EUR/AUD under slight pressure as ECB cuts interest rates to 2%

Forex

Economic

Summary:

EUR/AUD is trading around 1.7550 as the euro is under mild pressure from the European Central Bank (ECB) cutting interest rates to 2% and then signaling a possible end to its easing streak, while the Australian dollar is little changed after weak Q1 GDP growth data (0.2%)...

SELL EURAUD

Close Time

CLOSED

1.75750

Entry Price

1.75000

1.76200

1.75577 +0.00310 +0.18%

20.9

Pips

Profit

1.75000

1.75541

Exit Price

1.75750

Entry Price

1.76200

Macro Overview

First, on June 5, 2025, the ECB cut its policy rate by 25 basis points to 2%, warning that the easing cycle may be coming to an end as eurozone inflation fell to 1.9% in May, close to the bank's 2% target.

Figures from the June 4 PMI survey also showed that services activity in the eurozone weakened for the first time since November 2024, when the services PMI fell to 49.8 points, pulling the PMI composite index down to 50.2, the lowest since February 2025.

Against this backdrop, despite the ECB cutting interest rates, the euro only rose slightly as Lagarde reminded that further cuts would depend heavily on future data, limiting expectations of a more aggressive cutting cycle.

On the other hand, Australia announced that its GDP in the first quarter of 2025 increased by only 0.2%, lower than the expected 0.4% and down from the previous quarter's 0.6%, largely due to a decline in public spending and obstacles from severe weather affecting the mining and tourism industries.

The RBA had already cut interest rates to 3.85% on 20 May 2025 and is under pressure to cut further as inflation in Australia cooled to 3.2% (below the target of 2-3%) and is forecast to fall further in the next two quarters. This information has left AUD with little incentive to increase when considering the balance between expectations of further easing and the weak recovery of the economy.

Market psychology

The market is currently maintaining a cautious sentiment towards the EUR/AUD pair. Hedge funds have reduced their long EUR/AUD positions over the past week, suggesting that institutional investors are not rushing to enter positions before there is a clear signal from the ECB and RBA.

Although the ECB has cut interest rates to 2%, President Lagarde's statements highlighting the possibility of a pause in cuts at the next meeting have limited broad-based buying of the euro. At the same time, the AUD is also under pressure as GDP growth in the first quarter is slow and the RBA is likely to cut interest rates again in July, so money is not willing to buy AUD strongly.

As a result, EUR/AUD has been broadly in a narrow range this week, with the Asia-Pacific currency group’s “Fear Greed” index remaining neutral, reflecting the wait for more key data.

Technical analysis

EUR/AUD under slight pressure as ECB cuts interest rates to 2%_1

On the M15 chart of 06/06/2025, EUR/AUD is trading around 1.7850. Important technical levels are as follows:

The middle band (MA20) on the M15 timeframe is estimated around 1.7600, the upper band around 1.7700 and the lower band around 1.7500, indicating that the price is currently close to the lower Bollinger band. The fact that EUR/AUD has repeatedly failed to surpass the MA20 at 1.7600 and turned down from 1.7580 suggests that the short-term downtrend is still dominant.

On the M15 chart, EUR/AUD is currently below the Kumo cloud, with the Tenkan-sen (9) estimated at around 1.7575 crossing below the Kijun-sen (26) around 1.7590, sending a short-term sell signal. The front Kumo cloud is also sloping down, creating strong resistance in the range of 1.7580–1.7600. This highlights the possibility of the price continuing to retreat to the support zone of 1.7530 before a technical pullback.

Stochastic (5,3,3) on the M15 chart is moving down to the oversold zone (below 20), but has not yet reached the bottom, indicating that there is still room for sellers when the price approaches support. If Stochastic drops below 20 and maintains, the price may break the support zone of 1.7530 to head towards 1.7500.

Trading Recommendations

Based on macro and technical analysis on M15 timeframe, the strategy to sell (SELL) EUR/AUD on 06/06/2025 is as follows:

Entry: 1.7575

Take Profit: 1.7500

Stop Loss: 1,7620

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Warren Takunda

Commodity

Traders' Opinions

Summary:

Gold remains buoyant above $3,370 as escalating trade tensions, rising U.S. jobless claims, and a surprise ECB rate cut fuel safe-haven demand.

BUY XAUUSD

Close Time

CLOSED

3364.73

Entry Price

3435.00

3320.00

4205.24 +7.33 +0.17%

447.3

Pips

Loss

3320.00

3319.93

Exit Price

3364.73

Entry Price

3435.00

Gold prices (XAU/USD) steadied near elevated levels on Thursday as a cocktail of central bank easing, labor market weakness in the United States, and renewed geopolitical friction buoyed investor appetite for safe-haven assets. With spot prices holding above $3,370 after testing $3,400 in early European trade, bullion continues to find firm footing amid deepening macroeconomic and geopolitical uncertainty.

