EUR\/USD has seen a rise near 1.1720, its highest in nearly two months, gaining almost 0.8% over the last two days. Improved market sentiment has bolstered the Euro, while the US Dollar struggles following a dovish Fed monetary policy announcement.<\/p>\n
Markets ignored negative forecasts from Oracle that caused concerns about AI sector valuations. European equities began positively, although US futures hint at slight losses. The Fed’s less aggressive stance on monetary policy saw the US Dollar fall after a 25 basis point rate cut.<\/p>\n
On Thursday, attention turns to US Initial Jobless Claims data to ascertain if last week’s drop was a holiday effect or a labour market improvement. The Federal Reserve’s recent decisions have led market expectations of further rate cuts, with only limited votes against current policies.<\/p>\n
Jerome Powell’s potential replacement by Kevin Hassett, who supports further rate cuts, influences market sentiment. The Fed’s upcoming $40 billion bond-buying programme surprised markets, impacting the USD. In Europe, ECB President Christine Lagarde indicated stable monetary policy, hinting at possible future growth forecast upgrades.<\/p>\n
EUR\/USD technical indicators show bullish momentum above 1.1705, with targets around 1.1730 and 1.1780. Initial Jobless Claims data indicate US labor market health, with lower claims supporting the USD. Upcoming data is expected to show claims at 220K, with previous numbers at 191K.<\/p>\n
The Federal Reserve’s dovish stance, highlighted by yesterday’s rate cut and a surprise bond-buying program, signals a weaker US dollar into the end of the year. We see the contrast with the European Central Bank, which appears to have ended its easing cycle, as a clear driver for continued EUR\/USD strength. This policy divergence is the central theme that should guide trading strategies in the coming weeks.<\/p>\n
Today’s US Initial Jobless Claims will be a critical data point to confirm this outlook. A high reading, above the 220K consensus, would validate the Fed’s concerns about the labor market and further weaken the dollar. This aligns with recent data, like the November 2025 CPI reading which held steady at 3.2%, giving the Fed room to focus on supporting growth rather than fighting inflation.<\/p>\n
For derivative traders, this environment favors strategies that profit from a rising EUR\/USD. We believe buying call options with strike prices near the 1.1750 and 1.1800 levels for late December 2025 or January 2026 expiries is a prudent approach. This allows for participation in the expected upward move while clearly defining risk to the premium paid.<\/p>\n
This view is also supported by the bond market, where we’ve seen the yield spread between the US 2-year Treasury and the German 2-year Bund narrow significantly over the last month. This compression directly reflects the market pricing in more rate cuts from the Fed than the ECB. It’s a key indicator we follow that reinforces the bullish case for the euro against the dollar.<\/p>\n
While the momentum is clearly positive after the break above 1.1700, we should remain aware of potentially thin liquidity as the holidays approach. Any unexpectedly strong US data or hawkish comments from Fed officials could cause sharp, albeit likely temporary, pullbacks. However, the path of least resistance for EUR\/USD appears to be higher as we close out 2025.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD climbs on dovish Fed signals, Euro strength, and market optimism ahead of key US job data.<\/p>\n","protected":false},"author":62,"featured_media":16966,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36625","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\/36625","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=36625"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36625\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16966"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36625"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36625"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36625"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}