Article by: ETO Markets
The Australian and European markets both felt the impact of a stronger US dollar, driven by President-elect Donald Trump’s potential declaration of a national economic emergency to impose widespread tariffs. In the Australian market, the AUD/USD pair fell by over 0.40%, trading at …, despite a slight rise in November’s Weighted CPI to 2.3% YoY, which exceeded expectations. However, the inflation data failed to boost demand for the Australian dollar. Federal Reserve Governor Christopher Waller dismissed concerns about tariffs causing persistent inflation and hinted at potential rate cuts in 2025, contingent on inflation progress. Traders are now focused on the release of the Federal Open Market Committee's (FOMC) December meeting minutes for further insights.
In the European market, the EUR/USD pair also faced downward pressure, holding near daily lows as mixed US labor data added to market caution. The ADP Employment Report showed the private sector added 122K jobs in December, falling short of the 140K forecast, while initial jobless claims improved to 201K, better than the expected 218K. However, these figures had little impact on the EUR/USD, with the focus shifting to Trump’s tariff plans and the upcoming FOMC meeting minutes for clues on future monetary policy.
The EUR/USD dipped back into the … range on Wednesday as traders balanced mixed European data and awaited Friday's US Nonfarm Payrolls (NFP) report. While German Retail Sales and pan-European PPI showed some improvement, EU PPI inflation remained in contraction, and traders now look to upcoming German Industrial Production and EU Retail Sales data for clearer direction. In the US, slower December hiring, with ADP Employment Change at 122K versus 140K expected, and wage growth at its slowest since 2021, added to market caution. The Federal Reserve's latest meeting minutes revealed growing concerns about President Trump's tariff plans and emphasized uncertainty in trade policies, with the Fed signalling fewer rate cuts in 2025 than previously anticipated.
From a technical perspective, the EUR/USD remains under pressure near the … level, with traders struggling to lift the pair from its multi-year lows. Since late September, the pair has dropped 8.82%, hitting 26-month lows amidst a consistent bearish trend. While a bullish rebound is possible as the pair approaches oversold territory, the immediate resistance level could be near …, supported by the 20-day Exponential Moving Average (EMA). Beyond that, Euro bulls face resistance from the 50-day EMA, which is trending downward toward the … level, posing a significant challenge for recovery. On the downside, the EUR/USD still faces the multi-year low support level at 1.0223 and the psychological level at ….
The Australian Dollar (AUD) extended its losses for the third straight day, with the AUD/USD pair trading near two-year lows as domestic data and China's inflation report weighed on sentiment. Australia's trade surplus rose to ... million in November, exceeding expectations, driven by a 4.8% MoM rise in exports and a 1.7% MoM increase in imports. Retail sales grew by 0.8% MoM in November, falling short of the anticipated 1.0% rise, despite improving from October's 0.5% growth. Meanwhile, China's Consumer Price Index (CPI) for December highlighted deflationary risks, with annual inflation up by just 0.1%, unchanged MoM at 0%. With China being a key trading partner, these developments add pressure on the AUD, as traders await Friday's US Nonfarm Payrolls (NFP) report for further policy direction.
From a technical perspective, the AUD/USD pair trades near ..., maintaining a bearish outlook within a descending channel on the daily chart. With the 14-day Relative Strength Index (RSI) slightly above 30, bearish momentum could intensify, potentially driving the pair toward the channel's lower boundary around .... On the upside, immediate resistance lies at the nine-day EMA at ..., followed by the 14-day EMA at ..., with stronger resistance near the channel's upper boundary at ....
