Insights 
VT 
The EUR/USD remains stable, with the session showing little movement. German Retail Sales increased by 0.2% in September, while the preliminary Eurozone CPI also rose by 0.2% monthly, marking a 2.1% gain for the year. ECB President Lagarde suggested that the current policy stance is appropriate, indicating resistance to further easing.
The Spot Rate and Market Movements
The spot rate consolidates in the upper 1.15s, with support in the low to mid 1.15s throughout October. A decline below 1.1525 could indicate further short-term downside risk for the EUR to potentially reach 1.1400/50. Intraday resistance levels are at 1.1575 and 1.1635.
Other market insights include a week-long stall in the Dow Jones Industrial Average, a three-month low for EUR/USD due to hawkish US Federal Reserve tones, and a seven-month low for GBP/USD amid UK fiscal concerns. Gold prices drop below $4,000, facing a second weekly loss, while WTI rebounds slightly amidst energy recovery considerations.
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As we see it on October 31, 2025, the Euro is showing a soft undertone while consolidating in the upper 1.15s against the dollar. The European Central Bank appears content with its current policy, which suggests a high bar for any further monetary easing. This creates a stable but vulnerable position for the currency.
US Federal Reserve Impact
The key factor at play is the starkly different approach from the US Federal Reserve, which continues to project a hawkish tone. Recent data from September 2025 showed US inflation persisting at 3.7% and a robust addition of 336,000 jobs, giving the Fed reason to maintain its “higher for longer” interest rate stance. This policy divergence is putting significant underlying pressure on the EUR/USD pair.
For derivative traders, the critical level to watch is the 1.1525 support. A decisive break below this point in the coming weeks could trigger a sharper move down towards the 1.1400 to 1.1450 range. The current market consolidation has likely compressed volatility, making options strategies relatively inexpensive.
Considering this outlook, buying EUR/USD put options with strike prices below 1.1500 could be a prudent way to position for a potential breakdown. This strategy offers a defined risk while providing exposure to the downside if the US dollar’s strength continues to build as we expect. It allows us to capitalize on a potential drop without the unlimited risk of a short futures position.
We remember a similar dynamic back in 2022 when a hawkish Fed and a more cautious ECB led to a significant decline in the EUR/USD, eventually pushing it below parity. While the current levels are different, the fundamental story of policy divergence is a powerful historical precedent for anticipating further dollar strength.