The metal's latest gains are underpinned by a dovish pivot from the European Central Bank, which delivered a widely expected 25 basis-point interest rate cut—the first in nearly a year. Although the decision was priced in, market participants parsed ECB President Christine Lagarde’s cautious tone during the subsequent press conference. Lagarde flagged persistent financial stability risks in the euro area, acknowledging that while banks remain resilient, external threats—particularly trade-related—continue to cloud the outlook.

“The risk environment remains fragile,” Lagarde said. “This is a precautionary step aimed at ensuring that monetary conditions remain accommodative enough to support growth as inflation eases.”

The move comes just ahead of a pivotal meeting between German Chancellor Friedrich Merz and U.S. President Donald Trump in Washington. The two leaders are expected to hash out issues ranging from NATO funding to increasingly strained transatlantic trade ties. The diplomatic backdrop has shifted sharply in recent days as Washington doubled tariffs on European and Mexican steel and aluminum imports from 25% to 50%, prompting retaliatory warnings from global counterparts.

Mexican President Claudia Sheinbaum was particularly forceful in her remarks, calling the new U.S. tariffs “unjust, unsustainable, and without legal grounds.” Canadian Prime Minister Justin Trudeau labeled the measures “illegal,” while EU officials have hinted that countermeasures could be imposed as soon as next week if talks fail to yield a resolution.

Across the Atlantic, signs of economic deceleration are becoming harder to ignore. U.S. Initial Jobless Claims rose to 245,000 in the latest weekly reading, exceeding economist expectations of 235,000 and stoking concerns that the labor market is beginning to lose momentum. This followed Wednesday’s weak ADP employment print, which showed private payrolls increasing by just 37,000 in May—well below the 150,000 expected.

All eyes are now on Friday’s closely watched Nonfarm Payrolls (NFP) report. Consensus forecasts suggest 130,000 jobs were added last month, down sharply from April’s 177,000 figure. While the unemployment rate is expected to remain unchanged at 4.2%, a surprise miss could reinforce market speculation that the Federal Reserve may opt for a rate cut as early as July, rather than waiting until September.

Such a shift would be particularly supportive for gold, which tends to benefit when interest rates fall and the opportunity cost of holding non-yielding assets declines.

“Gold is one of the few assets catching a safe-haven bid in a world where central banks are blinking,” said AvaTrade market strategist Naeem Aslam. “With the ECB cutting and the Fed under pressure from rising jobless claims and slower hiring, the path of least resistance for gold remains higher.”

Technical Analysis

Technically, gold remains on solid footing. The yellow metal continues to trade within a short-term bullish channel and recently confirmed a breakout above the key resistance level of $3,365. Momentum indicators, such as the Relative Strength Index (RSI), are flashing bullish signals, while the 50-day exponential moving average (EMA50) provides dynamic support to price action.

As long as gold sustains above $3,365, traders are likely to target the next key resistance level at $3,435. A decisive break above this level could pave the way for a fresh leg higher, particularly if Friday’s U.S. employment data disappoints and further dampens the Fed’s tightening stance.

For now, the short-term trading range is seen between support at $3,330 and resistance at $3,435. The outlook remains bullish, with any dips likely to attract fresh buying interest amid persistent global uncertainties.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3365

STOP LOSS: 3320

TAKE PROFIT: 3435

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

Sterling surged to its highest level in over two years, breaking above 1.3600 against the dollar as weak US jobless claims data and hawkish signals from the ECB drove broad-based dollar selling.

BUY GBPUSD

Close Time

CLOSED

1.36002

Entry Price

1.39500

1.35400

1.33226 -0.00086 -0.06%

60.2

Pips

Loss

1.35400

1.35398

Exit Price

1.36002

Entry Price

1.39500

The British pound extended its bullish streak on Thursday, breaching the key 1.3600 mark against the US dollar for the first time since February 2022. The rally in GBP/USD gathered pace during the American session as mounting selling pressure on the greenback, triggered by softer-than-expected US economic data, sent investors scrambling for alternative majors. At the time of publication, the pair was trading at 1.3605, up 0.4% on the day, after rising steadily throughout the session.

The key driver behind the pound’s ascent was the latest data from the US Department of Labor, which showed an unexpected increase in initial jobless claims. First-time applications for unemployment benefits rose to 247,000 for the week ending May 31, missing the market consensus of 235,000 and adding to evidence that the labor market may be losing momentum. This print reinforces concerns that the US economy, while still growing, is beginning to cool, particularly in the employment sector.

