**EUR/USD, USD/JPY, and AUD/USD Outlook: US Dollar Slips as Investors Evaluate Fed Path**
*Based on the analysis by Christopher Lewis, FXEmpire, and supplemented with insights from recent market data and policy commentary.*
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### Overview
On Wednesday, the US dollar experienced a mild slump against major currencies such as the euro, yen, and the Australian dollar. This came as traders processed new economic data and sought direction ahead of anticipated central bank decisions, particularly from the US Federal Reserve. The greenback’s slide reflected wider market sentiment that US policymakers may hold interest rates steady for longer, but with mounting expectations for eventual rate reductions as inflation shows signs of softening.
This update provides a closer look at the latest performance and technical analysis for EUR/USD, USD/JPY, and AUD/USD pairs, highlighting key drivers, potential price ranges, and the broader economic context influencing currency markets.
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## US Dollar Index: Underlying Factors for Weakness
The US Dollar Index, tracking the dollar against a basket of major counterparts, edged lower during the middle of the week. Several factors contributed to this trend:
– **Recent US Data:** Mixed macroeconomic releases, with inflation still above the 2 percent target but showing some moderation. Employment data has remained generally robust, which complicates the Fed’s decision-making process.
– **Federal Reserve Positioning:** Although the Federal Reserve continues to emphasize data-dependence in its policy statements, there is growing speculation that the central bank is approaching the end of its hiking cycle. The markets are now watching for any hints regarding the timing of potential cuts.
– **Market Sentiment:** Risk appetite has improved somewhat as global equities found support, encouraging investors to diversify away from the US dollar’s safe-haven appeal.
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## EUR/USD Analysis: Upward Momentum Continues
The EUR/USD pair showed resilience on Wednesday, extending a mild rebound from recent lows. Several factors contributed to the euro’s strength and patterns visible on the charts:
– **Technical Overview:**
– The pair rebounded after forging a short-term bottom near crucial support around 1.0700.
– Momentum indicators point to a neutral-to-positive configuration.
– If bulls maintain pressure above 1.0740, the next significant resistance appears near 1.0800, with a break above this level opening the door toward 1.0860 and 1.0930.
– Immediate support lies at 1.0700, followed by deeper support at 1.0650.
– **Fundamental Drivers:**
– Eurozone inflation has exhibited signs of stabilization, though growth remains tepid.
– The European Central Bank (ECB) is expected to maintain rates, but any changes in guidance could inject volatility.
– **Key Risks:**
– Surprising US data could trigger a renewed euro sell-off.
– Any dovish turn from ECB officials would weigh on the euro.
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## USD/JPY Analysis: Yen Holds Firm
Read more on AUD/USD trading.