Insights 
VT 
The Euro gained as EUR/USD moved above 1.1700 following France’s government’s survival of a no-confidence vote. European Central Bank (ECB) policymaker Edward Scicluna suggested the bank should hesitate before making further interest rate cuts.
The EUR/USD pair traded around 1.1710 during Asian hours on Friday, marking the fourth consecutive session of gains. Support for the Euro came from France’s political developments and a dovish outlook contrasting with the ECB’s unchanged interest rate projections.
ECB Policymaker’s Views
ECB’s Edward Scicluna mentioned uncertainty about higher trade tariffs being disinflationary or inflationary. Martin Kocher from the ECB Governing Council expressed that they might have reached the end of the interest rate reduction cycle.
The US Dollar weakened due to the ongoing US government shutdown, lasting into next week. The shutdown affected the Senate’s inability to pass a funding bill, marking the tenth unsuccessful attempt during this 16-day stalemate.
The Euro remains an essential currency in the global market, with the ECB managing its monetary policy. Economic indicators such as GDP and inflation data significantly influence the Euro, alongside trade balance statistics affecting its value.
The EUR/USD is showing strength, now above 1.1700, and we see this as a positive signal for the near term. This move is supported by reduced political risk in France and recent comments from the European Central Bank suggesting interest rate cuts are on hold. This provides a solid foundation for the Euro going into the next few weeks.
Eurozone Inflation and Strategic Considerations
The ECB’s cautious stance is understandable given the latest data we’ve seen. Eurozone inflation for September 2025 came in at 2.1%, just above the central bank’s target, which reinforces the idea that they won’t rush to cut rates further. This fundamental support gives us confidence that the Euro’s recent strength is not just temporary.
On the other side of the pair, the US Dollar is weighed down by the government shutdown, now in its 17th day. Looking back, the longest shutdown we saw was 35 days in 2018-2019, so this political gridlock could easily persist and continue to create uncertainty. This environment typically hurts the dollar as it clouds the economic outlook.
Given the clear upward momentum, we believe bullish strategies on EUR/USD are warranted in the coming weeks. Traders could consider buying call options to capitalize on further gains while limiting downside risk. The current market dynamics favor those positioned for a continued rise toward higher resistance levels.
We must remain vigilant, however, as the primary risk to this trade is a sudden resolution to the US government shutdown. An unexpected funding deal would likely trigger a sharp relief rally in the US Dollar, causing a quick reversal in EUR/USD. Therefore, using defined-risk option structures is a prudent way to manage this possibility.
