Article by: ETO Markets
In Europe market, EUR/USD, after three consecutive daily gains, shed some of its advance as a weak rebound in the US dollar—evidenced by a brief dip below … and the US Dollar Index nearing 103.80—suggested renewed selling pressure amid improving US yields. Investor concerns over the US economy, heightened by President Trump’s evolving trade policies and new tariffs on Canadian, Mexican, and Chinese goods, have compounded the fragile outlook for the dollar, potentially influencing future Fed decisions. Meanwhile, easing tensions in the Russia-Ukraine conflict, coupled with central bank moves—where the Fed maintained rates in the 4.25–4.50% range and the ECB trimmed rates by 25 basis points while hinting at further easing—have bolstered the euro, setting the stage for market sentiment to pivot on further trade policy developments and economic forecasts.
In Australia market, the Australian Dollar extended its gains with AUD/USD reaching two-day highs amid a generally improved risk sentiment and a weakened US Dollar environment, as the DXY hovered near multi-month lows. However, fresh tariffs on Canadian, Mexican, and Chinese goods continue to unsettle markets and raise fears of a broader trade war, especially given the risk that a slowdown in China could dampen demand for Australian exports—a worry partly eased by rising copper and iron prices. Meanwhile, concerns over trade-related inflation are keeping the Federal Reserve cautious despite weaker US CPI data, while Australia’s Reserve Bank recently trimmed rates by 25 basis points to 4.10%, though future cuts remain uncertain. Market focus now shifts to upcoming economic data, including building permits and industrial production figures due on March 13, which are expected to offer further insights into the Aussie’s near-term direction.
During Asian trading hours on Thursday, the EUR/USD pair fell to around 1.0880 as escalating trade tensions between the US and the EU weighed on the euro. The situation intensified after US President Trump warned of further US responses to EU countermeasures against his new 25% tariffs on steel and aluminum, while the European Commission announced retaliatory tariffs on US goods worth up to 26 billion euros—measures set to take effect on April 1 with more planned for mid-April. Traders are now closely watching upcoming US economic data, including the February PPI and weekly jobless claims, even as concerns persist that Trump’s protectionism might ultimately weigh on the US dollar by pushing the economy toward a recession.
From a technical perspective, the EUR/USD pair faces near-term resistance at …—the 2025 high from March 11—with a breakout potentially opening the door to testing …(the 23.6% Fibonacci retracement) before approaching the key … level. On the downside, support is seen at multiple technical levels starting from the 200-day SMA at …, followed by the 100-day and 55-day SMAs at … and …. Meanwhile, momentum indicators—with the RSI near 74 and the ADX close to 27—point to a strong uptrend, though the sustained overbought conditions may soon prompt a technical correction.
The Australian Dollar extended its gains but depreciated against the US Dollar for the third consecutive session on Thursday, as the pair found support from a subdued greenback amid mounting tariff uncertainty and recession fears. However, gains may be capped after President Trump ruled out exempting Australia from his 25% tariffs on aluminum and steel—key exports valued at nearly $1 billion. Meanwhile, Australia’s consumer inflation expectations fell to 3.6% in March from 4.6% in February, and Prime Minister Albanese confirmed that Australia would not impose reciprocal tariffs to avoid higher costs and inflation. Investors remain focused on the Reserve Bank of Australia’s policy outlook following robust economic data that has lowered expectations for further rate cuts, even as the US Dollar Index steadied around 103.50 amid softer inflation data that hints at potential Fed rate cuts. Rising global trade tensions further complicate the picture, with retaliatory tariffs between the US and EU, ongoing US-China trade deadlock, and new Chinese tariffs on Canadian products adding to the uncertainty.
From a technical perspective, the AUD/USD pair is trading near … on Thursday, with technical indicators suggesting a strengthening short-term momentum. The pair is trading above the nine-day EMA, and the 14-day RSI has moved slightly above 50, both pointing to a bullish bias. On the upside, the pair could test the three-month high around …, last seen on February 21, while immediate support is found near the 50-day EMA at … and the nine-day EMA at …. A break below these levels could weaken the momentum and drive the pair toward the five-week low of … recorded on March 4.
