Insights 
VT 
During the North American session, EUR/USD decreased by 0.17% and traded at around 1.1666. This occurred after US President Donald Trump stated that the high tariffs on China were unsustainable, easing previous tensions between the two countries.
The US Dollar recovered some losses, with the US Dollar Index climbing by 0.09% to 98.42. The lack of new economic data redirected traders’ focus to Federal Reserve officials’ remarks, who predominantly expressed a dovish stance yet acknowledged ongoing inflationary concerns.
European Market Overview
In Europe, the Harmonized Index of Consumer Prices met expectations, indicating stable price dynamics. Upcoming events for traders include the awaited release of US Consumer Price Index figures, set for next week.
The EUR/USD pair remains pressured and is currently facing technical resistance levels, with the first at the 100-day Simple Moving Average of 1.1648. Key support levels lie at 1.1600, 1.1550, and 1.1500, while resistance can be found near the 50-day SMA at 1.1691 and 1.1728.
In the foreign exchange market, Euro performs relatively weaker against the Australian Dollar. Economic indicators and monetary policies remain pivotal in influencing the currency’s value, impacting with notable data releases such as inflation and trade balance figures.
The recent shift in trade rhetoric has given the US Dollar a temporary boost, pushing EUR/USD down toward 1.1666. While Fed officials hinted at rate cuts, they remained concerned about high inflation, creating a mixed signal for the market. We must now look beyond these initial comments and focus on the hard data that followed.
US Inflation and Federal Reserve Actions
As we saw, the US Consumer Price Index (CPI) released last week confirmed the Fed’s inflation fears, coming in hotter than anticipated with a core reading of 3.9% year-over-year. This persistent price pressure complicated the central bank’s path, even with a cooling labor market. This has been a recurring theme throughout 2025, with inflation consistently surprising to the upside despite a slowing economy.
At the late October meeting, the Fed did deliver the 25-basis-point cut that markets had priced in, but the message was distinctly hawkish. Chairman Powell emphasized that this was not the start of a sustained easing cycle and that the committee would be aggressive if inflation did not resume its downward trend. This “hawkish cut” has since propelled the US Dollar Index (DXY) from the 98.42 level to highs around 99.50.
This dynamic has pushed EUR/USD decisively below the 100-day moving average at 1.1648, with the pair now consolidating around 1.1580. The European Central Bank, by contrast, has remained on the sidelines, signaling no urgency to adjust policy while its own inflation holds steady at 2.2%. The policy divergence between a hawkish Fed and a neutral ECB is now the dominant driver for this pair.
For derivative traders, this environment suggests that bearish strategies on EUR/USD could be favorable in the coming weeks. Buying put options with strike prices near 1.1550 or 1.1500 offers a way to capitalize on further downside while defining maximum risk. The implied volatility on these options has ticked up since the Fed meeting, but it still reflects an opportunity to position for a break lower.
Alternatively, establishing bear put spreads could be a more conservative approach, reducing the upfront cost of the position. For example, one might buy a 1.1550 put and sell a 1.1450 put to finance the trade and set a clear profit target. This strategy is prudent given that any sudden positive development in US-China trade talks could cause a sharp, albeit likely temporary, reversal against the dollar.
