Options traders expect the euro to gain new momentum next week as the upcoming European Central Bank meeting is expected to exacerbate monetary policy disagreement with the US Federal Reserve. Statistics from the deposit and clearing company Depository Trust & Clearing show that the most active trading this month is concentrated at the level of $1.18 per euro, with the largest part in terms of total value accumulated in contracts expiring on December 18 and 19, that is, during the period of the meeting of the European Central Bank and the day after the interest rate decision. This flow indicates that the currency will exceed this level when monetary policy makers complete their meeting. The interest rate supports the euro’s rise. The single currency is hovering near its highest level in more than two months, after the Federal Reserve cut interest rates for the third time in a row this week, and statements leaning towards monetary tightening from a member of the European Central Bank’s Executive Board, Isabel Schnabel, and sentiment reflected in the options market ahead of the bank’s decision on December 18 became the most optimistic in about three months. Also read: Expectations for a European rate hike in 2026 as hawkish bets escalate. The cost of hedging volatility ahead of the decision rose to the highest level in three months after Schnabel’s statements. Even if the European Central Bank does not raise interest rates next year, Morgan Stanley analysts expect the euro to rise to $1.30 by the second quarter of 2026. Hedge funds were the main driver of the euro’s uptrend this week as they rushed to buy regular and composite options contracts that will generate profits if the euro rises, according to currency flows traders who are not familiar with the public.