Insights 
VT 
Growth in the US is viewed as more robust compared to the German economy, with markets sceptical about a stronger EUR/USD in the upcoming months. Lower growth in Germany is attributed to reduced investment, particularly after the euro crisis, where private investment in relation to GDP has been lower than in the US since 2012.
Between 2015 and 2019, Germany’s investment share was already lower but remained parallel to the US. This trend worsened post-pandemic and following Russia’s actions in Ukraine, as US investment in GDP rose, whereas Germany’s declined. The German government’s fiscal strategy is vital for investment recovery, aiming for an 11.5% share of GDP by 2027, a slight increase from the current 11.0%.
US Investment Growth
US investment growth is primarily led by the IT sector, without significant growth in other sectors like industrial equipment or transport. Narrowing the investment gap could bolster Germany’s growth and aid the euro’s strength against the US Dollar. Expectations are for improvements next year, contributing to a potential euro appreciation by 2026.
The market is critical of a stronger EUR/USD right now, as US growth appears much more solid. This view is reinforced by expectations that the European Central Bank may cut rates more aggressively in 2026 than the US Federal Reserve. This has kept pressure on the euro for much of the second half of 2025.
We are watching for early signs of a shift, particularly from Germany. While Germany’s share of investment in GDP fell after 2022, the government’s fiscal plans for next year aim to reverse this. The recent uptick in the German IFO Business Climate index to 88.5 might be an early, fragile signal that sentiment is bottoming out.
US Investment Picture
Looking closely at the US, the investment picture is not as strong as it seems. Recent Q3 2025 data showed that investment in information processing equipment made up over 70% of business investment growth. Other key areas like industrial and transport equipment have been flat, suggesting a narrow and potentially fragile expansion.
For derivative traders, this potential shift in narrative for 2026 is key. With 3-month implied volatility for EUR/USD near multi-year lows of 5.8%, options are relatively cheap. This presents an opportunity in the coming weeks to build positions, such as buying call options expiring in the first or second quarter of 2026, to capitalize on a potential upward move that the market is not yet pricing in.
The strategy over the next few weeks is not about reacting to daily noise but about positioning for a structural re-rating of the Euro. If the gap between US and German economic performance begins to close as we expect in 2026, these early positions could prove valuable. The current market pessimism provides a good entry point for this contrarian view.
