Insights 
VT 
The EUR/USD remains stable around 1.1617 during the North American session, as markets await the US inflation data. The US Dollar gained modestly, with a rise of over 0.05%, while the Euro hit a low of 1.1585.
Thin data release contributes to muted price actions with Existing Home Sales in the US increasing more than expected. President Trump’s upcoming meetings with Asian leaders and the ongoing US government shutdown also impact the market focus.
Market Anticipation and Data Release
Traders anticipate the US Consumer Price Index (CPI) data, which is expected to show a rise above 3%. In Europe, Consumer Confidence improved slightly in October from -14.9 to -14.2.
The Euro was strongest against the Japanese Yen, with the Euro increasing in value against several major currencies. The heat map shows the percentage change of the Euro against others, helping traders make informed decisions.
EUR/USD is subdued due to anticipation of US CPI, with the US Dollar Index up by 0.06%. Upcoming Federal Reserve decisions are keenly awaited, with a possible interest rate cut on the cards. European Central Bank commentators have varying perspectives on potential future interest rate changes.
Looking back, we can see the market was holding steady around the 1.16 level for EUR/USD, waiting on key data. Today, on October 24, 2025, the currency pair is trading in a much lower range near 1.07, showing how fundamentally the environment has changed. This demonstrates the dollar’s prolonged strength over the past couple of years.
Impact of Inflation and Interest Rate Policies
The anxiety at that time was over a US inflation print potentially jumping above 3%. We now know that inflation proved much more persistent, with the latest US CPI data for September 2025 coming in at a stubborn 3.5%. This ongoing inflation has forced central banks to maintain policies that were unthinkable back then.
It is particularly notable that traders were then pricing in Federal Reserve rate cuts to a range near 4.00%. In reality, the Fed has held its key rate in the 5.00% to 5.25% range for the last five consecutive quarters to ensure inflation returns to target. This wide and sustained interest rate differential is the primary factor weighing on the EUR/USD.
In Europe, the debate between ECB hawks and doves eventually led to a more assertive policy than many expected. However, with the ECB’s deposit rate at 4.00% and recent Eurozone manufacturing PMI figures still hovering below the 50-point mark indicating contraction, the Euro has struggled to gain ground. The persistent gap in economic growth compared to the U.S. continues to cap the Euro’s potential.
For our strategy in the coming weeks, this history serves as a reminder that market expectations can be deeply flawed. With one-month implied volatility on EUR/USD options currently low at 7.5%, we see an opportunity to buy straddles ahead of next week’s US advance GDP report. This allows us to profit from a significant price move in either direction if the data surprises the market.
Given the persistent rate differential, we should also consider strategies that benefit from this gap. Selling EUR/USD futures contracts allows us to collect the positive carry, which is the interest earned from being short the lower-yielding currency and long the higher-yielding one. This is a lower-risk strategy that profits from the ongoing central bank policy divergence rather than a specific directional bet.
