The Euro remained largely unchanged around 1.1650 as it faced pressures from lukewarm confidence data. The US Dollar stayed on the defensive, with expectations of a Federal Reserve rate cut of 25 basis points on Wednesday. The Eurozone Sentix confidence index improved in December, but stayed in negative territory. Meanwhile, favourable data on German industrial production and comments from the European Central Bank lent support to the Euro.<\/p>\n
The Federal Open Market Committee faces anticipated dissent, adding complexity to the Fed’s future plans. In the US, key employment reports are due ahead of the Fed’s decision, but Monday’s calendar was sparse. Futures markets indicated an 88% probability of a quarter-point rate cut by the Fed, while subsequent rate cuts in January were seen as less likely. Euro sentiment has improved as it rebounded from mid-November lows.<\/p>\n
Technical analysis shows the EUR\/USD remains supported by an ascending trendline, facing resistance at 1.1680. The 4-hour RSI is above 50, although the MACD suggests mild negative momentum. Immediate support stands at 1.1640, with further resistance and support levels noted. The Euro outperformed against the British Pound, while data from China showed export growth after a previous contraction.<\/p>\n
We are seeing the EUR\/USD holding steady near the 1.1650 mark as the market’s entire focus shifts to the Federal Reserve’s interest rate decision this coming Wednesday. The prevailing weakness in the US Dollar is the main driver, with almost everyone anticipating a policy change. This anticipation has kept the currency pair locked in a familiar range.<\/p>\n
The market has almost fully priced in a 25 basis point cut, with Fed fund futures showing a 92% probability for such a move. However, last week’s surprisingly strong Nonfarm Payrolls report, which added 190,000 jobs in November 2025, complicates the picture. With US inflation proving sticky and holding at 3.4%, the Fed is under pressure to cut rates cautiously.<\/p>\n
On the other side of the pair, the Euro is finding support from positive economic signals. We saw strong German industrial production figures recently, and hawkish remarks from ECB officials suggest they are not ready to ease policy. This divergence between an easing Fed and a steady ECB is providing a solid floor for the Euro.<\/p>\n
Given the high event risk, traders should consider strategies that benefit from a spike in volatility. We have seen one-month implied volatility on EUR\/USD options rise to 8.5%, indicating nervousness. Buying a straddle, which involves purchasing both a call and a put option at the same strike price, could be an effective way to play a significant price move regardless of the direction.<\/p>\n
The most discussed scenario is a “hawkish cut,” where the Fed lowers rates but Chairman Powell’s accompanying statement stresses that the fight against inflation is not over. This could create a sharp, two-way price swing, initially weakening the dollar on the cut and then strengthening it on the commentary. Using short-dated weekly options could allow traders to position for this potential whipsaw action.<\/p>\n
Alternatively, if we believe the central bank’s announcement will ultimately fail to break the pair out of its recent confines, selling premium might be a sound approach. A strategy like an iron condor, with strikes set safely outside the key 1.1590 support and 1.1730 resistance levels, could be profitable if the EUR\/USD settles back into its range after the initial excitement fades.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Euro steady at 1.1650 amid mixed data; Fed rate cut expected; EUR\/USD supported by trendline.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36286","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36286","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\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36286"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}