Dovish Fed Lifts EUR, GBP, AUD

Fed Dovish, Majors Rise

The US Dollar lost ground across the board on Thursday after a series of dovish remarks from Federal Reserve officials triggered a shift in market sentiment. The EUR/USD pushed above the 1.1600 level, the GBP/USD approached 1.3450, and the AUD extended gains, all reflecting a broad retreat in risk aversion and renewed demand for higher-yielding currencies. Meanwhile, remarks from China’s Commerce Minister hinted at stabilization in US-China trade relations, further boosting confidence in global economic recovery.

EUR/USD Forecast

Current Price and Context

EUR/USD surged above the 1.1600 level on Thursday, supported by a broad decline in risk aversion following dovish comments from several Federal Reserve officials. The softer Fed stance reduced expectations for further tightening, leading to a weakening in the US Dollar. In turn, the euro capitalized on the improved sentiment across financial markets. Traders are now watching upcoming Eurozone inflation figures and further Fedspeak.

Key Drivers

Geopolitical Risks: Low, with no fresh Eurozone tensions.

US Economic Data: Softer outlook after dovish Fed signals.

FOMC Outcome: Dovish remarks lowered rate hike bets.

Trade Policy: Stable outlook.

Monetary Policy: Market reassessing the Fed’s tightening bias.

Technical Outlook

Trend: Bullish short-term.

Resistance: 1.1650

Support: 1.1570

Forecast: May test 1.1650 if momentum holds.

Sentiment and Catalysts

Market Sentiment: Improving risk appetite.

Catalysts: Eurozone HICP release and continued Fed remarks.

GBP/USD Forecast

Current Price and Context

GBP/USD rallied close to the 1.3450 level on Thursday, buoyed by improving risk sentiment and a softer US Dollar. The pair benefited from dovish Fed commentary which calmed investor nerves and encouraged flows into the pound. While UK macro data remains mixed, the pair was lifted by broader USD weakness. Traders await the US University of Michigan Consumer Sentiment report for short-term direction.

Key Drivers

Geopolitical Risks: Low impact.

US Economic Data: Weak tone following dovish Fed statements.

FOMC Outcome: Fed bias shifts to caution.

Trade Policy: No fresh updates.

Monetary Policy: BoE expected to stay cautious amid mixed UK data.

Technical Outlook

Trend: Uptrend holding.

Resistance: 1.3470

Support: 1.3400

Forecast: Momentum could lift the pair toward 1.3500.

Sentiment and Catalysts

Market Sentiment: Positive on USD weakness.

Catalysts: UoM Consumer Sentiment, Fed commentary.

AUD/USD Forecast

Current Price and Context

AUD/USD advanced modestly on Thursday as the US Dollar softened following dovish comments from Fed officials. The pair gained traction above the 0.6800 handle, reflecting improved risk appetite and optimism over global economic stability. Despite lackluster Australian data earlier in the week, the Aussie benefitted from the shifting Fed narrative. Traders now look ahead to China’s economic developments and US sentiment indicators.

Key Drivers

Geopolitical Risks: Low, focus on China’s economic signals.

US Economic Data: Fed dovish tone drives USD lower.

FOMC Outcome: Market rethinks Fed rate path.

Trade Policy: Stable with mild optimism on China.

Monetary Policy: RBA remains data dependent.

Technical Outlook

Trend: Bullish bias returning.

Resistance: 0.6850

Support: 0.6780

Forecast: Consolidation above 0.6800 likely.

Sentiment and Catalysts

Market Sentiment: Risk-on rebound.

Catalysts: US data, Chinese trade headlines.

USD/CNH Forecast

Current Price and Context

USD/CNH edged slightly lower on Thursday, reflecting resilience in the Chinese Yuan amid signs of thawing in US-China trade relations. China’s Commerce Minister highlighted that economic and trade ties between the two nations have weathered many storms, injecting a dose of stability into market expectations. The pair remains range-bound as investors weigh US dollar softness against cautious Chinese optimism.

Key Drivers

Geopolitical Risks: Muted on improving rhetoric.

US Economic Data: Weaker after dovish Fed tone.

FOMC Outcome: Cautious outlook keeps USD restrained.

Trade Policy: Reassuring China-US tone.

Monetary Policy: PBOC policy expected to remain accommodative.

Technical Outlook

Trend: Sideways with mild bearish tilt.

Resistance: 7.1600

Support: 7.1300

Forecast: Mild downside pressure likely to persist.

Sentiment and Catalysts

Market Sentiment: Stabilizing on trade clarity.

Catalysts: Trade remarks, USD momentum.

NZD/USD Forecast

Current Price and Context

NZD/USD trades steadily above the 0.5950 level as the US Dollar continues to face pressure from dovish Fedspeak. Investors are gradually moving toward risk-sensitive currencies, pushing the Kiwi higher amid improving sentiment. The pair also benefits from relatively resilient New Zealand data and broader greenback softness. Market focus now turns to US consumer sentiment data for fresh directional cues.

Key Drivers

Geopolitical Risks: Low, with no fresh Eurozone tensions.

US Economic Data: Softer outlook after dovish Fed signals.

FOMC Outcome: Dovish remarks lowered rate hike bets.

Trade Policy: Stable outlook.

Monetary Policy: Market reassessing the Fed’s tightening bias.

Technical Outlook

Trend: Bullish short-term momentum above 0.5950.

Resistance: 0.6000

Support: 0.5920

Forecast: A sustained break above 0.6000 may encourage bulls to target 0.6050 in the near term. 

Sentiment and Catalysts

Market Sentiment: Risk-on tone supports upside potential for NZD.

Catalysts: US Michigan Consumer Sentiment report and further Fed commentary.

Wrap-up

Major currency pairs found renewed strength as the Fed’s dovish tone reshaped investor expectations, weighing on the Greenback. EUR/USD and GBP/USD extended upward momentum while the Aussie advanced amid improved market appetite. As attention now turns to upcoming sentiment data from the US and evolving trade dynamics with China, markets remain poised for further volatility.

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