Stronger-than-expected GDP growth in France for the third quarter, at 0.5% quarter-on-quarter, helped the Eurozone grow by 0.2% in that quarter and 1.3% over the year. This news gave a slight boost to the Euro before the European Central Bank’s policy decision. The European Central Bank is expected to keep its current policy unchanged, marking the third consecutive meeting with no changes. President Lagarde may emphasize that the policy remains stable, indicating that interest rates could stay the same for a while.

Euro Trading Dynamics

The Euro is trading within recent ranges, but a significant dip from a recent high has reinforced resistance near 1.1665/70. This raises the chances of testing support at 1.1580, with crucial support found at 1.1540. The FXStreet Insights Team, consisting of journalists, shares market insights from experts, adding their own observations to external analyses. We recall a similar situation in late 2023 when better-than-expected Q3 GDP figures briefly boosted the Euro. However, the current economic outlook is much weaker, with flash estimates from Eurostat showing growth slowing to just 0.1% in Q3 2025. This slowdown increases pressure on the currency compared to the slight optimism we saw a few years ago. The European Central Bank’s stance has changed significantly from its optimistic views back then. With Eurozone core inflation recently reported at 2.4%, the market is now anticipating a high chance of a rate cut in the first quarter of 2026, which is a stark contrast to the steady environment we were evaluating before.

Volatility in Euro Trading

For derivative traders, this suggests preparing for potential increased volatility around upcoming ECB announcements. Buying at-the-money straddles on the EUR/USD could be a smart strategy to take advantage of greater-than-expected price movements. This approach would be profitable regardless of whether the bank indicates a more aggressive easing strategy or unexpectedly maintains its position. The important technical level of 1.1540 that was significant previously is now a memory. We are currently eyeing the 1.0900 level as major resistance, with strong open interest in put options accumulating around the 1.0750 strike price. This points to bearish sentiment and a much different landscape for the Euro. Examining one-month risk reversals for EUR/USD reveals a rising premium for puts over calls, suggesting that options traders are increasingly hedging against a decline in the Euro. This marks a notable shift from the neutral positioning seen in late 2023 when policies were stable. This sentiment implies that any rallies in the Euro might be viewed as chances to sell. Create your live VT Markets account and start trading now.

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