EUR/USD has slightly decreased from recent highs and is now trading at around 1.1615, but it still shows a positive trend on daily charts. The reopening of the US federal government has helped balance a weaker-than-expected Eurozone Industrial Production report, which indicated a 0.2% increase in September after a 1.1% drop in August. Factory activity in the Eurozone grew by 1.2% year-on-year, falling short of the anticipated 2.1%. While the reopening of the US government brings some optimism, the White House warns of potential gaps in future employment and inflation data.

The Federal Reserve And Market Dynamics

The Federal Reserve appears divided. Some members are calling for more interest rate cuts, while others warn about inflation risks. The US Consumer Price Index (CPI) release might be delayed, so traders will look to other indicators, like the Monthly Budget Statement, for guidance. The Euro, the second most traded currency worldwide, showed relative strength against the Japanese Yen today. Although the EUR/USD pair shows bullish momentum, there are signs that upward pressure may be decreasing. Support levels are being observed around historical lows, particularly in the 1.1530-1.1540 range. The European Central Bank (ECB) manages Eurozone monetary policy, focusing mainly on price stability. Key economic indicators, including GDP and PMI reports, impact the Euro’s trajectory, with the Trade Balance also influencing currency strength. If we look back a few years, we see that EUR/USD was trading much higher, above 1.1600. Today, the pair is struggling to maintain the 1.0900 level, highlighting the changes in the economic landscape since the late 2010s. The ongoing tensions between ECB and Federal Reserve policy expectations remain key drivers.

Central Bank Strategies

Currently, the ECB faces challenges, reflecting the mixed data trend of recent years. While headline inflation in the Eurozone has dropped to 2.7% as of October 2025, core inflation remains sticky, hindering a clear pivot towards rate cuts. Derivative traders should monitor options pricing on the Euro, as rising implied volatility could indicate the market is anticipating surprises before the ECB’s December meeting. The Fed’s situation similarly reflects earlier divergences. Some members are pointing to a recent slowdown in job growth, with non-farm payrolls averaging just 150,000 over the last quarter, suggesting a policy easing may come soon. Others, however, are focused on the US Consumer Price Index, which, though down from 2022 highs, still shows services inflation exceeding a 4% annual rate. Due to this uncertainty from the central banks, strategies that profit from significant price movements in either direction might be advantageous in the coming weeks. There’s growing interest in buying at-the-money straddles on EUR/USD futures. This strategy bets on volatility, which historical data shows often spikes around central bank policy shifts. From a technical viewpoint, the previous battlegrounds around 1.1500 seem far away now. Our immediate attention is on the 1.0950 level, which has served as strong resistance throughout autumn 2025. If it breaks below the support at 1.0800, we could see a quick drop towards year-to-date lows. The upcoming preliminary PMI data for November will be the next critical factor for the pair. A weak Eurozone manufacturing number, combined with a strong US services number, could push EUR/USD toward its lower supports. We suggest traders prepare for increased volatility around this release, as it will significantly influence market sentiment heading into December. Create your live VT Markets account and start trading now.

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