This shift in sentiment came just hours after the European Central Bank delivered a 25-basis-point rate cut but offset the dovish action with assertive forward guidance. ECB President Christine Lagarde struck a notably hawkish tone in her post-decision remarks, suggesting that the central bank may now be close to ending its easing cycle. She noted that the ECB was in “a good place” and emphasized data-dependence going forward. Her comments sparked a rotation out of the dollar as traders interpreted the ECB’s stance as less dovish than previously anticipated, thereby narrowing interest rate differentials between the eurozone and the United States.

Consequently, the US dollar came under renewed pressure across the board, with the dollar index (DXY) retreating to 98.45, down 0.4% on the day and near a multi-week low. With the dollar losing traction and global investors recalibrating expectations for the Federal Reserve’s next move, sterling emerged as one of the primary beneficiaries.

Market focus now shifts to a barrage of scheduled speeches from Federal Reserve officials due later Thursday, followed by the US nonfarm payrolls report on Friday. Traders will be watching closely to gauge whether Fed policymakers acknowledge the weakening jobs data as reason enough to justify rate cuts in the coming months. According to the CME FedWatch Tool, markets are currently pricing in a 30% probability of a 25-basis-point rate cut as soon as July. Any dovish tilt in Thursday’s commentary or a downside surprise in Friday’s labor report could intensify rate cut expectations and further undermine the dollar.

Technical Analysis

From a technical standpoint, GBP/USD is forming a classic ascending triangle formation on the four-hour chart, often regarded as a bullish continuation pattern. The pair has been consolidating beneath a horizontal resistance zone between 1.36200 and 1.36300, while maintaining higher lows along an upward-sloping trendline. This pattern signals mounting pressure on the resistance zone, with an eventual breakout appearing increasingly likely.

The distance between the base and the top of the triangle measures roughly 325 pips, calculated from the support level around 1.33000 to the resistance zone at 1.36250. A clean breakout above the 1.36300 region would project a target near the 1.39500 area, marking a potential continuation of the bullish trend and offering a compelling upside objective for momentum-driven traders. This level also coincides with a major technical barrier from early 2022, adding to its significance.

Adding further support to the bullish outlook, GBP/USD remains comfortably above its 50-period exponential moving average, which is acting as dynamic support. The Relative Strength Index (RSI) is trending positively, suggesting there is still room for the rally to extend before the pair reaches overbought conditions.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3600

STOP LOSS: 1.3540

TAKE PROFIT: 1.3950

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Australian Dollar has rebounded to weekly highs past 0.6500, buoyed by a weakening U.S. Dollar and rising global trade tensions, despite soft domestic GDP data and a dovish Reserve Bank of Australia.

BUY AUDUSD

Close Time

CLOSED

0.65349

Entry Price

0.69000

0.64500

0.66338 -0.00045 -0.07%

31.5

Pips

Loss

0.64500

0.65034

Exit Price

0.65349

Entry Price

0.69000

The Australian Dollar extended its rally for a second consecutive session on Thursday, breaking decisively above the 0.6500 level and marking a strong recovery from earlier losses this week. This move higher is largely being powered by a combination of U.S. Dollar weakness and growing market anxiety over trade policy under the looming specter of renewed tariffs. Investors appear increasingly willing to look past weaker-than-expected domestic growth data from Australia and the dovish messaging from the Reserve Bank of Australia, instead focusing on deteriorating sentiment around the U.S. economy.

Much of the recent momentum in the Aussie stems not from strength at home, but from the growing cracks in the U.S. economic outlook. On Wednesday, the Institute for Supply Management’s Services PMI revealed a surprise contraction, falling below the crucial 50-mark that indicates whether activity is expanding or shrinking. This was compounded by a weaker-than-anticipated reading from the ADP private payrolls report, which showed that hiring in the private sector slowed last month. These disappointing numbers have cast a shadow over Friday’s upcoming Non-Farm Payrolls report and reignited speculation that the U.S. economy may be inching toward a recession.

At the same time, trade tensions have surged back to the forefront. Former President Donald Trump, who remains an influential figure on economic policy expectations, declared that ongoing negotiations with Chinese Premier Xi Jinping have been "extremely hard," citing a lack of meaningful progress. Markets reacted nervously to the announcement that tariffs on steel and aluminum imports would double to 50% from 25%, stoking fears of a broader protectionist pivot. Ironically, this uncertainty is hurting the U.S. Dollar more than traditionally risk-sensitive currencies like the Aussie, which is defying its usual behavior under such conditions.

