Germany’s factory orders rose sharply by 7.8% month-on-month in December, surpassing expectations of a 2.2% decline. In November, the revised growth figure was 5.7%.
There was also a 13% year-over-year increase in industrial orders, compared to a previous rise of 10.6%. This data indicates an increase in the country’s manufacturing sector activity.
The Euro received some support from this robust data, with EUR/USD trading slightly higher around 1.1800. The Euro gained most notably against the Australian Dollar.
The currency heat map displays percentage changes among major currencies. Selecting the Euro from the left column and the US Dollar from the top row reveals the percentage change for EUR/USD.
We saw a similar situation late in 2025 when December’s German factory orders surprised everyone with a 7.8% month-over-month jump. This strength helped push the EUR/USD pair toward the 1.1800 level at the time. The data defied expectations for a drop and showed the underlying resilience of Germany’s industrial base.
This week’s industrial production figures for January 2026 are confirming this trend, showing a solid 1.2% increase against a forecast of only 0.5%. This follows last week’s German IFO Business Climate index which rose to 91.5, its highest level in ten months. These numbers suggest the manufacturing sector is not just recovering, but actively expanding into the new year.
Given this positive momentum, we believe buying short-term call options on the Euro is a sensible strategy for the coming weeks. This allows traders to benefit from a potential rise in EUR/USD while keeping risk clearly defined. Implied volatility remains relatively subdued, making this a cost-effective way to position for further Euro strength.
For a more conservative approach, consider setting up bull call spreads on EUR/USD futures. This strategy reduces the initial premium paid by selling a higher-strike call against a purchased lower-strike call. It is well-suited for a market we expect to grind higher rather than explode in a single direction.
This continued economic strength will feature heavily in the European Central Bank’s thinking, especially with the latest Eurozone CPI data for January coming in at 2.4%. While this is down from last year’s peaks, it is still above the ECB’s target and limits their ability to consider cutting rates. These strong German numbers reinforce a hawkish hold, which should continue to support the Euro.
