The EUR/USD is stable, trading at around 1.1580, after experiencing five days of gains. This stability is due to expectations that the ECB will keep interest rates unchanged, supported by a steady economy and inflation close to target levels. Upcoming German inflation data may impact the ECB’s policy decisions, with October’s CPI and HICP figures under close observation. At the same time, the USD remains strong as the U.S. government works toward reopening after the Senate passed a bill pending the President’s signature.

Impact Of Employment Data

Even so, the Greenback is under pressure from weak ADP employment data, hinting at possible policy easing. Private employers reduced an average of 11,250 jobs per week in the four weeks ending October 25. The market now predicts a 68% chance of a 25-basis-point rate cut in December. The Euro, used by 20 EU countries, is the second most traded currency globally, making up 31% of foreign exchange transactions. The ECB, based in Frankfurt, oversees Eurozone monetary policy, focusing on price stability through interest rates. Economic data and inflation in the Eurozone significantly affect the Euro’s value, with robust economies and positive trade balances strengthening the currency. Today, on November 12, 2025, the situation looks very different from the late 2010s analysis. Back then, EUR/USD was near 1.1600 with expectations of Fed rate cuts. Now, the pair struggles around 1.0750. The driving force is not Fed easing anymore but a major policy gap between a cautious Fed and a more dovish ECB. The ECB is hinting at a possible shift toward rate cuts as inflation decreases across the Eurozone. The latest German HICP data for October 2025 showed a decrease to 2.4%, continuing a steady decline from the highs seen in 2023. This reinforces the notion that the ECB, with a main rate at 3.5%, may need to act sooner than the U.S. to support a slow economy.

US Monetary Policy

In contrast, the U.S. Federal Reserve is taking a cautious approach, keeping its key interest rate at 4.75% while inflation remains persistent. The latest U.S. CPI report indicated core inflation around 3.2%, which is above the Fed’s target and complicates discussions about potential rate cuts. This interest rate difference makes U.S. assets more appealing for investors seeking yield. This interest rate gap is a key factor for traders and suggests a strategy that favors the U.S. dollar in the short term. We’ve seen this in the past, especially during the Fed’s aggressive rate hikes from 2022 to 2023, which strengthened the dollar. For derivative traders, this environment may present an opportunity to buy EUR/USD put options, targeting a drop toward the 1.0600 level in the upcoming weeks. Further economic data will be important to watch. Recent Eurozone Manufacturing PMI figures fell to 48.5, indicating a contraction, while the latest U.S. non-farm payroll report showed a respectable but slowing addition of 150,000 jobs. This fundamental economic discrepancy supports the current trends in the currency market. Create your live VT Markets account and start trading now.

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