The Reserve Bank of Australia (RBA) cut interest rates as expected, sparking global market reactions on Wednesday. In European trading, the EUR/USD pair posted modest gains, reaching around 1.0450. The US Dollar's downtick provided support to the Euro, as Fed rate cut bets kept USD bulls on the defensive. Meanwhile, concerns over tariffs and tense negotiations between Russia and Ukraine may limit the upside for EUR/USD.
Market participants are now shifting their focus towards mid-tier US economic data and the Federal Open Market Committee (FOMC) Minutes. In light of recent developments, the XAU/USD pair is also benefiting from expectations of a US Fed rate cut. These factors are contributing to a volatile trading environment as investors await further guidance.
Michele Bullock, Deputy Governor of the RBA, stated that higher interest rates have been working as anticipated, slowing economic activity and curbing inflation. However, she noted that the recent rate cut was not an indication of a series of reductions. The RBA remains vigilant in its approach, emphasizing that current measures are adequately addressing economic conditions.
In other economic news, the UK's annual Consumer Price Index (CPI) inflation rose to 3% in January from 2.5% in December. This increase reflects ongoing inflationary pressures within the UK economy, prompting analysts to monitor potential responses from the Bank of England.
It is important to note that the views expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet or its advertisers. Neither the author nor FXStreet is a registered investment advisor, and this article is not intended to serve as investment advice.