Construction output in the Eurozone decreased sharply year-on-year, falling from 3.2% in July to 0.1% in August. This substantial drop indicates a challenging period for the construction industry within the Eurozone.

In foreign exchange markets, the EUR/USD pair stabilised around 1.1650, supported by a positive mood despite France’s credit rating downgrade by S&P Global Ratings. GBP/USD traded cautiously near 1.3400, impacted by a firm US Dollar and anticipation of upcoming UK inflation data.

Commodity Market Trends

Meanwhile, in commodity markets, Gold recovered to over $4,300 after an earlier correction to approximately $4,200. The precious metal’s attractiveness was supported by uncertainties in US-China trade relations and expectations of a dovish stance from the Federal Reserve.

Cardano (ADA) price experienced a correction, decreasing nearly 7% over the previous week. Traders’ confidence appeared to weaken, evidenced by the decline in Open Interest to a yearly low and a rise in short positions.

The near-collapse in Eurozone construction growth, plummeting from 3.2% to just 0.1% year-on-year, signals a sharp economic downturn. This is a clear indicator of weakening demand across the continent, prompting us to reconsider long positions on European assets. We are now looking at options strategies that profit from increased volatility or a continued decline in European equity indices like the DAX and CAC 40.

The weakness is not isolated, as recent data from Destatis showed German industrial production unexpectedly fell by 1.8% in September 2025. This confirms the slowdown in the Eurozone’s core economy, putting further pressure on the euro. Consequently, we see the current stability in EUR/USD around 1.1650 as a potential opportunity to build short positions.

Credit Rating Impacts on Currency

S&P’s credit rating downgrade for France to A+ earlier this month continues to weigh on the single currency. This has already increased borrowing costs for Paris, with the spread between French and German 10-year bonds widening by 15 basis points since the announcement. Any rally in the EUR/USD is likely to be met with selling pressure as the fundamental picture deteriorates.

We are also bracing for volatility in the British Pound ahead of this week’s UK inflation data. With the September 2025 CPI data showing core inflation remaining sticky at 3.1%, another high reading could force the Bank of England’s hand. Traders should consider straddles or strangles on GBP/USD to trade the potential sharp move, regardless of the direction.

Amid the uncertainty in Europe and ongoing US-China trade tensions, gold is reasserting itself as a key safe-haven asset. Its climb back above $4,300 is directly tied to growing expectations of a dovish pivot from the Federal Reserve. The CME FedWatch tool now shows a 70% probability that the Fed will hold rates steady at its November 2025 meeting.

This risk-off sentiment is also spilling into more speculative markets like cryptocurrencies. The recent 7% correction in Cardano is telling, as derivatives data shows open interest has fallen to a yearly low while short bets are surging. We interpret this as capital fleeing high-risk assets, suggesting further downside for the broader crypto market in the coming weeks.

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