Insights 
EUR/USD maintains its position around 1.1200 in the Asian session, as the Euro gains momentum before the Eurozone GDP report for Q1 2025. The Euro benefits from increased confidence in its status as a reserve currency.
US policies are seen to diminish the US Dollar’s appeal as a safe haven. Germany’s increased public spending further boosts demand for the Euro. Despite European Central Bank talks of rate cuts, the Euro remains resilient due to a softer US Dollar.
Focus Shifts To Economic Indicators
Attention shifts to US data releases like Retail Sales and the Producer Price Index. Discussions arise that a weaker Dollar could enhance US trade competitiveness.
The Eurozone GDP, a critical economic indicator, measures the total value of goods and services produced in the Eurozone. A rise in GDP is generally positive for the Euro, with the upcoming consensus and previous reading both at 1.2%. The GDP release is scheduled for May 15, 2025.
With the Euro stabilising near the 1.1200 mark during the quieter Asian hours, there’s a sense that recent undercurrents in the macroeconomic backdrop are beginning to ripple across currency markets. A stronger Euro, supported by broader acceptance as a reserve instrument, finds added support from domestic developments such as increased fiscal expenditure out of Berlin. This increase in public investment, while mostly long-term in nature, sends indirect but sustained confidence signals in the near term, especially in light of ongoing discussions surrounding monetary easing within the bloc.
In contrast, the Dollar finds itself under quiet pressure. Recent fiscal moves in Washington and a slightly more dovish stance from the Federal Reserve have reduced its draw as a defensive holding. This subtle repositioning by global investors is compounded by renewed interest in Euro-denominated assets, particularly as economic releases across the Atlantic carry room for upside surprises.
Upcoming US Economic Data
On the calendar, our attention now moves towards two key upcoming figures from across the pond—particularly Retail Sales and the Producer Price Index (PPI). Any deviations in these readings will likely influence short-dated rate expectations, and consequently the interest rate differentials that often drive short-term flows into currency derivatives. A subdued PPI print, for example, may encourage bets on softer monetary conduct, reducing real yield expectations and further weighing on the Greenback.
While monetary policy remains a talking point, it’s the upcoming Eurostat GDP print that could provide more directional bias. The measure encapsulates economic output across the Eurozone. With consensus aligning at an annual pace of 1.2%, in line with the previous quarter’s outcome, there’s a level of anticipation for whether this print will either confirm a pattern of moderate expansion or surprise to the upside. The scheduled date of 15 May places this event in a relatively light macro window, amplifying its potential reaction across currency pairs.
In this environment, attention needs to turn less towards the broad trend narratives and more towards the timing of these smaller moments which may temporarily but aggressively shift positioning. As derivative traders, the focus sharpens on relative performance rather than absolute changes, and on how implied volatility prices into the front end of the curve in advance of this economic data.
When influencers such as Weidmann signal approval of expansionary policy in the Euro area, we often observe a sustained interest in building longs on currency strength—even when rate cut talk is already priced in. This stems from the belief that coordinated fiscal and monetary shifts offer a broader policy cushion, adding structural support to the single currency.
Our approach in the weeks ahead should be to closely track three key threads: the rate of USD yield repricing, surprise potential in US activity data, and the directionality of Eurozone economic performance. The skew in short-dated options may begin to reflect higher demand for upside Euro protection, particularly if GDP edges beyond consensus.
Volatility remains suppressed relative to historical ranges, but that can shift quickly, especially around tightly packed economic releases. The presence of consistent demand for the Euro—even amid easing discussions—suggests there’s a firmer floor underneath current pricing than surface-level Fed-ECB divergence might imply. We may be seeing a transition phase, where rates decouple slightly from FX direction, and flows are driven more by relative growth expectations and fiscal injection than purely by base rates.
It’s worth noting that the 1.1200 level has not so much acted as resistance but more a magnet. Each return towards it feels less like rejection, and more like a reassessment point. Movement above or below needs to be contextualised against both the data and implied market responses.
