EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Roars Back on Tuesday

EUR/USD Technical Analysis

The Euro fell in the early part of the Tuesday session and now that we are getting the Americans on board, this will get interesting. Quite frankly, with Trump in office, let the chaos begin, because he does like to make random comments that will throw the markets into disarray, and in fact, we already saw that overnight when he released a statement saying that he was thinking 25% tariffs on Canada and Mexico begin February 1st.

So, of course, we’ve seen the US dollar strengthen since then, but quite frankly, it had been anyway, and it is worth noting that we failed near the 1.05 level and the 50 day EMA. So, this is just a technical bounce that has been repudiated as I figured probably would end up being the case. At this point, I still think we eventually find our way down to parity.

USD/JPY Technical Analysis

The US dollar has been all over the place against the Japanese yen during the trading session. At this point, it does look like it’s supported at the 50-day EMA, which is essentially the same thing as the 155-yen level. However, I’d also point out that there is a Bank of Japan meeting on Friday, so that changes things. You have to be very cautious about getting overexposed to this pair, but I think it still favors the upside overall.

AUD/USD Technical Analysis

The Australian dollar, of course, continues its show of weakness as we have fallen pretty hard during the first half of the session losing about 80 basis points and it now looks like we are going to continue to use the 0.62 level as a fair value area. I think we’re just going to bounce back and forth in this region. Eventually it would not surprise me at all to see the Australian dollar drop to the 0.60 level.

But even if we did rally from here, I think the 0.635 zero level and the 50 day EMA combined are probably going to cause a bit of a ceiling for this market, which obviously is very negative, and of course the Australian dollar has the misfortune of being tied to the Chinese economy. So, with that, I favor fading rallies just like we have seen play out over the last 24 hours.

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