EUR\/USD fell more than 0.28% as Eurozone services PMIs suggested slowing economic growth. German inflation dipped below 2%, indicating the European Central Bank’s easing cycle is largely finished.<\/p>\n
The EUR\/USD slumped to 1.1690 after reaching 1.1742 earlier. Market participants largely overlooked geopolitical risks due to recent US actions regarding Venezuela.<\/p>\n
In December, US Purchasing Managers\u2019 Indices displayed a decline compared to the previous month. Richmond Fed’s Thomas Barkin highlighted competing risks; the current policy rate is within the neutral range.<\/p>\n
Eurozone services sector activity slowed, and German inflation fell beneath the ECB’s 2% target. This suggests the ECB\u2019s easing might be concluded unless economic growth falters.<\/p>\n
Upcoming, the European Union economic docket will include EU Harmonized Index of Consumer Prices for December and German retail sales. In the US, focus will be on ADP Employment Change, ISM Services PMI, and JOLTS Job Openings.<\/p>\n
The US Dollar Index gained 0.25% yet did not affect Gold’s value. German HICP data declined from 2.6% to 2% YoY. December’s Eurozone PMI reduced to 52.4 from 53.1 in November.<\/p>\n
The Euro is used by 20 countries in the Eurozone. It is the second most traded currency globally after the US Dollar, accounting for 31% of forex transactions in 2022.<\/p>\n
The economic picture we saw developing at the end of 2025 shows a clear split between a slowing Europe and a more resilient United States. This divergence was confirmed when German inflation dipped below 2% and Eurozone PMIs weakened. The EUR\/USD pair’s break below the key 1.1700 level was a direct result of this growing gap.<\/p>\n
In the first week of January, the data has supported this view. The flash estimate for Eurozone HICP in December 2025 came in at 1.9%, cementing the idea that the European Central Bank is on hold for the foreseeable future. Meanwhile, last week’s US JOLTS data showed job openings cooling slightly to 8.3 million, confirming a slowdown but not an economic collapse.<\/p>\n
Given this continued downward pressure, we should consider strategies that profit from a further slide in the EUR\/USD. Buying puts with strike prices near the 100-day moving average around 1.1660 offers a direct way to play this trend. For a more cautious approach, establishing bear put spreads can limit upfront costs while targeting a move toward the 200-day average near 1.1550.<\/p>\n
We should also anticipate an increase in market choppiness in the coming weeks. The US economy is slowing but not breaking, creating uncertainty around the Federal Reserve’s timing for any potential 2026 rate cuts mentioned by officials like Miran. This environment suggests that implied volatility may be relatively cheap, making long volatility positions attractive to hedge against sharp moves after key US data releases.<\/p>\n
On the upside, significant resistance has now formed around the 1.1700 to 1.1730 zone. This area, which includes the 20-day moving average from December, presents an opportunity for income-generating strategies. We can look at selling out-of-the-money call spreads with strikes above 1.1750 to collect premium, betting that any rallies will be short-lived.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD declined as Eurozone services slowed and German inflation dropped below ECB\u2019s 2% target level.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-38430","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\/38430","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=38430"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38430\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=38430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=38430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=38430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}