The eurozone’s M3 money supply for November increased by 3% year-on-year, surpassing the forecast of 2.7%.
In related market developments, the EUR/USD pair is experiencing downward pressure, while GBP/USD remains stable around 1.3450. Gold has shown a recovery, nearing $4,400 after significant losses.
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Higher Than Expected Eurozone M3 Data
The higher-than-expected Eurozone M3 money supply data from November 2025 suggests inflationary pressures may be building. This follows the trend we saw in late 2025, when Eurozone core CPI for December ticked up to 2.9%, moving closer to the ECB’s target. A sustained increase in money supply could force the European Central Bank to adopt a more hawkish tone sooner than anticipated.
With this backdrop, the current weakness in EUR/USD, trading below 1.1750, may be temporary and presents a buying opportunity. We should consider using derivatives to position for a stronger Euro in the coming weeks, such as buying call options to capture potential upside. The divergence between this strengthening Eurozone data and a potentially dovish Fed is a key theme to trade.
Expectations for a less aggressive Federal Reserve are what’s helping push gold toward $4,400 an ounce. The December 2025 Non-Farm Payrolls report from the US showed that annual wage growth had cooled to 3.8%, giving the Fed room to ease policy. This contrasts sharply with the Eurozone’s inflation signals, setting up a clear case for dollar weakness against the euro.
The powerful rally in gold is also supported by significant institutional demand, as global central banks reportedly added over 300 tonnes to their reserves in the final quarter of 2025. This behavior is reminiscent of the inflationary periods of the late 1970s and signals a flight to safety. We can use bull call spreads on gold to participate in further gains while limiting the initial cost of the trade.
As we are just coming out of the New Year holiday, trading volumes remain thin, which can lead to exaggerated price swings. Implied volatility in major currency pairs is currently hovering near its 52-week lows, making options relatively cheap. This is an opportune moment to build positions that will benefit from an increase in market activity as traders return to their desks.
