EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Continues to See Overall Strength

EUR/USD Technical Analysis

The euro has drifted a little bit lower during the trading session on Tuesday as it looks like we are trying to head towards the 1.05 level. The 1.05 level, of course, is an area that will attract a lot of attention. It’s been almost like an anchor for price as of late.

For what it is worth, the CPI numbers come out on Wednesday. So we could very well see the market just hang out in this area between now and then. After all, a lot of traders are out there paying close attention to inflationary numbers in the United States.

USD/JPY Technical Analysis

The US dollar has rallied against the Japanese yen and is now threatening the 152 level. 152 is a significant barrier that I think we will be paying close attention to and after the CPI figures are released, it’ll be interesting to see which side of this level we are on. I do think that the market is trying to do everything it can to rally here and eventually break out to much bigger moves and levels.

Short-term pullbacks probably get bought into unless of course that CPI number ends up being horrific. The interest rate differential should continue to favor the US dollar despite the fact that the Federal Reserve is more likely than not to cut interest rates by 25 bases points next week.

AUD/USD Technical Analysis

Over in the Australian dollar, you can see that we have fallen a bit to show signs of weakness again as we continue to plunge towards the lows of the last couple of years. The 0.6250 level could be our destination eventually, but I think you will see a lot of noise between now and then. Short-term rallies should end up being selling opportunities at the first sign of exhaustion, but again, we have to wait for this CPI number in the United States to really get a handle on what might be happening going forward.

The Australians, of course, have kept their interest rates at 4.35 and the Fed is likely to cut by 25 basis points, but I don’t think this has much to do with interest rate differential. I think this has a lot to do with the Australian economy recently underperforming. You also have to keep an eye on China, because China directly influences Australia as well. Short-term rallies that show signs of exhaustion are still sellable events.

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