In Europe markets, the Euro (EUR) fell to a four-day low against the US Dollar (USD) on Wednesday, pressured by a resurgent USD driven by renewed trade tariff concerns and a neutral Federal Reserve stance. The US Dollar Index (DXY) surged past 108.00 as Treasury yields rose, while uncertainty over potential Trump-era tariffs on the Eurozone continued to dampen sentiment. The Fed held rates steady at 4.25%–4.50%, dropping prior language about inflation progress and signalling caution, though policymakers remain data-dependent before considering cuts. Meanwhile, the ECB is expected to cut rates on Thursday but faces challenges balancing inflation control with economic stagnation in the Eurozone, particularly in Germany. Trade tensions loom large, as tariffs could spike US inflation, prompting a hawkish Fed pivot and further EUR/USD downside—potentially reviving parity fears. Structural Eurozone weaknesses, diverging ECB-Fed policies, and political risks suggest sustained EUR recovery remains unlikely, with key inflation data and trade developments set to dictate near-term trends.
In Australia markets, the AUD/USD pair fell after the Federal Reserve kept interest rates unchanged at 4.25%-4.50% but adopted a slightly hawkish tone by removing language suggesting progress toward its 2% inflation target. This initially strengthened the US Dollar and pressured the Aussie lower. However, Fed Chair Jerome Powell later downplayed the change as a "language cleanup," easing market concerns and tempering the hawkish reaction. He emphasized that while policy remains restrictive, it could gradually transition to a neutral stance, adding dovish undertones that helped the AUD/USD pair recover some losses.
The EUR/USD pair remains range-bound near … as traders await the European Central Bank (ECB) meeting, where another rate cut is widely expected due to low inflation and weak economic growth. Market expectations of further ECB easing and concerns over potential US trade tariffs weigh on the Euro, while the US Dollar finds support from the Federal Reserve’s decision to hold rates steady despite pressure for cuts. However, lower US Treasury yields limit the USD’s upside. Traders also eye the US Q4 GDP data for further cues, though the ECB-Fed policy divergence suggests a bearish outlook for the EUR/USD pair.
The EUR/USD pair's breakout above a short-term descending trend channel and the 50-day Simple Moving Average signals a bullish outlook, with technical indicators supporting further gains. However, a sustained move above the … psychological level is needed to confirm upside momentum, potentially targeting … and …. On the downside, the … level offers initial support, with deeper pullbacks likely finding buyers around …. A break below this could accelerate declines toward … and potentially the two-year low near ….
The Australian Dollar (AUD) extended its losing streak against the US Dollar (USD) but found some support after Australia’s Export Price Index rose 3.6% in Q4 2024, reversing a previous decline. Speculation of a February rate cut by the Reserve Bank of Australia (RBA) increased as inflation eased, though the AUD remained under pressure amid USD strength following the Federal Reserve’s decision to hold rates steady with a cautious stance on future cuts. Additional headwinds for the AUD came from concerns over US tariff threats under President Trump, contributing to risk aversion. Traders now await key US Q4 GDP data for further direction.
The AUD/USD pair trades around …, just below the ascending channel, signaling a bearish shift. The 14-day RSI remains under 50, reinforcing downside momentum. A break below key support intensifies bearish pressure, potentially driving the pair toward …, its lowest level since April 2020. Resistance lies at the nine-day EMA (…) and the channel’s lower boundary (…). A sustained move above … could restore a bullish outlook, with the next target near ….
