’s interest rate decisions are crucial for the Euro’s strength. If inflation surpasses the ECB’s target, an interest rate hike may be necessary to maintain economic balance. Other economic indicators, such as GDP and trade balance, also influence the Euro’s value.

Currency Comparison and Trading Strategy

Currently, the Euro appears stronger than the US Dollar. With US weekly jobless claims recently rising to 245,000—the highest since late 2024—the Federal Reserve is more likely to cut rates compared to the European Central Bank. This fundamental difference supports a positive outlook for the Euro. Traders might consider purchasing EUR/USD call options with strike prices above 1.1700, targeting expirations in September or October 2025. This strategy allows for profit from an upward move while limiting risk to the premium paid. Another option is to sell out-of-the-money put options for premium income, reflecting confidence that the Euro will not drop significantly. The potential meeting between Trump and Putin brings considerable event risk, likely increasing volatility. Implied volatility on one-month EUR/USD options has already risen to 8.5%, as traders prepare for significant moves. A positive outcome could push the pair towards 1.1800, while a negative result could lead to a quick retreat to the safety of the dollar. Looking back, market sentiment in late 2023 showed the pair struggling to stay above 1.1000, highlighting the significant policy changes since then. For now, the 20-day SMA, near 1.1610, is an important support level to monitor. A drop below this level would indicate that recent upward momentum is fading. In the coming weeks, we will watch for the Eurozone’s preliminary Q2 GDP figures and the US consumer sentiment report on August 15th. The flash inflation data for the Eurozone, which showed a 2.8% year-over-year increase last month, will be particularly important. Another high reading could pressure the ECB to act, likely strengthening the Euro further. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now