Global financial markets faced heightened volatility on Wednesday as trade tensions and economic data releases influenced investor sentiment. The EUR/USD pair, after enjoying a three-day winning streak, struggled to maintain its momentum, trading near the 1.0900 mark during the European morning session. Meanwhile, the Emini S&P March contract hit its daily high precisely at the resistance zone of 5645/50 before experiencing a sharp decline.
The Emini Dow Jones March contract also mirrored this pattern, reaching a high at the 42100/200 resistance level before tumbling to a low of 41400/41200. Similarly, Emini Nasdaq March saw a sell-off following a break below 20000, hitting targets of 19850/800 and 19550/500, before finding support at 19250/150.
The XAU/USD pair found support as trade war concerns and expectations of Federal Reserve rate cuts buoyed the precious metal ahead of the U.S. Consumer Price Index (CPI) report. Spot prices hovered around the 1.2935 region, though the movement lacked significant bearish momentum. The EU's response to U.S. steel tariffs added pressure, contributing to a renewed buying interest in the U.S. Dollar.
European and American Markets React
In Europe, the DAX index faced critical resistance levels at 19600/620, with a daily high reaching 19686. Market participants expect similar challenges today as minor resistance levels were tested. Additionally, a reversal was anticipated to retest buying opportunities around the 19250/150 range.
Across the Atlantic, the Nasdaq continued its downward trajectory after a pivotal break below 20000. This movement served as a sell signal targeting various support zones, including 19850/800 and 19550/500. Despite these setbacks, buying interest emerged at 19250/150, marking a low for consecutive sessions.
Currency Markets Experience Fluctuations
The GBP/USD pair displayed volatility during the Asian session on Wednesday, eroding gains from the previous day's rally to a four-month high. This decline was attributed to a modest rebound in the U.S. Dollar from its multi-month low, coupled with a positive risk tone that capped gains in precious metals.
The EUR/USD's inability to maintain its upward momentum signaled market uncertainty as traders weighed economic data and geopolitical developments. The downtick in spot prices around the 1.2935 region hinted at cautious market sentiment amid ongoing trade negotiations and economic forecasts.