EUR/USD started November on a bullish trajectory, showing significant recovery after a challenging October.

The pair is currently trading around 1.0860, supported by shifting economic data and evolving market expectations. Let’s delve into the key market drivers.

Fundamental data has also played a role in this movement. Eurostat recently reported that the region’s GDP grew by 0.9% year-over-year in the third quarter, surpassing forecasts. Germany, the economic engine of the eurozone, managed to avoid a technical recession, posting an unexpected 0.2% quarterly growth. Meanwhile, inflation remains steady, with the Harmonized Index of Consumer Prices (HICP) in October rising to 2.0%, higher than the projected 1.9%.

These economic figures have led traders to adjust their outlook on European Central Bank (ECB) policy, now factoring in a more moderate 25 basis-point rate cut instead of more drastic measures.

On the other hand, a weakening U.S. dollar is providing further support for EUR/USD. The U.S. Personal Consumption Expenditures (PCE) index for September matched expectations with an annual rate of 2.1%, down from 2.2% in August. However, the core PCE index remains at 2.7%, which may prompt traders to exercise caution ahead of the upcoming Non-Farm Payroll (NFP) report.