**EUR/USD, USD/JPY, and AUD/USD Outlook: US Dollar Pulls Back Slightly, Market Eyes Shifting Sentiment**
*Based on the article by Christopher Lewis, FX Empire — Additional insights incorporated from recent market analysis by Reuters and Investing.com*
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## Overview: US Dollar Sees Mild Weakness as Market Tone Changes
The US dollar exhibited some minor weakness on Tuesday, retracing gains accumulated in the prior trading sessions. Foreign exchange traders and investors saw subtle but noteworthy shifts across key currency pairs, especially EUR/USD, USD/JPY, and AUD/USD. Although the greenback has maintained an overall robust posture due to strong US economic data and continued expectations for “higher for longer” interest rates, emerging market themes and repositioning are starting to create different trading dynamics.
The focus now turns to how the Federal Reserve’s policy outlook and evolving risk sentiment might change the trajectory of major currency pairs.
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## EUR/USD Technical and Fundamental Analysis
### General Sentiment
– The EUR/USD pair started to stabilize on Tuesday after notable declines in previous days.
– The euro had been under pressure due to weaker economic data out of Europe and contrasting strength in the US economy.
– A slight recovery in the pair suggests some hesitance among traders to aggressively favor the US dollar, especially as the major central banks approach potential inflection points.
### Key Resistance and Support Levels
– **Resistance**: Main resistance can be found around the recent swing highs close to the 1.0850–1.0870 area.
– **Support**: Noteworthy support lies near 1.0700, which served as a key level in previous sessions.
### Factors Impacting EUR/USD
– **US ISM Services PMI and Jobs Data:** Stronger than expected ISM Services PMI and ongoing tightness in the US labor market have been supporting the dollar, but Tuesday’s milder gains signal potential profit-taking.
– **European Economic Outlook:** The euro continues to grapple with subdued growth in the zone’s largest economies, especially Germany, which is dealing with ongoing stagnation.
– **Central Bank Divergence:** The ECB has signaled a cautious pause, but weaker inflation might force it into earlier or more aggressive easing compared to the Fed.
### Market Outlook
– **Short-term:** EUR/USD is consolidating, suggesting indecision as traders await more clarity on Fed policy.
– **Medium-term:** The currency pair may trade in a sideways to slightly bearish channel.
– **Long-term:** Strength will likely be capped unless the US data unexpectedly turns negative or the eurozone witnesses a strong rebound.
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## USD/JPY Analysis: Pause or Resumption of Uptrend?
### Current Situation
– USD/JPY remains sensitive to varying narratives regarding the Bank of Japan and the Federal Reserve’s future moves.
– Volatility has increased as USD/JPY hovers near multi-decade highs.
### Technical Picture
– **Support:** 155.00 is serving as a psychological and technical support level
Read more on AUD/USD trading.