In this week’s Europe market, the EUR/USD pair traded below … as the US Dollar gained strength amid weak Asian equities and caution ahead of major central banks' monetary policy decisions. US CPI data matched expectations, with annual inflation at 2.7% and core inflation at 3.3%, prompting a mild USD decline as it failed to influence the Federal Reserve's expected 25 bps rate cut next week, which has a 97% likelihood. Attention now shifts to the European Central Bank, anticipated to also reduce rates by 25 bps, with focus on President Christine Lagarde's comments on economic prospects.
Besides, in the Asian market, the USD/JPY pair rose 0.37% early in the North American session following the release of November US Consumer Price Index (CPI) data, which met market expectations. The USD/JPY pair continued its upward movement, while the US 10-year Treasury yield stabilized at 4.226%. Upcoming economic data includes the Producer Price Index and Initial Jobless Claims.
For Australis, the Australian Dollar (AUD) recovered from two days of losses against the US Dollar (USD) on Thursday, buoyed by better-than-expected domestic employment data. Australia's employment change rose by 35,600 in November, surpassing estimates, while the unemployment rate fell to 3.9%, its lowest since March. However, the AUD/USD pair remains under pressure from a stronger USD, driven by a US Consumer Price Index (CPI) increase to 2.7% YoY in November. Market attention now shifts to the US November Producer Price Index (PPI) for further direction.
The EUR/USD pair rebounded modestly during the Asian session on Thursday, trading near the … mark after breaking a four-day losing streak to a one-week low. Traders are cautiously positioning ahead of the European Central Bank (ECB) policy decision, where a rate cut is widely expected amid Eurozone economic concerns, though uncertainty persists over whether it will be a standard 25 basis points or a larger reduction. Focus will also be on ECB President Christine Lagarde's remarks for insights into 2025 easing plans, which could heavily influence the Euro’s trajectory. Meanwhile, a subdued US Dollar (USD) lends temporary support to the pair, though its upside is capped by higher US Treasury yields, reflecting expectations of inflationary pressures from President-elect Donald Trump's policies that may prompt the Federal Reserve to pause its rate-cutting cycle. Additional market drivers include concerns over Trump’s tariff plans and their economic impact, along with upcoming US macroeconomic data, including the Producer Price Index (PPI) and weekly jobless claims, which will further shape the pair's short-term movement.
The US Dollar trimmed early gains unevenly, with EUR/USD reaching daily highs near … amid improved market sentiment, though its bullish potential remains constrained. On the daily chart, the pair stays below a bearish 20 Simple Moving Average (SMA), while the 100 and 200 SMAs slope downward above it, signalling continued pressure, while the Relative Strength Index (RSI) stays weak at 42. On the downside, a break below the daily low at … could trigger further declines toward …, with … as the next support target. On the flip side, … supported by 20-day SMA could act as immediate resistance level and the further resistance level could be … as a weekly-high.
The USD/JPY pair has risen to the …, approaching a two-week high, as fresh selling of the Japanese Yen (JPY) emerged following an uptick in the Asian session. This move reflects a growing consensus that the Bank of Japan (BoJ) is unlikely to raise interest rates in December, despite Japan's moderate economic growth, rising wages, and inflation remaining above the BoJ's 2% target. Mixed signals from BoJ officials, including reports that the central bank may keep rates steady, have diminished the odds of tightening, further weakening the Yen. Meanwhile, a rise in US Treasury bond yields, coupled with a generally positive market tone around equities, has supported the US Dollar (USD). However, subdued USD price action has capped the upside for USD/JPY, with traders waiting for the BoJ’s policy decision next week, following the Federal Reserve's anticipated rate cut. The US CPI data from November showed inflation remains elevated, prompting the market to expect the Fed’s cautious stance on future rate cuts, possibly pausing as early as January. This uncertainty, along with the rise in the US 10-year bond yield, offers support to the USD and continues to underpin the USD/JPY pair's recent upward momentum. As the markets digest these central bank developments, the upcoming US Producer Price Index (PPI) and jobless claims data could provide additional direction for the pair.
From a technical standpoint, the USD/JPY pair's breakout above the 200-day Simple Moving Average (SMA) around the … level has served as a fresh signal for bullish traders, with oscillators on the daily chart comfortably remaining in positive territory and still well away from the overbought zone, suggesting that the pair's path of least resistance is upward. However, the upward momentum stalls near the …-… region, which coincides with the 200-period SMA on the 4-hour chart and the 50% Fibonacci retracement level of the recent pullback from the multi-month high. This area could present a significant resistance level, and a break above it might see the pair surpass the … mark, aiming for the next key resistance near the … region, the 61.8% Fibonacci retracement level. On the downside, a move below the … mark could find initial support around the … area, corresponding to the 38.2% Fibonacci retracement level. A further decline would likely meet fresh buying interest near the … round figure, which could act as a crucial pivot point. If the pair falls below this level, it could move toward intermediate support near …, with the psychological … mark acting as the next major support level.
