EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Slumps Just a Bit

EUR/USD Technical Analysis

The euro has rallied slightly during the early hours on Monday but not without noise and therefore I think you need to pay close attention to the idea of the 1.09 level being massive resistance and 1.08 offering a little bit of support. If we were to break down below that level, then the market could drop pretty significantly. I do expect that actually, but a lot of this is probably going to be profit taking more than anything else.

Keep in mind that a lot of what we’ve been seeing is interest rates spiking in the European Union due to the massive amount of supply and the bond market that is suddenly going to be available. So, remember, bonds down in price, yields up and that’s exactly what we are seeing here.

AUD/USD Technical Analysis

The Australian dollar has rallied slightly during the trading session on Monday as we continue to dance around the 50 day EMA. However, the 50 day EMA of course, has been an area that the market comes back and forth from. So, I think we’re still looking at the market as one that is very much stuck in the same range it’s been in for quite some time between the 0.62 level on the bottom, and the 0.64 level on the top.

USD/JPY Technical Analysis

The US dollar continues to drift lower against the Japanese yen, and now it looks like we are trying to break below the 147 yen level to reach the 145 yen level. Short-term rallies at this point in time will more likely be sold into, unless of course something changes in Japan, which it very well could, but right now they are still foretelling that they are going to be tightening rates later this year. And at this point, the market is trying to price in something along the lines of three interest rate cuts out of the Federal Reserve this year.

They probably will be disappointed, but in the short term, it certainly looks like that’s what they are expecting. And therefore, you see the interest rate differential shrink between these two economies. And therefore, you get the Japanese strengthening. If we were to turn around and take out the 150 yen level to the upside, that would be a major breach of the downtrend. But right now, we are nowhere near that.

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