AUD/USD surges toward 0.6730 as the US Dollar weakens due to tensions between the US and EU

AUD/USD Rises as US Dollar Weakens Amid US-EU Tensions

The AUD/USD currency pair advanced by 0.25%, trading close to 0.6730 during Tuesday’s European session. The Australian Dollar is strengthening as the US Dollar (USD) loses ground against other major currencies, largely due to ongoing disagreements between the United States (US) and the European Union (EU) regarding Greenland’s future.

At the time of reporting, the US Dollar Index (DXY)—which measures the USD’s performance against a basket of six key currencies—had dropped by 0.55% to around 98.50.

The US Dollar is facing significant selling pressure as the “Sell America” trend gains momentum. Investors are seeking alternative safe-haven assets amid concerns about deteriorating relations between the US and the EU. Over the weekend, President Donald Trump introduced 10% tariffs on several EU countries and the United Kingdom (UK) in response to their opposition to US plans to acquire Greenland.

Meanwhile, US Treasury Secretary Scott Bessent stated at the World Economic Forum (WEF) in Davos that the US has no intention of withdrawing from NATO despite the ongoing Greenland dispute.

On the topic of monetary policy, Secretary Bessent mentioned that Washington may reveal the next Federal Reserve (Fed) Chair as soon as next week, with four candidates currently under consideration.

Although the Australian Dollar has found support against the US Dollar, the greenback continues to lag behind other major currencies ahead of Australia’s December employment figures, which are due on Thursday. Market participants are closely monitoring the upcoming labor market data for insights into the Reserve Bank of Australia’s (RBA) future policy direction.

Expectations for the Australian jobs report suggest that the economy added 30,000 new positions after shedding 21,300 jobs in November. The unemployment rate is projected to climb to 4.4%, up from the previous reading of 4.3%.