Despite a weak set of domestic data released earlier in the week, the Australian Dollar has held its ground. Australia’s first-quarter GDP rose just 0.2%, missing consensus forecasts of 0.4% and marking a notable slowdown from the 0.6% pace seen in the previous quarter. The disappointing growth figures suggest that the Australian economy is struggling under the weight of soft household spending, stagnant wage growth, and slowing business investment. Ordinarily, such data might have weighed more heavily on the currency, but current global dynamics appear to be overriding local fundamentals.

The dovish tone from the Reserve Bank of Australia adds another layer of complexity. Minutes from the central bank’s most recent policy meeting revealed that a 50 basis point rate cut was actively considered. Policymakers also signaled their readiness to implement further reductions if global trade conditions deteriorate due to escalating tariffs. While such a stance might normally pressure the Australian Dollar, the broader flight from U.S. assets is providing a supportive backdrop.

Technical Analysis

On the technical front, the price action in AUD/USD is encouraging for bulls. The pair has broken above a key resistance zone around 0.6550, signaling the potential for a broader breakout. The Relative Strength Index is showing bullish momentum, even as it edges into overbought territory, suggesting that strong buying interest remains in play. Additionally, the pair continues to trade above its 50-day Exponential Moving Average, which reinforces the view that the short-term trend remains upward. The Aussie is currently navigating a minor ascending channel that has kept price action relatively stable while guiding it higher.

We are now closely watching the next major resistance levels, with the first significant upside target emerging near the 0.6680 area, a zone that previously acted as a strong barrier. A sustained break above that could pave the way for an eventual test of the 0.6900 region, a level not seen since late last year. These milestones, however, are contingent on a continued softening of U.S. data and a lack of hawkish surprises from the Federal Reserve or other major central banks.

TRADE RECOMMENDATION

BUY AUDUSD

ENTRY PRICE: 0.6535

STOP LOSS: 0.6450

TAKE PROFIT: 0.6900

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

The Institute for Supply Management (ISM) has indicated that the US service sector business activity has contracted for the first time in nearly a year. Meanwhile, according to the ADP National Employment Report, private sector hiring in the US saw a significant slowdown in May. The cooling US economy could lead to an early rate cut by the Federal Reserve, which is bullish for gold.

BUY XAUUSD

Close Time

CLOSED

3381.06

Entry Price

3500.00

3300.00

4205.24 +7.33 +0.17%

810.6

Pips

Loss

3300.00

3299.83

Exit Price

3381.06

Entry Price

3500.00

Fundamentals

Gold prices surged past $3,390 on Thursday as concerns over the US economic slowdown intensified, bolstering demand for non-yielding safe-haven assets and driving the strength in gold prices.

The ISM's report released on Wednesday revealed that the US service sector contracted for the first time in nearly a year, signaling a worrying sign of overall economic weakness.

Moreover, the ADP employment report showed a marked slowdown in private sector hiring, with only 37,000 jobs added in May, significantly below the expected 111,000 and also lower than the 60,000 added in April.

Nela Richardson, Chief Economist at ADP, acknowledged the hiring slowdown but noted that wage pressures have not yet significantly eased, indicating that while the overall momentum has weakened, certain parts of the labor market remain tight.

These weak indicators have reinforced expectations that the Federal Reserve will cut rates at least twice this year. This outlook is typically bullish for gold, as the precious metal becomes more attractive in a low-interest-rate environment.

Despite repeated calls for rate cuts by former President Trump, Federal Reserve officials have remained cautious, especially amid ongoing trade risks and a volatile global landscape.

Currently, attention is turning to the US non-farm payrolls report due out on Friday. If the report continues to fall short of market expectations, it could further clarify the Federal Reserve's policy path. (Bullish for gold)

Deteriorating US Economic Outlook Boosts Gold Prices Further_1

Technical Analysis

Since hitting a low on May 15, gold prices have been on a strong upward trend, forming a series of higher highs, signaling potential for further gains.

From a technical standpoint, gold prices are in an upward trend, having broken above this week's high of $3,392 during trading hours. The Relative Strength Index (RSI) indicates that buying pressure is dominant.

Given the clear daily upward trend, gold prices are expected to rise to the next resistance level at $3,415. Moreover, based on the continuation of the head-and-shoulders bottom pattern, a break above this level appears inevitable. The next resistance level is at $3,440.

Trading Recommendations

Trading Direction: Long

Entry Price: 3374

Target Price: 3500

Stop Loss: 3300

Valid Until: June 20, 2025, 23:55:00

Support: 3385/3361/3343

Resistance: 3415/3340/3480

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

The Bank of Canada (BoC) has kept its key interest rate unchanged, primarily focusing on inflation risks. A potential rate cut in the future cannot be ruled out.

