The EUR/USD exchange rate has increased for six consecutive days as the US Dollar’s gains slow down. The Euro is supported by strong German inflation data and clear signals from the European Central Bank (ECB). The US House of Representatives is set to vote on a bill to prevent a government shutdown. If the bill passes, it will go to President Trump for final approval. This legislation would fund most federal agencies until January 2026 and some until September 2026.

German Inflation Data and ECB Signals

In October, Germany’s Harmonized Index of Consumer Prices increased 0.3% from the previous month and 2.3% year-on-year, meeting expectations. ECB official Isabel Schnabel remarked that the Eurozone’s economy shows positive signs and that inflation may rise, though interest rates are currently stable. Traders are closely monitoring US news and an upcoming Eurozone Industrial Production report. Delays in US data, including the Consumer Price Index, are causing caution about the Federal Reserve’s policy direction. Today’s currency data shows the US Dollar is weaker against several currencies, particularly the Japanese Yen. The heat map illustrates percentage changes of major currencies relative to one another, with the US Dollar showing mixed results. With the EUR/USD pair rising for six days, we see immediate momentum favoring the Euro. We are considering short-term bullish options, such as buying December 2025 call options, to take advantage of a potential move above the 1.1600 resistance level. This strategy lets us engage in the upside while managing our risk.

Euro Strength and US Political Dynamics

The Euro’s strength is backed by recent Eurostat estimates indicating core inflation at 2.8% in early November, well above the ECB’s target. This situation stands in stark contrast to the US, where the government shutdown has delayed the October CPI report, creating uncertainty about the Federal Reserve’s next move. The absence of new US inflation data is a major factor putting pressure on the dollar. We should be cautious about the upcoming vote on the US government shutdown, as a resolution could lead to a “buy the rumor, sell the fact” situation for the dollar. A similar pattern occurred after the 35-day shutdown ended in January 2019, when the dollar briefly rallied as fiscal uncertainty eased. Therefore, any long EUR positions should be closely monitored with strict risk management around the vote. Current political tensions have kept implied volatility high, making selling options an appealing option for those expecting a smooth resolution. A bull put spread on EUR/USD with a January 2026 expiration could be a solid strategy, profiting from a slight rise in the pair and a drop in volatility. However, we must remember that this funding bill is only a short-term solution, lasting until late January 2026, so this political drama will likely return. Create your live VT Markets account and start trading now.

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