EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Screams Higher After Landslide Election

EUR/USD Technical Analysis

The Euro has been trashed overnight against the US dollar dropping a whopping 250 points or so, as Donald Trump won the US presidency, the Republicans won the Senate, and the Republicans retained the House of Representatives. In other words, a clean sweep. It was never really close and as the evening played out, the US dollar started to gain more and more strength. The question now is where do we go from here?

We do have an interest rate decision on Thursday, which should be a 25 basis point rate cut in America, but there is a fairly strong consensus that the Federal Reserve may stand still after that. That being said, will a Trump presidency put pressure on Jerome Powell? We’ll have to wait and see. But as things stand right now, we are approaching pretty significant support, so I would assume there’s a little bit of a bounce coming.

USD/JPY Technical Analysis

The US dollar has skyrocketed against the Japanese yen and is now threatening the 155 yen level. There’s a very good chance that we will break through this sooner or later, but whether or not we do it in one shot remains to be seen. The US dollar will continue to be dominant over the Japanese yen due to growth and interest rate differential, even if the Federal Reserve cuts rates by 25 basis points as expected. Quite frankly, the Bank of Japan cannot do much as far as monetary tightening is concerned. So, this is a trend that is ready to continue going higher. The Australian dollar got absolutely whacked as well.

AUD/USD Technical Analysis

It is worth noting the Aussie has done a bit better than both the euro and the yen, and this is probably due to the fact that the Reserve Bank of Australia a couple of days ago had held tight with its interest rate. So, with that being the case, it wouldn’t really surprise me that once all the dust settles, we end up in the same general sideways action that we’ve had for the better part of the entire year, with the exception of a couple of outliers.

Now that the election is behind us and we know what’s going on in America, the interest rate decision, although important, probably won’t be as important as you would suspect. So, I’m still looking at this through the prism of somewhat sideways, but an overall stronger US dollar I think is something that you need to keep in the back of your mind.

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