The EUR/USD exchange rate stabilized around 1.1750 during the Asian session on Wednesday. Despite some fluctuations, market conditions favor buyers, suggesting a possible rise ahead. This comes as the US Dollar shows weakening recovery momentum. Expectations that the Federal Reserve will keep its lenient policies play a role, especially after a mixed US jobs report noted an increase of 64,000 jobs in November, which was better than anticipated, yet accompanied by a rise in unemployment to 4.6%. These job market figures don’t seem to shift expectations for more interest rate cuts by the Federal Reserve. There’s also speculation about a new dovish head for the Fed. President Trump is said to be considering Fed Governor Christopher Waller and others as potential replacements for Jerome Powell. Meanwhile, the Euro is gaining support because the European Central Bank (ECB) is likely to avoid further rate cuts. The final Eurozone CPI figures and the ECB’s policy meeting on Thursday will be essential in shaping future market movements.

Economic Indicators

Traders are keeping an eye on key economic indicators, like GDP and inflation, that could influence the Euro’s value. High inflation in the Eurozone typically leads the ECB to raise interest rates, making the Euro more attractive. Economic health from major countries like Germany and France is crucial since they form a large part of the Eurozone’s economy. A positive Trade Balance also boosts a currency by increasing demand for exports. The Euro is vital in the foreign exchange market, making up a significant share of global transactions. The European Central Bank, which manages Eurozone monetary policy, has a strong impact on the currency’s stability and value. Interest rate decisions and economic data releases are key in guiding market trends and investor strategies. With the EUR/USD around 1.1750, the recent recovery of the US dollar seems to be losing momentum. This environment favors a possible rise in the currency pair, with an upward path appearing more likely for now. The dollar’s weakness stems from market expectations of a more dovish Federal Reserve. The recent jobs report for November 2025 showed only 95,000 job gains. Futures markets now expect a high chance of at least one Fed rate cut by March 2026, which is limiting the dollar’s strength.

Market Speculation

This situation resembles what we saw in the 2019-2020 period, when uncertainty about the Fed’s future policies kept dollar rallies weak. The current speculation around the Fed’s actions is creating a similar challenge. A dovish approach from the central bank generally makes the dollar less appealing. Conversely, the Euro is gaining solid support. Recent Eurostat data from late November 2025 revealed core inflation remained at 2.3%, reinforcing the view that the ECB will not cut rates further in the near term. This difference in policies between a dovish Fed and a steady ECB is driving the Euro’s strength. For traders, this suggests positioning for potential EUR/USD gains in the coming weeks. Buying call options may take advantage of the expected upward movement, while bull call spreads could help reduce initial costs, especially with the key ECB meeting tomorrow. Watching today’s final Eurozone CPI print will be crucial for immediate insights. Implied volatility is likely to increase around tomorrow’s ECB announcement and the US inflation data release. This opens up strategies like put credit spreads below a key support level like 1.1700 for those confident the pair won’t fall significantly. The premium collected could benefit from the anticipated drop in volatility following the announcement. Create your live VT Markets account and start trading now.

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