EUR/USD Gains While Markets Await Fed Guidance
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EUR/USD extended its gains, trading near 1.1643[1] in Tuesday's early European session, as softer US dollar sentiment supported the pair. It is believed that this move reflected a broad positioning ahead of the upcoming Federal Reserve (Fed) meeting, where markets expect a high chance of a 25-basis-point rate cut[2]. Expectations of easing policy have weighed on US yields and curbed dollar demand[3], providing short-term support for the pair. This occurs despite the pair approaching near-term resistance levels.
Market reports[4] highlight a shift in focus to forthcoming US labour-market data, such as the ADP Employment Change four-week average and the JOLTS Job Openings for September and October. Any indication of weaker employment conditions could support the narrative of a slowing US economy[5], putting further pressure on the dollar while helping the euro stay firm intraday. Conversely, stronger figures might lessen the need for more Fed easing next year, causing the pair to pull back as traders reconsider the pace of potential rate cuts.
Market commentators[6] suggest the Fed’s policy announcement will likely be the main driver for the pair this week. Although a rate cut is widely anticipated, a “hawkish cut” remains a key risk for euro bulls. If Chair Powell[7] stresses caution about deeper easing, US rate expectations may rise, offering the dollar a relief boost and posing challenges for the pair. The updated Summary of Economic Projections will be closely analysed for any upward revisions to the Fed’s median rate path.
Analysts[8] suggest improving macro data in the Eurozone has provided moderate support to the single currency. Germany’s industrial production[9] exceeded expectations, while Eurozone investor sentiment improved. These point to tentative economic stabilisation in the bloc. Nevertheless, growth remains fragile, and the European Central Bank (ECB)[10] adopts a data-dependent approach. Medium-term risks continue to balance, which limits the pair’s ability to sustain gains beyond short-term technical resistance. The EUR/USD exchange rate may see cautious near-term upside as softer U.S. dollar sentiment supports the pair, though upcoming Fed guidance and labour data could cap further gains.
USD/CAD Holds Firm with Volatility Risks Looming
USD/CAD traded cautiously after Monday’s modest rebound from around 1.3850, retreating around 1.3857[11] in Tuesday’s early Asian session. The pullback mirrors subdued market conviction. Participants are cautious amid conflicting fundamental drivers and await key central bank events[12] this week. Price action remains contained within a narrow range, showing little appetite for strong directional moves in the near term.
Stronger-than-expected Canadian employment data[13] on Friday continues to underpin the Canadian dollar, reinforcing expectations of a prolonged hawkish stance by the Bank of Canada (BoC). This restricts upside potential for the pair. Meanwhile, geopolitical risks, including possible US tariffs on Canadian agricultural imports, dampen enthusiasm for further Canadian dollar gains. The pair’s[14] failure to sustain a deeper correction shows how sensitive the market remains to shifting rate expectations on both sides of the border.
Market commentators[15] highlight that crude oil price stabilisation has offered only modest relief for the commodity-linked Canadian dollar following Monday’s sharp sell-off. Meanwhile, the US dollar’s recovery is limited by rising market expectations of further Fed rate cuts[16], which caps broader US dollar gains. This mix leaves the pair supported during dips but without a clear catalyst for a sustained breakout. Intraday movements are therefore expected to remain heavily dependent on incoming data.
Analysts[17] highlight that focus now shifts to upcoming US releases like ADP Employment and JOLTS job openings, which may affect short-term US dollar sentiment. Weaker data could pressure the pair by raising expectations of earlier Fed easing, while stronger figures might provide temporary support. Yet, with the BoC’s policy announcement and the Federal Open Market Committee[18] decision ahead, mid-term risks lean towards increased volatility and cautious trading. The USD/CAD exchange rate is likely to stay range-bound as traders balance supportive Canadian data against expectations of further Fed easing.
GBP/USD Steadies While Outlook Hinges on Data
The GBP/USD pair inched higher, trading around 1.3330[19] during Tuesday’s early Asian session, following Monday’s largely indecisive price moves. Despite this small rise, the pair struggles to muster lasting bullish momentum[20] as traders remain cautious ahead of central bank events this week. Market participants are hesitant to take firm positions until the Fed[21] completes its policy meeting, where another rate cut is widely anticipated. This dovish tone has held the US dollar back from extending its recent gains, providing short-term support to the pair’s modest advance.
Market reports[22] highlight that upside momentum remains limited, as UK-specific factors dampen demand for sterling. The OECD’s upgrade[23] to the UK growth outlook and its forecast of a BoE policy shift only by Q2 2026 offer a positive medium-term outlook for the pound. However, market expectations have moved towards a Bank of England (BoE) rate cut as soon as next week. This view is strengthened by the latest UK inflation data, which showed headline CPI easing to 3.6% year-on-year[24] in October. Weaker price pressures lessen the chance of an extended tightening cycle and limit sterling’s scope for significant appreciation.
Analysts[25] highlight that, in the short term, traders will focus on upcoming US economic data, such as ADP Weekly Employment Change and JOLTS Job Openings. Signs of a cooling labour market or weak jobs data could pressure the dollar, aiding the pair’s recovery from November’s 1.3000 psychological support. On the other hand, strong figures may boost demand for the US dollar and restrict the pair’s potential gains.
Market watchers[26] note that although the pair holds a modest short-term bid, the medium-term outlook is still weighed down. This is due to expectations of BoE policy easing and ongoing uncertainty over the UK’s inflation path. A more definite directional move might need stronger fundamental drivers or confirmation of market positioning following the Fed’s actions. A cautious tone persists as the GBP/USD exchange rate edges higher but remains capped by expectations of forthcoming policy easing from both the Fed and the BoE.
NZD/USD Weakens Amid Cautious Tone Ahead Fed
The NZD/USD pair continued its fall, trading near 0.5780[27] in Tuesday's early Asian session, weighed down by renewed US dollar strength. Markets are positioning for a possible hawkish rate cut by the Fed. Although a further 25-basis-point cut is expected, investors foresee Fed Chair Jerome Powell[28] pairing it with firm guidance, similar to recent policy hints. This outlook has capped upward moves in the kiwi and kept the pair broadly defensive.
Market reports highlight that price action remains sensitive to shifts in US interest rate expectations, with traders awaiting the upcoming release of delayed US labour market data. The ADP Employment Change[29] four-week average and JOLTS Job Openings for September and October may provide the next directional signals. Any upside surprises could confirm the US labour market's resilience, lowering chances of aggressive easing in 2025. This outcome would likely support the US dollar and limit recovery attempts in the pair in the short term.
Market watchers[30] note that external factors continue to influence the market. China’s trade surplus rose to a five-month peak in November, giving a gentle boost to the New Zealand dollar. Yet, this support is currently outweighed by broad US dollar strength and caution ahead of the Fed decision. For now, unless global risk appetite improves significantly, the pair remains exposed to further downside.
Analysts[31] indicate that, looking ahead, the pair encounters a blend of short-term stabilisation risks and medium-term challenges. Softer upcoming US data might provide brief support, but lasting weakness in US economic indicators is needed to alter the outlook. Until then, the expectation of a hawkish Fed is likely to keep pressuring the pair. The NZD/USD exchange rate may remain under downside pressure as a potentially hawkish Fed stance could limit any near-term recovery attempts.
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