The Data Presents A Positive Outlook
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The significant increase in German industrial orders for December 2025 is a positive signal we cannot ignore. While the 7.8% jump is skewed by large orders, the underlying growth suggests the industrial recession that plagued the economy through much of 2025 may finally be bottoming out. This points towards a potential recovery, making us reconsider our bearish outlook on certain European assets.
Bullish Positions On The German DAX Index
We should look at bullish positions on the German DAX index, which has already shown strength by gaining over 8% in the final quarter of 2025. This industrial data provides fundamental backing for continued momentum into the first quarter of 2026. Derivative traders could consider buying call options on DAX futures with March or April expiration dates to leverage this expected upside.
This economic strength should also support the Euro. After finding solid ground around the 1.08 mark against the US dollar in January 2026, the EUR/USD pair now has a catalyst to move higher. We see an opportunity to go long on EUR/USD futures contracts or purchase call options to profit from a potential rally towards the 1.10 level in the coming weeks.
The data also impacts our view on European Central Bank policy. With German industry showing signs of life and recent Eurozone inflation for January 2026 coming in at 2.3%, the pressure for the ECB to cut interest rates diminishes. We can position for this by selling German Bund futures, anticipating that improving economic prospects will push bond yields higher and prices lower.
However, we must remain cautious as the headline number was inflated by volatile big-ticket items. This underlying uncertainty could be exploited by selling volatility, for instance through short positions on VSTOXX futures. This strategy would be profitable if the market continues its steady climb without major shocks, a scenario that seems more likely now.
