{"id":36250,"date":"2025-12-08T17:43:39","date_gmt":"2025-12-08T09:43:39","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=36250"},"modified":"2025-12-08T17:43:39","modified_gmt":"2025-12-08T09:43:39","slug":"euro-steadies-as-traders-weigh-ecb-hawkish-tilt","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/analysis\/euro-steadies-as-traders-weigh-ecb-hawkish-tilt\/","title":{"rendered":"Euro Steadies as Traders Weigh ECB Hawkish Tilt"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/Image_fx-2025-10-03T175502582-1024x559.png\" alt=\"\" class=\"wp-image-31522\" \/><figcaption class=\"wp-element-caption\">#image_title<\/figcaption><\/figure>\n\n\n\n<p><strong>Key Points<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>EUR\/USD holds above <strong>1.165<\/strong>, near its highest since mid-October.<\/li>\n\n\n\n<li>ECB\u2019s Schnabel signals upside risks to growth and inflation, reinforcing hawkish bias.<\/li>\n\n\n\n<li>Markets price in a <strong>90% chance<\/strong> of a Fed rate cut this week.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-dots\" \/>\n\n\n\n<p>The <strong>euro traded steady around 1.1650<\/strong>, hovering near its highest level since mid-October, as market participants digested diverging policy signals from the European Central Bank and the US Federal Reserve.<\/p>\n\n\n\n<p>Recent price action reflects a cautiously bullish tone, with the pair <strong>rebounding over 5.3%<\/strong> since hitting a low of <strong>1.1064 in May<\/strong>.<\/p>\n\n\n\n<p>Comments from <strong>ECB Executive Board member Isabel Schnabel<\/strong> helped anchor euro strength. She said she was <strong>\u201ccomfortable\u201d with market bets on a potential rate hike<\/strong> next year, warning that <strong>both growth and inflation risks are now tilted to the upside<\/strong>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">ECB Executive Board member Isabel Schnabel says she\u2019d be willing to take over as president when Christine Lagarde\u2019s term ends in less than two years <a href=\"https:\/\/t.co\/D5OavxZxR9\">https:\/\/t.co\/D5OavxZxR9<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1997925202638823729?ref_src=twsrc%5Etfw\">December 8, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Schnabel also hinted that the ECB\u2019s <strong>December economic forecasts may be revised higher<\/strong>, strengthening the case for a longer hold on policy.<\/p>\n\n\n\n<p>This stance reflects a broader shift in tone at the ECB, where policymakers appear increasingly reluctant to commit to any easing cycle.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Inflation risks in the euro area are slightly tilted to the downside in the medium term, ECB Governing Council member Olli Rehn said in an interview with Milano Finanza <a href=\"https:\/\/t.co\/Z9VOXZPaup\">https:\/\/t.co\/Z9VOXZPaup<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1997237710570827993?ref_src=twsrc%5Etfw\">December 6, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>With eurozone <strong>inflation now tracking close to the 2% target<\/strong>, the ECB is expected to maintain current rates <strong>through 2026<\/strong>, barring a sharp downturn in data.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Fed Cut in Focus as Labour Cools<\/h2>\n\n\n\n<p>On the other side of the Atlantic, the narrative is firmly dovish. Markets now <strong>price in a 90% probability of a 25-basis-point cut<\/strong> from the Fed this Wednesday, followed by <strong>two to three more cuts in 2026<\/strong>, as US economic data continues to slow.<\/p>\n\n\n\n<p>Recent indicators point to softening in the labour market. The <strong>ADP private payrolls report showed a drop of 32,000<\/strong>, while <strong>Challenger layoffs hit 71,000 in November<\/strong>, bringing the year-to-date total to <strong>over 1.17 million<\/strong>. These figures increase pressure on the Fed to act pre-emptively as growth moderates.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">Applications for US unemployment benefits fell last week to the lowest in more than three years, indicating that employers are still largely holding onto workers despite a wave of recent layoff announcements. <a href=\"https:\/\/t.co\/ZyBtYgqVil\">https:\/\/t.co\/ZyBtYgqVil<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1996576429060850170?ref_src=twsrc%5Etfw\">December 4, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Despite these headwinds, <strong>initial jobless claims fell to a three-year low<\/strong>, though seasonal factors around Thanksgiving likely distorted the data. Investors are now focused on the <strong>September PCE Index<\/strong> due later today.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Technical Analysis<\/h2>\n\n\n\n<p>EURUSD is trading at <strong>1.16507<\/strong>, continuing its gradual recovery after forming a base around the <strong>1.1500<\/strong> level in mid-November. The pair has broken back above its 5-, 10-, and 30-day moving averages, signalling a shift in short-term momentum toward the upside.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/en-ca\/wp-content\/uploads\/sites\/13\/2026\/03\/image-13-1024x474.jpg\" alt=\"\" class=\"wp-image-36251\" \/><\/figure>\n\n\n\n<p>The moving averages are starting to align bullishly, with the 5-day MA crossing above the 10-day \u2014 a sign that buyers are regaining control.<\/p>\n\n\n\n<p>The MACD has crossed above the signal line, and the histogram has flipped positive, supporting the bullish bias. Price is now approaching the next key resistance at <strong>1.1700<\/strong>, with a break above that zone potentially opening the path toward <strong>1.1800\u20131.1850<\/strong>.<\/p>\n\n\n\n<p>However, the high from October at <strong>1.19181<\/strong> remains a major ceiling unless supported by a broader shift in USD dynamics.<\/p>\n\n\n\n<p>Support is now seen at <strong>1.1600<\/strong>, followed by <strong>1.1500<\/strong>, where the pair previously bottomed out. As long as EURUSD holds above these levels and maintains momentum, the bias leans bullish into year-end.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Cautious Forecast<\/h2>\n\n\n\n<p>The euro\u2019s near-term outlook will hinge on <strong>two central bank narratives diverging at full pace<\/strong>. A hawkish ECB paired with a cutting Fed may provide a tailwind for EUR\/USD to extend toward <strong>1.18<\/strong> in the coming weeks.<\/p>\n\n\n\n<p>However, if US inflation surprises the upside in the PCE report, or if the Fed maintains a cautious tone despite cutting, upside in the euro may stall around <strong>1.17<\/strong>. Traders should remain alert to incoming central bank commentary and labour market trends.<\/p>\n\n\n\n<p><strong>Learn more about trading <a href=\"https:\/\/www.vtmarkets.com\/forex\/\" target=\"_blank\" rel=\"noopener\" title=\"\">Forex<\/a> on <a href=\"http:\/\/www.vtmarkets.com\/\" target=\"_blank\" rel=\"noopener\" title=\"\">VT Markets<\/a> today.<\/strong><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The euro held firm near two-month highs on Monday, supported by hawkish ECB signals as markets brace for a likely Fed rate cut. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":64,"featured_media":31522,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[31],"tags":[56,10],"class_list":["post-36250","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-euro","tag-forex"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/64"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36250"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36250\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/31522"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}