**FX Empire Forex Forecast: U.S. Dollar Eases Amid Market Anticipation (Original Analysis by Christopher Lewis, Expanded and Updated)**
The U.S. Dollar drifted lower against major currency pairs during Wednesday’s trading session, influenced by the evolving expectations regarding the Federal Reserve’s monetary policy and a broader sense of risk appetite in global financial markets. The forex landscape remains sensitive to a convergence of factors such as central bank policy decisions, inflation profiles, labor market data, and shifting sentiment among traders. This article provides a comprehensive analysis of the EUR/USD, USD/JPY, and AUD/USD currency pairs, drawing primarily from Christopher Lewis’s forecast for FX Empire while incorporating additional recent insights and data.
**Key Market Drivers Impacting the U.S. Dollar:**
– Federal Reserve monetary policy trajectory
– Comparative performance of economies (U.S., Eurozone, Japan, Australia)
– Geopolitical events and global risk sentiment
– Recent inflation and labor market data releases
– Central bank commentary and forward guidance
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## EUR/USD: Dollar Weakness Lends Support to the Euro
**Overview**
The EUR/USD currency pair rebounded slightly during Wednesday’s session, buoyed by recent softness in the U.S. Dollar. Investors are closely monitoring upcoming economic data and Federal Reserve communications for further cues on the potential timing and magnitude of future interest rate moves.
**Price Action and Technical Analysis:**
– The pair traded above the 1.0850 level, recouping losses from earlier sessions as dollar bulls took profits and repositioned ahead of fresh macroeconomic inputs.
– Resistance remains at 1.0900, a critical psychological barrier that has repeatedly capped upward price movement in recent weeks.
– Support is evident near 1.0800, bolstered by the 50-day moving average, which has provided a platform for buyers to step in.
– Technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), suggest neutral to slightly bullish momentum.
**Fundamental Factors:**
– Europe’s modest economic recovery, aided by easing energy fears and better-than-expected PMI data, continues to underpin the euro.
– The European Central Bank (ECB) maintains a cautious tone but refrains from signaling imminent rate hikes, limiting euro upside.
– In contrast, the Federal Reserve’s recent “wait and see” approach to inflation and monetary policy, signaled in the latest FOMC minutes, has dampened dollar demand.
**Outlook:**
– Traders remain vigilant ahead of forthcoming U.S. inflation and labor market data, which could recalibrate expectations for rate cuts.
– A sustained break above 1.0900 could signal further gains toward 1.1000, while a move below 1.0800 might indicate renewed dollar strength.
**Additional Note:**
According to a recent Reuters poll, most analysts foresee the EUR/USD trading within a stable range over the next quarter, contingent on data flows and central bank messaging
Read more on AUD/USD trading.