As we head into Wednesday, June 4, 2025, global markets brace for heightened volatility fueled by a slate of economic events. The calendar features Australia’s GDP report, the Bank of Canada’s interest rate decision, the U.S. ADP private employment change, and the ISM Services PMI – releases poised to stir major currency pairs. The U.S. Dollar has been on the front foot after surprisingly strong labor data earlier in the week, while the Euro is under pressure from softer-than-expected inflation figures (Eurozone headline HICP fell below 2%). Meanwhile, commodity-linked currencies like the Australian Dollar and Canadian Dollar face their own crosswinds, from slowing domestic growth to shifting central bank outlooks. In this report, we dive into technical analysis and trading strategies for EUR/USD, USD/CAD, and AUD/USD amid these drivers.
EUR/USD
EUR/USD, 5-minute chart as of early June 4, 2025. The pair has been trending lower for two days.
Technicals in Focus
EUR/USD extended its slide from the week’s high near 1.1450 down into the mid-1.13s, establishing a clear short-term downtrend of lower highs and lower lows. After failing to hold the 1.1400 handle (a key psychological support-turned-resistance), the pair dipped to an intraday low around 1.1365. This area now forms immediate support, and a decisive break below could open the door toward the 1.1300 region. Momentum indicators reflect the bearish tilt: the Relative Strength Index (RSI) has slipped below the 50 midpoint (signaling rising downside momentum), and MACD on intraday charts is below its signal line in negative territory. The stochastic oscillator is hovering in oversold ranges – hinting the sell-off may be stretched – but has yet to show a clear bullish crossover. Overall, the technical bias is bearish unless buyers can reclaim levels above 1.1400.
Trading Strategy
- Recommendation: Neutral-to-sell. With the euro’s rebound attempts faltering, the bias favors short positions on upticks.
- Entry (Sell Zone): Around 1.1380–1.1400, near the broken support turned resistance. This zone offers a better risk-reward entry for bears if retested.
- Take Profit (Target): Primary target at 1.1320, just above the next notable support region (mid-1.13). A more aggressive downside objective could be 1.1300, aligning with a round number and recent swing lows.
- Stop Loss: 1.1450, placed above the last significant swing high. This stop is above the 1.1440–50 resistance zone (where the pair peaked earlier in the week), capping risk in case of a bullish reversal.
- Alternate Scenario: A sustained break above 1.1450 would negate the bearish bias. In that case, a neutral-to-buy stance is warranted – the pair could retest 1.1500, with upside extension toward 1.1560 on renewed euro strength.
USD/CAD
USD/CAD, 5-minute chart as of early June 4, 2025. The pair saw a volatile swing but remains range-bound near its highs.
Technicals in Focus
USD/CAD is trading near the top of its recent range after an eventful start to the week. The pair briefly spiked to ~1.3740 – a level that now stands as immediate resistance – before a sharp intraday pullback saw it test support in the 1.3680–1.3700 zone. That dip was quickly bought, underscoring a buy-on-dips dynamic as traders position ahead of the Bank of Canada meeting. Now back around 1.3720, price action is consolidating under the 1.3740 swing high. Momentum signals are mixed: the RSI is hovering in the 50–55 area, reflecting the recent range-bound nature without a strong trend bias. MACD has flattened out, with the MACD line teasing a bullish crossover but not yet confirming decisive momentum. Meanwhile, the stochastic oscillator is climbing out of oversold territory following the earlier drop, suggesting the pair may have room to retest the highs. Overall, bulls have a slight edge given the quick recovery from support, but USD/CAD remains in a sideways holding pattern awaiting a catalyst.
Trading Strategy
- Recommendation: Neutral-to-buy. The preference is to buy on dips, given the pair’s resilience and potential for an upside break if news favors the USD.
- Entry (Buy Zone): 1.3690–1.3710 on minor pullbacks. This area near the recent support offers an attractive entry, with the 1.3680 level as a buffer (recent low). Alternatively, momentum traders could buy a breakout above 1.3740 once confirmed.
- Take Profit (Target): 1.3780 as an initial target, just below 1.3800 (a round number and projected resistance). If bullish momentum accelerates, an extended target near 1.3850 can be eyed, but be prepared to secure profits as volatility may increase around those levels.
- Stop Loss: 1.3660, placed under the week’s swing low (~1.3680). This stop is tight below support – if USD/CAD falls through 1.3680, it would indicate a deeper pullback, so it’s prudent to exit.
- Alternate Scenario: A break below 1.3680 would flip the bias to bearish in the near term. Under that scenario, USD/CAD could slide toward 1.3600 or lower, and short positions could be considered on a daily close below support, aiming for the mid-1.35s. Any dovish surprise from the Bank of Canada (or a surge in oil prices benefiting the CAD) could be the catalyst for such a move.
AUD/USD
AUD/USD, 5-minute chart as of early June 4, 2025. The pair’s uptrend has stalled, with price testing support around 0.6450.
Technicals in Focus
AUD/USD’s recent rebound has stalled, and the pair is now retreating to test a critical support region. After climbing toward 0.6500 earlier in the week, the Aussie dollar turned lower and is currently trading around 0.6460. Notably, this area coincides with the rising 9-day EMA (~0.6456) and horizontal support at 0.6450, which together form a make-or-break zone for the short-term uptrend. Thus far, buyers have defended this zone, keeping AUD/USD within a tentative ascending channel on the multi-day view. However, technical signals show momentum waning. The RSI, which had been above 50 during the upswing, is now slipping back toward the neutral 50 line – a sign that bullish momentum has faded. MACD is trending toward a bearish crossover as the histogram shrinks toward zero, indicating the prior upward momentum has ground to a halt. Additionally, the stochastic oscillator has rolled over from overbought levels and is heading into the lower half of its range, reflecting the pair’s pullback. If 0.6450 fails to hold as support, it would confirm a bearish reversal out of the recent up-channel. On the other hand, a strong bounce from this support could revive the bulls, but they would face immediate resistance back at 0.6500, followed by the recent peak near 0.6537 (a seven-month high).
