The AUD/USD pair increased to nearly 0.6730 as the US Dollar weakened due to tensions between the US and the EU over Greenland. During the European trading session, the pair rose by 0.25%, mainly because the US Dollar performed poorly against other currencies.

US Dollar Index Falls

The US Dollar Index, which measures the dollar against six major currencies, fell by 0.55% to about 98.50. The “Sell America” trend grew stronger as concerns about the US-EU alliance grew after President Trump imposed 10% tariffs on certain EU members and the UK in relation to Greenland disputes. US Treasury Secretary Scott Bessent stated that the US will remain in NATO despite these issues. He also noted that a new Federal Reserve Chairman might be announced soon, with four candidates under consideration. Traders are closely watching Australia’s employment data to understand the future of the Reserve Bank of Australia’s monetary policy. The Australian job report is expected to show 30,000 new jobs in December, following a drop of 21,300 jobs in November, with the Unemployment Rate possibly rising to 4.4% from 4.3%. This data is important for consumer spending and economic growth. The “Sell America trade” is gaining traction as geopolitical tensions with the EU escalate over Greenland and recent tariffs. This has lowered the US Dollar Index to 98.50, a significant support level from the latter half of 2025. If it stays below this mark, it could indicate further dollar weakness in the upcoming weeks.

Focus on Australian Employment Data

Our immediate focus is on the Australian employment data releasing this Thursday, which will be crucial for the AUD/USD exchange rate. With expectations of a 30,000 job increase to offset November’s unexpected decline, a solid report is vital to support the Aussie’s recent strength. This jobs report is particularly important as last week’s quarterly inflation rate was high at 3.1%, putting pressure on the Reserve Bank of Australia. We suggest buying volatility on the AUD/USD ahead of Thursday’s data release. An options strategy like a straddle allows traders to profit from significant price movements in either direction, whether the job number exceeds or falls short of expectations. This strategy protects against the risk of a sharp market turnaround. Looking beyond this week, uncertainty about the next Federal Reserve Chairman is likely to keep the US Dollar weak. We experienced similar market fluctuations in 2017 before Jerome Powell’s confirmation, indicating that risk-averse sentiment could persist until an announcement is made. This situation favors holding safe-haven currencies like the Swiss Franc, which has recently performed well against the dollar. Create your live VT Markets account and start trading now.

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