Germany’s factory orders jumped 7.8% in December compared to the previous month. This was a surprise, as analysts expected a 2.2% drop. In November, factory orders were revised to show a growth of 5.7%. Year-over-year, industrial orders also rose by 13%, up from a previous increase of 10.6%. This suggests that manufacturing activity in Germany is picking up. Due to this strong data, the Euro received some support, with EUR/USD trading slightly higher at around 1.1800. The Euro performed particularly well against the Australian Dollar. The currency heat map illustrates percentage changes among major currencies. By selecting the Euro from the left column and the US Dollar from the top row, you can see the percentage change for EUR/USD. We observed a similar pattern at the end of 2025, when Germany’s factory orders rose by 7.8% month-over-month in December. This helped the EUR/USD pair reach around the 1.1800 level at that time. The data surprised many by showing growth instead of a decline, highlighting the strength of Germany’s industrial sector. This week’s industrial production figures for January 2026 confirm this trend, showing a solid 1.2% increase compared to a forecast of just 0.5%. This follows last week’s German IFO Business Climate index, which rose to 91.5, the highest in ten months. These figures indicate that the manufacturing sector is not just recovering, but is actively expanding as we enter the new year. With this positive momentum, buying short-term call options on the Euro seems like a smart move for the coming weeks. This strategy allows traders to profit from a potential rise in EUR/USD while keeping risks well-defined. Implied volatility is currently low, making it an affordable way to position for further Euro strength. For a more cautious approach, consider using bull call spreads on EUR/USD futures. This strategy lowers the initial cost by selling a higher-strike call while buying a lower-strike call. It fits a market outlook where we expect gradual gains rather than sharp movements. These strong economic results will be significant for the European Central Bank (ECB), especially since the latest Eurozone Consumer Price Index (CPI) data for January showed a 2.4% increase. Although this is down from last year’s highs, it remains above the ECB’s target, restricting their ability to cut rates. These positive German figures support a cautious but hawkish stance, which should continue to bolster the Euro.

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