EUR/USD Steadies as Dollar Weakens Broadly
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The EUR/USD couple stopped its five-day downwards streak and was trading around 1.1490[1] during the Asian session on Wednesday. The euro is believed to have had some slight support as traders re-evaluated the future policies of the European Central Bank (ECB)[2] after a period of constant interest rates and rising economic indicators throughout the Eurozone. The rebound of the pair[3] indicates buying interest in the short run following the recent downside momentum, despite the fact that the overall trend is cautious before major US numbers are released later on in the week.
Market reports[4] indicate that the October policy statement by ECB reiterated that the Eurozone bank has no plans to make changes in its rates for the third successive time, noting that the inflation outlook is stable and the growth remains strong. Eurozone statistics indicated that inflation was eased a little higher than the 2% target and the Q3 GDP[5] growth had been higher than expected giving the common currency some temporary momentum. Policymaker comments like Francois Villeroy de Galhau and Martins Kazaks[6] pointed to a moderate course, noting that there were both inflation risks and growth headwinds, but there was no worry that the ECB would be changing policy soon, although it was not urgent.
Market commentators[7] note that the US dollar is under pressure as the ongoing government shutdown continues into the sixth week. The lengthy political stalemate, in which short-term funding bills have been blocked several times, has cast a question of economic stability[8] and has burdened the mood of investors. This has helped the recent gains of the greenback to be mild in providing support to EUR/USD throughout the thin trades of the mid-week.
Analysts[9] suggest that their focus will shift to future US data on employment and ISM services, which can present new angles to the dollar. The low-than-anticipated figures may strengthen the anticipation of a softer US growth trend and near-term EUR/USD[10] recovery. Nevertheless, continuing Eurozone doubts and the prudent sounding of the ECB persistently threaten the two with negative impacts in the medium run.
USD/JPY Weakens as Safe Haven Demand Rises
The USD/JPY pair extended its decline for the second consecutive session and traded near 153.50[11] in Wednesday's Asian hours as the Japanese yen benefited from renewed safe-haven demand. Heightened risk aversion followed a sharp global equity selloff amid growing investor concern over inflated AI-related stock valuations[12]. It is believed that the retreat in risk appetite boosted traditional safe-haven currencies like the Yen, pressuring the US dollar[13] after its recent five-day winning streak.
Market reports[14] point out that adding to yen strength, Japanese officials intensified verbal intervention efforts. Finance Minister Satsuki Katayama[15] reaffirmed that authorities are closely monitoring foreign exchange volatility and warned against sharp, speculative movements. Meanwhile, Prime Minister Sanae Takaichi[16] reiterated that Japan’s inflation remains short of sustainable wage-driven momentum, suggesting the Bank of Japan (BoJ) will maintain a cautious stance on tightening. These comments have tempered expectations of imminent policy shifts but continue to lend underlying support to the Yen through reduced speculative pressure.
Market commentators[17] point out that the dollar faced additional headwinds from prolonged political uncertainty as the US government shutdown entered its sixth week, with the Senate again failing to pass a short-term funding measure. The deadlock, now the longest in US history, has weighed on sentiment and delayed key economic data releases[18], clouding the outlook for the Federal Reserve’s December policy decision. Fed Chair Jerome Powell[19] recently emphasized a data-dependent approach, leaving investors uncertain about the timing of the next policy adjustment.
Analysts[20] indicate that traders now turn attention to upcoming US indicators such as the ISM Services PMI and weekly jobless claims, which may offer clues about underlying economic resilience. While short-term risk aversion supports the JPY, medium-term momentum in USD/JPY remains sensitive to evolving US fiscal and monetary dynamics, with immediate support seen near 153.00 and resistance around 154.30.
GBP/USD Holds Firm as Dollar Softens
The GBP/USD pair edged higher and traded near 1.3025[21] in Wednesday's early European trading hours, as a softer US dollar provided modest support. The intraday recovery of the pair is believed to be an indication of a benign US dollar in the coming days before major data releases[22] in key US markets although traders are cautious with their positioning not aggressive. The US Dollar Index (DXY)[23] fell marginally following previous gains whereas risk sentiment stabilized throughout European markets and this allowed the pound to hold some of the ground amidst domestic headwinds.
Market commentators[24] note that the pound upside may be capped because fiscal issues have become the centre of attention before the UK Autumn Budget on November 26. UK Finance Minister Rachel Reeves[25] threatened to make sweeping tax increases on the higher earners, and this strengthened the view that the fiscal position would be tightened. These signals are considered by markets as a risk to the weakened household spending and economic growth, killing the ardour with regard to the long term GBP strength[26]. The Bank of England (BoE)[27] is generally believed to keep the rates at 4.0% during the policy meeting on Thursday and the policy makers are likely to evaluate the effect of the fiscal tightening and will then review adjusting the rates accordingly.
Market reports[28] indicate that the market is now looking for US private ADP employment and ISM Services PMI figures later on Wednesday across the Atlantic. Analysts[29] believe in a slight increase in employment of approximately 25K after the last 32K decline. The greenback and cap may be supported further by a stronger-than-anticipated print, and a weaker one would keep the pair above near-term support at 1.2980.
Analysts[30] note that although the GBP/USD trend is consistent in favour of stability above 1.30 in the short term, in the medium term, risks are skewed to risk as the UK fiscal tightening and policy uncertainty could work against the overall Pound perspective.
USD/CAD Extends Rally Amid Weak Oil Prices
The USD/CAD pair extended its advance for the fifth consecutive session and traded near 1.4110[31] in Wednesday's Asian session. The sustained upward trend of the pair is believed to be indicative of persistent weakness in the commodity-linked Canadian dollar[32] as oil prices fall sharply. The West Texas Intermediate (WTI)[33] crude fell to approximately $60.00 per barrel following a massive increase in inventories in the US. The most recent API report indicated a 6.5 million barrel[34] increment in the stock of crude, the first time since the beginning of July, indicating that there are still concerns on continued over supply issues that continue to weigh heavily on the Canadian dollar.
Market commentators[35] note that the bullish trend in USD/CAD is limited by new pressure on the US dollar as the government shutdown stretches into the sixth week. The long stalemate in Washington has led to concerns about a more severe economic disruption that may extend US growth should federal operations[36] continue to be stalled. The market participants were still wary when the Senate failed to agree again on funding which marked the fourteenth unsuccessful effort of passing a temporary budget bill.
Market reports[37] point out that technically USD/CAD is supported at the position of above 1.4050, and in the short-term resistance is observed at 1.4150. Nonetheless, the traders will continue monitoring additional changes in the risk sentiment and the dynamics of oil prices. The recent strength of the pair is a reflection of oil-based Canadian dollar softness[38] and a weak safe-haven demand on the greenback, yet the current macro backdrop is weak in the US and places a limit on upside.
Analysts[39] point out that with the future, the focus now shifts to future releases in the US such as the ISM Services PMI and weekly jobless claims data which might provide additional guidelines on the resilience of the economy. Any underperforming readings can increase worries about decelerating growth and calm anticipations of further increases in Fed tightening, which limit USD/CAD profits over the medium term. Market analysts suggest the GBP/USD exchange rate may remain stable near 1.30 as softer U.S. dollar trends offset UK fiscal concerns.
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