As the geomarkets remained stable on Wednesday, the real action was in the currency markets.
EUR/USD
The EUR/USD exchange rate has just broken the important level of 1.1400, confirming a sharp recovery in the euro driven by the US Dollar weakness. Traders are anticipating hawkish surprises from the European Central Bank (ECB). For one, they expect the ECB to cut its policy rates sharply in the next meeting.
Developments
Market participants are digesting softer-than-expected economic data from the US. This reaction is exacerbating volatility in exchange rates, already heightened by the bad-tempered trade uncertainty.
The Australian Dollar showed exceptional force, lifting to better than 0.6493 against its US relative. The analysts at Westpac caution that the 0.6500 nether support level presents as hard nut to crack for AUD/USD. Nevertheless, the currency pair is regaining some confidence as the US Dollar continues to weaken. The recent performance of the Australian Dollar suggests that US Dollar bulls are retreating, allowing AUD/USD to target higher levels. If it manages to break the immediate resistance at 0.6500, traders may witness a strong bullish surge. They will be taking a very close eye on this turning point.
In fact, on Wednesday, gold prices blasted through the $3,380 level per troy ounce. That increase was driven mainly by a fresh bout of trade-related excitement that increased demand for the shiny metal. As the US Dollar rides through some serious losses, gold looks poised for another potentially powerful leg north. This trend is in keeping with the overall markets sentiment. Investors are searching for safe-haven assets as global uncertainties increase.
The euro recovering somewhat on the heels of a US Dollar that fell dramatically. Market participants are continuing to watch the effects of all these new economic indicators. Traders are very focused on the EUR/USD as it targets 1.1500 area and above. They keep an especially watchful eye for any moves from the ECB that could change the currency landscape.