Insights 
VT 
The Eurozone’s HCOB Services Purchasing Managers’ Index (PMI) registered 53 in October, surpassing the anticipated 52.6. This result signals steady growth in the services sector, pointing to resilient economic activity amid ongoing difficulties.
Related updates include currencies and commodities movements, with USD/JPY approaching 154.00 and WTI oil rebounding due to geopolitical risks. The US ISM Services PMI is expected to show a slight increase in October, while the EUR/USD remains near a three-month low.
Editorial Picks Focus
Editorial picks focus on currency pairs and the upcoming impact of US data on forex markets. Job statistics suggest mild gains in October following a September dip, while risk sentiment in financial markets might face changes.
Included are top broker recommendations for 2025 across various criteria such as low spreads, leverage, and specific currencies. Highlights include EUR/USD trading and the best brokers in regions like Mena and Indonesia.
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The Eurozone services sector has shown surprising strength, with the October PMI reading of 53 beating expectations and improving on September’s 52.8. This unexpected resilience challenges the prevailing bearish sentiment that has been weighing on the Euro. We should reconsider the narrative that the European economy is lagging significantly behind the US.
Potential Rebound Opportunity
With EUR/USD hovering near three-month lows around 1.1500, we see an opportunity for a potential rebound fueled by this stronger data. Buying short-dated call options on EUR/USD provides a low-risk way to position for a reversal ahead of the US data releases. This setup feels similar to the sentiment shift we saw in late 2023, when better-than-expected European data preceded a multi-week rally in the pair.
The upcoming US ISM services and ADP employment reports are key risk events that could inject volatility. The Euro FX VIX (EVZ) has already ticked up to 9.5% this week, showing the market is bracing for a move. For those uncertain of direction, using options straddles on EUR/USD futures could be a prudent way to trade the expected price swing.
This resilience in the Eurozone contrasts sharply with the UK, where last week’s retail sales figures showed a surprise 0.5% contraction. This divergence strengthens the case for buying the Euro against the Pound Sterling, especially as EUR/GBP tests a key support level near 0.8800. We view this as a potential entry point for long positions in the cross.
The market is currently pricing in a 70% chance of a European Central Bank rate cut by March 2026, according to overnight index swaps. This strong services data could push those expectations further out, providing underlying support for the Euro. We can use interest rate futures to position for the ECB holding rates higher for longer than the market anticipates.
