The Euro (EUR) is currently trading steadily in the mid to upper 1.15s, keeping up the positive momentum from last week. Recent comments from the ECB’s Schnabel showed a neutral stance but expressed worries about rising inflation risks.

Euro Area Rate Expectations Rise

Expectations for interest rates in the euro area are increasing. By the end of 2026, rates have climbed to a new local high of 2%. This rise in interest rate differentials is giving a strong boost to the EUR. The EUR is gradually moving beyond recent recovery levels, with a goal to break through 1.16 again. The recovery in the RSI supports these upward moves, holding a neutral position around 50. We anticipate resistance as it approaches the 50-day moving average at 1.1662. The FXStreet Insights Team is made up of journalists who gather market observations from various experts, including notes by commercial entities and additional analyst insights. This article is for informational purposes only and does not constitute investment advice, as the market data presented carries inherent risks and uncertainties. The Euro is quietly moving into the mid/upper 1.15s, building on the bullish momentum from last week. Growing concerns about inflation from the European Central Bank are driving this trend and raising expectations for interest hikes into 2026.

Eurozone Inflation and Investment Opportunities

Eurostat’s latest flash estimate shows October’s inflation for the Eurozone at 2.5%, slightly higher than expected, which reinforces the ECB’s hawkish stance. We experienced similar challenges in late 2023 when inflation struggled to fall below 2.5%. Persistent price pressures indicate that the interest rate differential will likely continue to favor the Euro over the US Dollar. This situation opens up opportunities for options traders in the coming weeks. With the expected range between 1.1550 and 1.1650, strategies that take advantage of this upward movement should be considered. Selling out-of-the-money puts with strike prices below 1.1500 could be a smart way to earn premium while the pair consolidates higher. This viewpoint is further supported by recent US data. Last week’s CPI report for October showed core inflation cooling to 2.8%, the lowest in over a year. Political uncertainty surrounding the US government funding vote is also impacting the dollar. This contrast in economic data and central bank attitudes encourages a cautiously bullish outlook on the EUR/USD pair. From a technical perspective, the Relative Strength Index is around the 50 mark, confirming a shift from bearish to neutral momentum. We are monitoring the 50-day moving average at 1.1662 as the next key resistance level. Implementing a bull call spread by buying a call at 1.1600 and selling one at 1.1650 could capture potential upside while managing risk ahead of that resistance. Create your live VT Markets account and start trading now.

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