The EUR/USD currency pair fell by 0.05%. This drop was driven by a stronger US Dollar and rising Treasury yields as traders await a policy decision from the Federal Reserve. The Euro is also facing pressure due to US inflation rates close to 3% and declining consumer sentiment. Traders expect Fed Chair Jerome Powell to announce a 25 basis point rate cut, while US Treasury yields continue to increase. The current EUR/USD exchange rate is 1.1637, after reaching a daily high of 1.1672. On the other hand, Isabel Schnabel from the ECB expressed optimism about future rate hikes, which uplifted Euro sentiment.

German Positive Developments

Germany has seen some positive news: industrial production rose by 1.8% month-over-month, contradicting predictions of a decline, and the Sentix Investor Confidence index increased from -7.4 to -6.2. The ECB is focusing on inflation risks, especially with fluctuating energy prices and base effects possibly raising overall inflation numbers. Currently, EUR/USD remains below 1.1650 in a narrow range, with a chance of dropping to 1.1600 after a long bearish trend. Key support levels include the 50-day SMA near 1.1605 and the 20-day SMA at 1.1596. The Euro’s value is shaped by economic data, inflation, and trade balance, all of which influence its worth. As of December 9, 2025, the EUR/USD situation has evolved significantly compared to recent years. The market is not anticipating hikes from the European Central Bank (ECB); instead, it is looking towards possible rate cuts in 2026 due to signs of weakness in the Eurozone economy. The pair is trading around 1.0850, well below the 1.1600 support level seen previously. The Federal Reserve remains steady. Recent November inflation data shows Core PCE at around 2.8%, still above their target. A stronger-than-expected Non-Farm Payrolls report from last week, adding 195,000 jobs, pushed market expectations for the first rate cut further into the second quarter of next year. This difference in policies is putting ongoing pressure on the Euro.

Eurozone Economic Concerns

In Europe, the latest Eurozone Composite PMI for November is 48.2, indicating contraction and raising fears of a mild recession. This is a stark contrast to the optimism in late 2023 when German industrial production was improving. The ECB is now more concerned about economic stagnation than inflation, which has eased to 2.3%. For traders dealing in derivatives, this situation suggests that selling EUR/USD call options or creating bear call spreads could be wise in the coming weeks. These strategies would benefit if the pair stays below significant resistance levels like 1.0950 and 1.1000. Additionally, purchasing put options can be a straightforward way to bet on further declines, especially with central bank meetings coming up next week. Looking back, the failure of the Euro to regain the 1.1700 level earlier was a warning that momentum was slowing down. Today, with the pair struggling to hold above 1.0800, we can see that the long-term trend is strongly favoring the Dollar. Any rebounds in the Euro should be approached cautiously until we notice a fundamental change in the Eurozone’s economic data. Create your live VT Markets account and start trading now.

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