The EUR/USD pair is having difficulty stabilizing near 1.1600, as the US Dollar remains strong. This strength is driven by easing trade tensions between the US and China, along with hopes that the federal government will reopen soon. In the latest trading session, the US Dollar Index holds steady near 99.00. President Trump’s remarks suggest that an agreement with China might happen during his upcoming meeting with Chinese leader Xi Jinping. Additionally, expectations that the US government shutdown could soon end are boosting the US Dollar. White House economic adviser Kevin Hassett mentioned that the shutdown might wrap up this week.

ECB Speeches and Euro Concerns

In contrast, the Euro is proceeding with caution as markets await speeches from ECB President Christine Lagarde and Vice-President Luis De Guindos. These talks could affect the outlook for interest rates. The next important event for the Euro is the upcoming monetary policy announcement from the European Central Bank, which could change the currency’s direction. Currently, the EUR/USD pair is following a familiar trend, but the levels have shifted significantly since previous periods of dollar strength. It’s now struggling around 1.0550, a big difference from the 1.1600 level seen in similar market conditions during 2018 and 2019. This ongoing downward pressure is vital for any trading strategy in the coming weeks.

Strong Dollar Continues

The US Dollar’s strength is supported by solid economic data, creating a clear difference in policy compared to Europe. For example, the latest US Core PCE data for September 2025 showed a rate of 2.8%, which is above the Federal Reserve’s target. In contrast, recent reports indicate that Eurozone GDP only grew by 0.1% in Q3. This fundamental gap suggests that selling rallies in the EUR/USD spot market is still the preferred strategy. For those trading derivatives, this environment favors strategies that take advantage of the US Dollar’s continued dominance. With key announcements from central banks expected, options may be mispriced for future movements. The current 1-month implied volatility for EUR/USD is low at 5.5%, making buying puts an affordable way to prepare for a potential drop below the key 1.0500 psychological level. Looking back at late 2018, we saw a similar situation where decreasing geopolitical tensions and a strong Fed kept the dollar in demand. The interest rate difference was a major factor then, just as it is now, with the Fed funds rate above 5% while the ECB considers more easing. History shows that these periods of differing policies can last a long time, often punishing those who try to predict a bottom for the Euro too early. Create your live VT Markets account and start trading now.

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