Australian unemployment is predicted to rise in September, indicating a slowdown in the job market. The EUR/USD pair has gained 0.35%, trading above 1.1600 for the second consecutive day, while the Dollar has fallen to a six-day low. Expectations of rate cuts by the US Federal Reserve and tensions in US-China trade are impacting the Dollar’s performance. Talks between the US and China remain tense, complicated by new port fees. The US had little economic data this week, but the Beige Book raised concerns about stagflation. In the Eurozone, mixed inflation data suggests that the European Central Bank (ECB) will maintain a dovish stance.

The Beige Book

The Beige Book highlighted stable US employment but minimal economic growth. There’s consideration for extending the pause on tariffs for Chinese goods. Fed Chair Jerome Powell pointed out labor market issues and hinted at moving toward neutral interest rates. The technical outlook for EUR/USD is neutral to bearish, fluctuating around the 100-day Simple Moving Average of 1.1644. Support levels are at 1.1600, 1.1550, and 1.1500, while resistance is at 1.1650 and 1.1700. The Euro, used by 19 EU countries, is the second most-traded currency in the world. The ECB aims for price stability, which affects the Euro’s value based on inflation and economic data releases. With the weakness of the US Dollar, there is potential in the EUR/USD pair, currently testing important levels. Expectation for a Federal Reserve rate cut has increased since the US CPI report on October 10, 2025, indicated a surprising drop in core inflation to 2.8%. The CME FedWatch Tool now shows an 85% chance of a rate cut in November, making short-dollar positions appealing.

The US-China Trade Dispute

The ongoing US-China trade dispute continues to pressure the Dollar and create market volatility. Beijing’s recent announcement of a new ‘Container Processing Surcharge’ is a clear escalation that traders need to account for. This has already affected shipping futures, with the Baltic Dry Index dropping 5% over the past week. While the Euro is gaining, it’s critical to recognize this is largely due to Dollar weakness, especially since the ECB is staying dovish. The Eurozone flash CPI for September was 1.9%, just below the ECB’s 2% target, leaving them little reason to change their current approach. This suggests there may be a limit on the Euro’s rise unless European economic data begins to exceed expectations. The cooling labor market in Australia reflects a broader global trend reminiscent of the slowdown seen in late 2023. The Reserve Bank of Australia acknowledged this “welcome rebalancing” in its last meeting, reinforcing their neutral policy, which may hinder the Australian Dollar’s potential. This should guide any strategies related to commodity currencies, indicating weakening global demand. With EUR/USD hovering around its 100-day moving average of 1.1644, the technical situation is uncertain. A sustained break above the 1.1650 resistance level may lead to a rapid move towards 1.1700. Conversely, failing to hold this level could lead back toward the 1.1600 support. Options traders might consider straddles to take advantage of potential significant movements in either direction, influenced by upcoming data releases. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now