The Euro strengthened as EUR/USD climbed above 1.1700 after the French government survived a no-confidence vote. Edward Scicluna, a policymaker at the European Central Bank (ECB), suggested that the bank should wait before cutting interest rates further. On Friday during Asian hours, the EUR/USD pair hovered around 1.1710, marking its fourth straight day of gains. The Euro benefited from France’s political situation and a dovish outlook, which stood in contrast to the ECB’s stable interest rate projections.

Views from the ECB

Edward Scicluna pointed out the uncertainty surrounding higher trade tariffs, questioning whether they would lead to inflation or disinflation. Martin Kocher from the ECB Governing Council also noted that we may be reaching the end of the interest rate cut cycle. The US Dollar weakened as the US government shutdown continues into next week. The Senate has failed for the tenth time to pass a funding bill, extending a stalemate that has lasted 16 days. The Euro is an important global currency, with the ECB overseeing its monetary policy. Economic factors like GDP, inflation data, and trade balance statistics significantly affect the Euro’s value. The EUR/USD pair is showing strength, now above 1.1700, which is a positive sign for the near term. This is supported by reduced political risk in France and recent comments from the ECB indicating a pause in interest rate cuts. This suggests a solid foundation for the Euro in the coming weeks.

Eurozone Inflation and Strategy

The ECB’s cautious approach makes sense given the latest data. In September 2025, Eurozone inflation was reported at 2.1%, slightly above the ECB’s target. This suggests they are unlikely to rush into further rate cuts, which supports the Euro’s recent gains. Conversely, the US Dollar is under pressure from the ongoing government shutdown, which has now lasted 17 days. The longest shutdown on record was 35 days in 2018-2019, indicating that this political deadlock may continue to create uncertainty. Such conditions often harm the Dollar as they cloud the economic outlook. With the clear upward trend, we believe that bullish strategies on EUR/USD are justified in the coming weeks. Traders might consider buying call options to benefit from further gains while limiting their downside risk. The current market situation favors those anticipating a rise toward higher resistance levels. However, we must stay alert, as the biggest risk to this trade is a sudden resolution of the US government shutdown. An unexpected funding deal could lead to a sharp rally in the US Dollar, quickly reversing the EUR/USD trend. Thus, utilizing defined-risk option structures is a smart way to manage this potential scenario. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now