Article by: ETO Markets
In the European market, EUR/USD trades near 1.0780, approaching recent peaks, but faces headwinds from the ECB's rate cut signals and the Fed's delayed easing amid US trade tariff concerns. Improving Eurozone PMI data offers some support. Market focus is on upcoming central bank communications and economic data.
In the Australian market, AUD/USD consolidates around 0.6290 amid global trade tensions and Fed caution, with US Dollar softness and China's stimulus pledges providing a floor. Market sentiment remains tentative ahead of US inflation data and trade policy developments.
EUR/USD is trading modestly higher on Thursday, approaching its recent daily peaks, yet the fundamental backdrop presents a mixed picture. Significant headwinds stem from the anticipated monetary policy divergence between a potentially more accommodative European Central Bank, with officials signalling a readiness for rate cuts, and a US Federal Reserve perceived to be delaying its easing cycle due to persistent economic resilience. This widening interest rate differential continues to favour the US Dollar, compounded by lingering concerns surrounding potential US-led trade tariffs impacting European exports. However, tentative signs of improvement in Eurozone economic activity, highlighted by recent PMI data, alongside perhaps cautious optimism regarding regional fiscal measures, provide a degree of underlying support for the common currency. Market sentiment consequently remains heavily influenced by upcoming central bank communications and key economic data releases from both regions.
Technically, the EUR/USD pair is navigating near the … vicinity, attempting to consolidate recent gains, closing Wednesday around …. Whilst the broader structure maintains a degree of bullish inclination, underpinned by key moving averages, shorter-term momentum indicators present a mixed view. The Moving Average Convergence Divergence (MACD) histogram remains negative, and the Relative Strength Index (RSI 14) sits neutral around 52, suggesting consolidation rather than strong directional impetus. Crucial support is derived from the cluster identified between … and the 200-day Simple Moving Average (SMA) near …. Below this, the recent low at … acts as an immediate floor, with the psychological … mark serving as a more significant potential support level. On the upside, initial resistance lies near the …-… zone, closely aligned with the 9-day Exponential Moving Average (EMA) around …. A decisive breach here could pave the way towards the next notable ceiling near …. The Average Directional Index (ADX) reading around 26.8 underscores the current lack of a strongly defined trend, hinting at continued range-bound behaviour until a key support or resistance level is convincingly broken.
The Australian Dollar is consolidating its position around the … mark against the US Dollar, navigating a choppy market environment amidst broader indecision. Bearish pressures stem from renewed global trade tensions following the announcement of US auto tariffs, alongside a persistently cautious stance from the US Federal Reserve, which contributes to underlying uncertainty. Furthermore, speculative markets remain predominantly bearish towards the Aussie, reflecting ongoing concerns about trade friction. However, underpinning the currency pair are factors such as recent softness in the US Dollar ahead of crucial inflation data and supportive sentiment derived from China's pledges for macroeconomic stimulus aimed at boosting demand, which is favourable for Australian commodity exports. Overall market sentiment remains tentative as participants await further clarity on US inflation trends and the potential fallout from trade policy shifts.
Technically, the AUD/USD pair is hovering just below a significant confluence of resistance levels. Immediate hurdles are presented by the 20-day Simple Moving Average (SMA) near … and the 9-day Exponential Moving Average (EMA) around …, closely followed by the 10-day SMA at …. A more substantial barrier lies at the 100-day SMA near …, reinforcing the view that upside potential is currently capped. The Moving Average Convergence Divergence (MACD) histogram remains in negative territory (-0.000576), underscoring lingering selling interest, whilst the Relative Strength Index (RSI_14) sits just below the neutral 50 mark at 47.78, indicating slightly weak momentum. Key support can be identified around the recent lows near … and …; a breach of this zone could open the way towards the lower Bollinger Band, currently situated near …. Failure to overcome the immediate resistance cluster keeps the focus on these potential downside targets.
