Insights 
VT 
Eurozone Industrial Production experienced a 1.2% decline on a monthly basis in August, contrasting with a 0.3% growth in July. Yet, the annual Industrial Production in the Eurozone still showed an increase of 1.1% in the same month, though this was a lower rate compared to 1.8% in July.
The data, released by Eurostat, indicated that the monthly decrease in industrial activity was more subdued than the anticipated 1.6% drop. Despite these changes, the Euro (EUR) maintained its position, with EUR/USD staying 0.22% higher at approximately 1.1630.
In terms of currency performance today, the Euro fared strongly against the US Dollar. The percentage change of the Euro against major currencies is evidenced, showcasing its performance within the international financial markets. Results for other currencies included minor fluctuations with limited impacts on overall market dynamics.
We remember seeing industrial production numbers back then that showed a 1.2% monthly drop in August. At the time, this was actually better than the market feared, so the Euro didn’t react much. That report highlighted an early sign of the industrial slowdown we have been navigating.
Fast forward to today, October 15, 2025, and the latest figures for August 2025 show a smaller, but still present, contraction of 0.5%. This persistent weakness in the industrial sector is a theme we have been watching for over a year. It confirms that the slowdown is not a temporary issue.
This puts the European Central Bank in a difficult position, as inflation remains sticky at 2.8%, well above their target. With the ECB signaling rates will stay high to fight inflation, the weak growth creates major uncertainty. This suggests paying to receive fixed rates on Euro interest rate swaps could be a valuable hedge against a sharper-than-expected downturn.
The VSTOXX index, a key measure of Eurozone equity volatility, has risen to 19.5, reflecting this tension between slow growth and hawkish central banks. For traders, this environment makes long volatility strategies, such as buying straddles on the EUR/USD, increasingly attractive. These positions can profit from a large price move in either direction as the market decides which force—recession or inflation—will win out.
While the Euro held up well against the dollar when that old data was released, the situation has changed with EUR/USD now near 1.0750. The persistent industrial weakness in Europe contrasts with a more resilient US economy, putting downward pressure on the pair. Traders should consider buying puts on the Euro to protect against further declines, especially if upcoming energy price data for the winter looks unfavorable.
