EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Softens Early on Thursday

EUR/USD Technical Analysis

The euro rallied slightly during the trading session on Thursday, as we continued to dance around the 50-day EMA. At this point in time, we are trying to change the trajectory of the US dollar and multiple currency pairs, and we’re on the precipice of doing so in a couple of them, but the euro I think will continue to have a lot of overhead resistance extending to the 1.06 level, so at this point I’m not really that impressed. We are still very much worth watching.

USD/JPY Technical Analysis

The US dollar has plunged against the Japanese yen as suddenly, an interest rate of possibly 1% in Japan is sending everybody running for the exits. That being said, sooner or later the interest rate differential does come back into play as we’ve been repricing the carry trade. Ultimately, this is a market that I think is at a very interesting point that could define the next 6 months. There is a lot of support just below the 150 yen level, so I wouldn’t be shorting into it.

I don’t really see a reason to buy it yet either, although I would anticipate that sooner or later things do turn around. But as traders continue to pretend that the Bank of Japan can suddenly become very tight, we have a situation where the yen will continue to strengthen, or perhaps, maybe the better way to put this is, people are closing out long positions in this pair. I’d sit pat on this one.

AUD/USD Technical Analysis

The Australian dollar is near the highs it made over the last couple of days. Again, this is much like the Euro in the sense that it has been a nice rounding pattern. But when you look at it through the prism of the big move lower, we aren’t even at the 38.2% Fibonacci retracement level yet. So, you do have to keep that in perspective.

If we broke above the 200 day EMA, which is something we won’t be doing in the next 24 hours, then you can begin to have the conversation about the trend changing. But right now, this looks like a market that, although positive, I think it’s got a lot of work ahead of it before it truly takes off to the upside. If we were to turn around and break down below the 50 day EMA, that would be extraordinarily negative.

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