EUR/USD trades near 1.1635, close to a one-month low of 1.1618, despite positive Eurozone Industrial Production data. Eurozone production grew 0.7% in November and 2.5% year-on-year, surpassing expectations.
The Euro remains under pressure due to strong US economic data and stable Federal Reserve interest rates. US producer prices accelerated to 3% in November, while retail sales increased by 0.6%, supporting the US Dollar.
Market Concerns Eased
US President Donald Trump’s reassurance regarding Fed Chair Jerome Powell eased market concerns. Investors await further US economic reports to gauge potential Fed policy actions.
The Euro saw gains against the Canadian Dollar while the US Dollar strengthened due to robust PPI and retail sales data. Geopolitical tensions eased as Trump commented on Iran, affecting oil and safe-haven assets.
Eurozone Industrial Production is expected to grow by 0.5% in November. Upcoming US manufacturing indices may influence market trends.
EUR/USD is around 1.1635, with technical indicators suggesting bearish momentum. Key support levels are at 1.1615 and 1.1600, while resistance lies near 1.1660 and 1.1700.
The Euro remains stuck below the 1.1640 level against the dollar, pointing to continued weakness as we move through January 2026. This pressure is largely coming from the US side, as recent data confirms that inflation is proving difficult to tame. The latest CPI figures released just last week for December 2025 showed inflation holding stubbornly at 3.1%, keeping the Federal Reserve on alert.
Economic Divergence and Market Strategy
While we saw some steady industrial production figures for the Eurozone back in November 2025, the bigger picture is less positive. More recent manufacturing data, like Germany’s December PMI which registered a contractionary 48.5, suggests the European economy is struggling for momentum. This economic divergence continues to support a stronger dollar over the Euro.
Given this outlook, we should position for the Euro to potentially weaken further in the coming weeks. This means considering derivative strategies that profit from a fall in the EUR/USD pair, such as buying puts. These trades would act as a good hedge or a way to capitalize on the current bearish trend.
The Federal Reserve’s stance is the key driver here, and the market is not expecting them to lower interest rates anytime soon. In fact, current market pricing via the CME FedWatch Tool shows an over 90% probability that the Fed will hold rates steady at their next meeting. This policy outlook makes holding dollars much more attractive than holding Euros.
Looking at the charts, the pair remains in the descending channel we observed in late December 2025. The immediate focus is on the recent low around 1.1615, and a break below that could open the door to the 1.1600 level. Any small rallies are likely to face resistance and should be seen as potential selling opportunities.
