The Euro is presently experiencing a decline against the US Dollar, associated with strengthening US yields. The Euro’s value has entered the low 1.15s, with a risk of further decline below 1.1515.

The 2-Year Eurozone/US yield spread had narrowed to just under -150 basis points in September and later stabilised. The spread widened by approximately 9-10 basis points the previous week, which contributed to the Euro’s drift. Support for the Euro is anticipated if it falls to the low-to-mid 1.14s.

Central Bank Policies and Inflation

European Central Bank policy advocates suggest maintaining the current policy in the near term. Meanwhile, lower US Federal Reserve rates are expected within the upcoming months.

Technically, the Euro is testing the lower boundary of the rising channel established since mid-year at 1.1515. A sustained movement below this level might push the Euro to test the 1.14 region, aligning with August’s low of 1.1392. Resistance for the Euro stands at 1.1550.

As of early November 2025, we are seeing the Euro weaken against a stronger US Dollar, a move supported by higher US bond yields. The interest rate difference between the Eurozone and the US widened last week following the late-October FOMC meeting, making the Dollar more attractive for now. This trend has pushed the EUR/USD pair down into the low 1.15s.

The policy outlook between central banks is creating tension, as the European Central Bank appears committed to holding rates steady for the near future. This stance is backed by recent data showing Eurozone core inflation remaining sticky at 2.8%, well above their target. In contrast, futures markets are still pricing in a high probability of a Federal Reserve rate cut in the first quarter of 2026.

Trading Strategies and Market Volatility

From a technical standpoint, the Euro is testing a critical support level at 1.1515. A decisive break below this point would signal further weakness, opening the door for a slide towards the 1.14 area, a level we last saw in August 2025. Resistance for any potential bounce is currently capped at 1.1550.

For traders anticipating a breakdown, this presents an opportunity to buy EUR/USD put options with strike prices around 1.1450 or 1.1400. Considering options that expire in mid-December 2025 would provide enough time for the currency pair to make its move lower. This strategy profits if the Euro continues to fall as expected.

Conversely, if we believe the 1.1515 support will hold, selling cash-secured puts with a strike below 1.14 could be a viable strategy. This approach collects a premium based on the view that the Euro will not fall significantly further in the coming weeks. We saw a similar defensive stand in this currency pair back in early 2024, when strong support levels repeatedly held despite bearish sentiment.

Regardless of direction, traders should monitor implied volatility, which reflects expected price swings. Given the conflicting signals between current US economic strength, confirmed by October’s strong 210,000 job gain, and future Fed easing expectations, sharp price reversals are possible. Managing position size is crucial in this environment.

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