On Friday, the currency markets were very active. The EUR/USD pair tumbled below the 1.1400 level as trade woes between the US and China persisted. As trading advanced into the early Asian session, the pair dropped even lower to approach 1.1380. This drop highlights the concern investors have with the continued uncertainty of trade war. All of these issues remain potential market movers with their ability to influence market sentiment.
As a result, the EUR/USD exchange rate experienced strong downward pressure with the main factor being increased concerns on the US-China trade relationship. Analysts see limited downside for the EUR/USD following this pullback. NASDAQ and other market participants are hoping for constructive negotiations to cool the waters. That scenario highlights a worrying trend that may drive investor sentiment in the days ahead.
At the same time, AUD/USD showed resilience by staying capped around 0.6400 through consolidation. The Australian dollar remains near its year-to-date peak. It continues to bask in the positive risk sentiment that has gripped the market. Increased optimism on a nascent de-escalation of the US-China trade war improves outlook. In positive territory, this upbeat mood provides an encouraging backdrop for the Australian currency.
The unusual Bank holiday in Australia was a complicating factor that made AUD/USD’s performance all the more interesting. The holiday has effectively hurt participation in the market. Accordingly, this stability around 0.6400 suggests a lack of selling pressure. Moreover, a vague lack of serious demand for the US dollar has only supported the Australian dollar even more.
Traders are on guard for any sign of economic road bumps. As far as economic data goes, they are most looking forward to Michigan Consumer Sentiment final reading due later today on Friday. We hope that this report will provide important information about consumer confidence here in the United States. In addition, it would affect the market structure for EUR/USD and AUD/USD currency pairs.