The eurozone seasonally adjusted trade balance rose to €11.6bn in December. It was €10.7bn in the previous period.
The growing Eurozone trade surplus for December 2025 confirms a trend of strengthening external demand. This positive data suggests the Eurozone economy is more resilient than many had anticipated heading into this year. We should therefore adjust our expectations for a more robust economic performance in the first quarter of 2026.
Euro Outlook And Positioning
This strength points toward potential upside for the Euro in the coming weeks. Recent data from the U.S. Commodity Futures Trading Commission shows speculative net-long positions on the Euro have already been building since January, indicating this sentiment is gaining traction. We should consider long EUR/USD positions, perhaps using call options to limit downside risk while capturing potential gains toward the 1.10 level.
European equities, particularly in export-heavy economies like Germany, stand to benefit from this trend. The German DAX index, which is rich with exporters, has already climbed over 3% since the start of the year. This trade data should provide a further tailwind for these companies, making call options on major European indices an attractive strategy.
This positive economic picture is complicated by last week’s January 2026 inflation report, which showed core CPI holding steady at 2.3%, slightly above the ECB’s target. The combination of a strong trade balance and sticky inflation reduces the likelihood of an ECB rate cut in the near term. This contrasts with the situation we saw in 2025, when markets were pricing in aggressive cuts for this year.
Given the unlikelihood of imminent rate cuts, we should be cautious about long positions in government bonds. We anticipate that short-term yields may continue to drift higher as the market reprices ECB expectations. Traders could consider strategies that benefit from this, such as shorting futures contracts on German 2-year bonds.
Trade Surplus In Historical Context
The current trade surplus is especially noteworthy when we look back at the energy-driven deficits experienced just a few years ago in 2023. The shift back to a solid surplus indicates a fundamental improvement in the Eurozone’s trade position. This resilience suggests the region is on a much firmer footing than it was during the post-pandemic recovery period.