Trading Strategy
- Recommendation: Neutral-to-sell. With upside momentum stalling, a cautiously bearish stance is adopted unless the pair can reclaim higher levels.
- Entry (Sell Zone): Consider selling on a relief bounce into the 0.6480–0.6500 zone. Minor rallies toward the 0.65 handle provide an opportunity to establish short positions at better levels (in line with the now-dominant downbeat momentum). Conversely, more conservative traders may wait for a clear break below 0.6450 to confirm a downside breakout before entering short.
- Take Profit (Target): 0.6400 for the initial target. This is just above the 0.6393 level, which corresponds to the 50-day EMA and a significant support per broader technical charts. If bearish momentum accelerates, the move could extend toward 0.6360–0.6350 (an area of interest from earlier price action), but 0.6400 is a prudent first objective to secure profits.
- Stop Loss: 0.6540, placed well above 0.6500 and the recent swing high at 0.6537. A move above 0.6537 would indicate the bullish trend is resuming, so a stop at 0.6540 limits risk on the short trade.
- Alternate Scenario: If AUD/USD climbs decisively above 0.6540, it would invalidate the bearish setup. In that scenario, traders should shift to a neutral-to-bullish outlook. A break above 0.6540 could signal a fresh rally towards 0.6600, with potential to challenge the next resistance around 0.6660 (upper boundary of the prior channel). Such a move would likely be driven by a combination of improved risk sentiment or unexpectedly strong Aussie fundamentals, so keep an eye on news that could flip the script.
Market Outlook
The trading session ahead is packed with market-moving events. Economic data releases are at the forefront: Australia’s Q1 GDP growth came in at just 0.2% QoQ, half the expected pace, underscoring economic headwinds down under. In Europe, final PMI surveys and inflation readings show a cooling environment – notably, Eurozone inflation cooled to 1.9% in May, dipping below the ECB’s 2% target for the first time since 2024. Later today, the United States will report the ADP Employment Change, a preview of the labor market ahead of Friday’s Nonfarm Payrolls. Robust U.S. labor data have recently bolstered the dollar (job openings jumped to 7.39 million in April, reflecting continued labor market strength), so another upside surprise in ADP could reinforce USD strength. Meanwhile, the Bank of Canada meets today, and while no rate cut is expected amid persistent inflation challenges, any hawkish or dovish tilt in the BoC’s tone could spark volatility in CAD pairs. The U.S. ISM Services PMI is also due – given services account for a large share of the U.S. economy, this indicator will be closely watched for signs of resilience or slowdown in growth. Together, this “data surge” sets the stage for potential swings across FX markets, as traders digest each new piece of information.
Beyond scheduled data, broader risk sentiment will play a crucial role. Trade tensions remain a background risk – the U.S. has moved to double steel and aluminum tariffs on many countries, prompting renewed U.S.-China trade friction and rattling global growth confidence. Any escalation or surprise resolution on the trade front could quickly shift safe-haven flows. Adding to concerns, signs of a slowdown in China have emerged: the Caixin Manufacturing PMI slid to 48.3 in May, marking the first contraction in 8 months. This weakness in China’s economy weighs particularly on commodity-linked currencies like AUD, and further deterioration could limit their upside. Geopolitical factors (from European political uncertainties to Middle East tensions) also linger as wildcards that could spur bouts of risk aversion. On the monetary policy front, central banks are in various stages of policy shifts. The Federal Reserve is largely expected to hold rates steady in the near term, balancing a still-strong job market against mixed economic signals. Notably, some Fed officials have hinted at the possibility of rate cuts later in 2025 if inflation retreats – for instance, Fed Governor Waller suggested two quarter-point cuts might be on the table within the year – but for now the Fed’s stance remains one of patience. In contrast, the European Central Bank (ECB) is leaning dovish: markets widely anticipate a 25 bps rate cut at the ECB’s June meeting after a string of cuts earlier in the year, as the bloc grapples with tepid growth and easing price pressures. Indeed, the slide in Eurozone inflation below target has strengthened the case for more ECB easing to support the economy. The Bank of Canada (BoC) finds itself at a delicate juncture – inflation in Canada remains above comfort, and while growth has slowed, the BoC is not fully expected to cut rates at this mid-year meeting. Instead, it will likely hold the policy rate unchanged (currently at restrictive levels) but could signal how it views the path forward; any surprise from the BoC (a hike or an explicit easing bias) would directly impact the CAD. Meanwhile, the Reserve Bank of Australia (RBA) has already taken a dovish turn by cutting rates 25 bps to 3.85% in May. With Australian GDP and Chinese demand softening, the RBA is expected to maintain an easing bias – it will focus on supporting growth as long as inflation is trending down. This divergence in central bank trajectories – Fed on hold, ECB and RBA easing, BoC cautious – is creating cross-currents in FX markets. Traders should stay alert to any policy surprises or shifts in rhetoric: such developments can quickly alter interest rate differentials and, by extension, currency valuations. In summary, the overall market outlook is one of cautious optimism tempered by significant event risk. Expect choppy trading and heightened volatility today, with the potential for sharp moves in EUR/USD, USD/CAD, and AUD/USD as economic data hits the wires and central bankers weigh in. Managing risk is paramount under these conditions – clearly defined stops and disciplined position sizing will be key while navigating this data-driven session.