SELL USDCAD

Close Time

CLOSED

1.36582

Entry Price

1.34000

1.39100

1.38198 +0.00051 +0.04%

81.7

Pips

Loss

1.34000

1.37399

Exit Price

1.36582

Entry Price

1.39100

Fundamentals

The BoC maintained its key benchmark interest rate at 2.75% on Wednesday, citing the need to assess the impact of U.S. trade policies. However, it noted that further rate cuts might be necessary if the economy weakens due to tariffs.

This decision marks the second consecutive hold by the BoC, following a significant rate-cutting cycle over the past nine months that saw rates reduced by 225 basis points.

The BoC highlighted that overall inflation, excluding tax effects, accelerated to 2.3%, above the central bank's expectations.

The Liberal government's repeal of the consumer carbon tax will impact inflation data for April and the following 11 months.

Core inflation reached its highest level in nearly a year. BoC Governor Tiff Macklem stated, "There are some unusual fluctuations in inflation, but these measures indicate that underlying inflation may be stronger than we thought."

Moreover, Macklem emphasized that "the trade conflicts initiated by the U.S. remain the biggest headwind for the Canadian economy." He described U.S. trade policies as highly unpredictable. He added, "As we gather more information, we have a clear consensus to keep policy on hold."

Multiple Factors Keep the Asset Vulnerable_1

Technical Analysis

USDCAD has broken below last week's low and continues to trade within a downward channel, with strong selling momentum. The Relative Strength Index (RSI) has dipped to around 33.00, indicating robust bearish sentiment.

There are currently few factors that could prevent it from breaking below the 1.3600 level. If it holds above this level, it could pave the way for the demand zone at 1.3470 or the 100% Fibonacci retracement level at 1.3349. As long as the 1.3860 resistance level holds, the outlook remains bearish.

However, if it breaks above the May 29 high of 1.3860, the near-term trend would turn neutral, opening the door to the May 21 high of 1.3920, followed by the May 15 high of 1.4000.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3679

Target Price: 1.3400

Stop Loss: 1.3910

Valid Until: June 20, 2025, 23:55:00

Support: 1.3677/1.3647/1.3542

Resistance: 1.3743/1.3750/1.3862

Risk Warnings and Disclaimers

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Alan

Forex

Central Bank

Summary:

Recent weak US economic data have dragged the US dollar lower, while Eurozone economic data have shown resilience, supporting the Euro's upward movement.

BUY EURUSD

Close Time

CLOSED

1.14154

Entry Price

1.16800

1.13050

1.16489 +0.00063 +0.05%

140.4

Pips

Profit

1.13050

1.15558

Exit Price

1.14154

Entry Price

1.16800

Fundamentals

Recent US economic data have been notably weak. The May ADP employment report showed an increase of only 37,000 jobs, significantly below the expected 110,000, indicating a clear cooling in the labor market. Coupled with President Trump's public pressure on the Fed to "cut rates immediately," the market's probability of a rate cut in September has soared to 75%. US Treasury yields have fallen across the board (with the 10-year yield dropping to 4.37%), and the US Dollar Index has lost its 99 level, providing upward thrust for the Euro.

Moreover, the US May ISM Non-Manufacturing PMI unexpectedly fell below the neutral level to 49.9, with the new orders index plummeting to 46.4. However, the prices paid index soared to 68.7, highlighting the risk of "stagflation" and further diminishing the appeal of US dollar assets.

In the Eurozone, although the market widely expects the ECB to cut rates by 25 basis points to 2% today, economic data have shown resilience. The Eurozone's May Composite PMI final reading of 50.2 exceeded expectations, and manufacturing output has expanded for two consecutive months.

CFTC positioning data show that the euro's net short position has reached a historical high. If the ECB removes the "continued easing" wording from its statement, it could trigger a large-scale short-covering rally.

Technical Analysis

On the daily chart, EURUSD has been running along the upward trend line, showing a clear medium-term upward trend. After opening today, the price found support around 1.1400 and has attempted multiple times to break through the resistance zone of 1.1435-1.1450. The daily MACD indicator shows the fast line above the zero axis and forming a bullish divergence with the signal line, with the red histogram significantly expanding. This chart indicates a further strengthening of the medium-term bullish momentum.

Currently, if the price can hold above 1.1450 after the ECB meeting, the technical pattern will reinforce the upward trend and open up the upside space. Conversely, if the price breaks below 1.1350, it may retest the 1.1280 support level.