**EUR/USD, USD/JPY, and AUD/USD Analysis: US Dollar Shows Renewed Strength**
*Adapted and expanded from Christopher Lewis, FX Empire*
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The US dollar, after a period of weakness, has started to regain ground against major currencies. This resurgence is influenced by shifting sentiment regarding US economic indicators, monetary policy outlook, and global risk trends. In this comprehensive analysis, we examine the latest technical and fundamental dynamics shaping the EUR/USD, USD/JPY, and AUD/USD pairs, supplemented with additional insights from market sources and recent data.
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## Overview: The US Dollar’s Rebound
The greenback spent most of the early part of 2024 on the defensive, as hopes for Federal Reserve rate cuts and softening inflation data allowed other currencies to strengthen. However, the narrative is starting to change with a series of robust US jobs reports, sticky inflation, and comments from Federal Reserve officials suggesting that interest rate cuts may not be as imminent or as aggressive as previously anticipated.
Major catalysts for the dollar’s recent upturn include:
– **Persistently strong labor market data**
– **Stubborn levels of inflation above the Fed’s 2 percent target**
– **Fed policymakers advocating for patience in adjusting rates**
– **Geopolitical uncertainties, including ongoing conflicts and trade tensions**
– **Divergence in monetary policy outlooks between the Fed and other central banks**
Let us delve deeper into each of the three major currency pairs.
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## EUR/USD: Euro Under Pressure
### Recent Performance
– The EUR/USD pair recently faced resistance near the 1.0900 level.
– After testing this area, a sell-off ensued, which brought the pair below 1.0850.
– The correction reflects a broader push towards the US dollar as traders reassess the probability of multiple Federal Reserve rate cuts in 2024.
### Technical Picture
– **Resistance zones**: 1.0900 remains a pivotal resistance. A break above this level could open the door to a move towards 1.1000.
– **Support levels**: Immediate support is at 1.0835, with further downside potential towards 1.0800. Deeper losses could target the 200-day moving average.
– **Momentum indicators**: Daily RSI and MACD readings are neutral to slightly bearish, suggesting pressure persists, but oversold conditions may curb aggressive declines.
– **Chart patterns**: Price action is indicative of consolidation after an upward thrust earlier in the quarter. Failure to sustain rallies above 1.0900 points to profit-taking and renewed dollar demand.
### Fundamental Influences
– **ECB policy**: The European Central Bank has hinted at potential rate cuts in the second half of 2024 as growth cools and inflation continues to ease, widening the policy divergence with the Fed.
– **Eurozone data**: Recent releases show tepid economic momentum with flat GDP growth and inflation hovering well below ECB targets.
– **US data
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