EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Flexes Its Muscles on Wednesday

EUR/USD Technical Analysis

The euro fell a bit in the early hours on Wednesday as we continue to consolidate between the 1.05 level on the bottom and the 1.06 level on the top. Because of this, it looks as if the market is trying to sort out whether or not this extreme low will hold like it has over the last roughly two years or so, or if we finally break down. If we can break back above the 1.06 level, then I think it kicks off more of a recovery phase and the market will probably bounce towards the 1.0750 level.

On the other hand, if we break down below the 1.05 level, this would be a very bad sign for the euro and while you could short the euro against the US dollar, what it probably means is that the US dollar is going to start punishing everything else again. And basically, your currency play is just to buy the dollar against pretty much anything you can.

USD/JPY Technical Analysis

The US dollar has risen against the Japanese yen yet again on Wednesday morning as we are now above the 155 yen level again and looking fairly strong. At this point we are a little stretched, but ultimately, I think each and every time this market pulls back it is going to attract a certain amount of attention due to the fact that the interest rate differential favors the United States so heavily. Furthermore, we’ve recently had the so-called golden cross when the 50 day EMA crosses above the 200 day EMA so longer-term technical traders are probably watching that as well.

AUD/USD Technical Analysis

The Australian dollar initially did try to rally during the trading session, but it has fallen back toward the 0.65 level. There is a lot of support just below, so I don’t necessarily think this market has anywhere to go, and for what it is worth, the stochastic oscillator has crossed into the oversold condition in the last couple of days. So that’s part of what we’ve seen play out in the price action. But we still have a lot of work to do if we think this market is going to just simply take off to the upside.

The 0.6650 level is an area where I think a lot of action could be found due to the fact that the 50 day EMA and the 200 day EMA indicators are both parked in that area. And we just had the so-called death cross form, which of course is a very negative turn of events when the 50 day EMA crosses below the 200 day EMA. Although I’m the first to point out that’s typically a very late signal.

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