EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Somewhat Mixed on Monday

EUR/USD Technical Analysis

The Euro has gone back and forth during the early hours on Monday. As you can see we continue to look at the 1.06 level as a very difficult area to overcome. If we can break above the 1.06 euro level, then it opens up the possibility of a run towards the 50-day EMA at the 1.07 level, however, a lot of this is going to come down to whether or not the interest rates in America calmed down this week, and of course the inflation numbers coming out of America.

Now, it is worth noting that the ECB has an interest rate decision on Thursday, and it is expected to cut about 35 basis points, but really at this juncture, the market already knows this, so I don’t think that is necessarily the driver here. Pay close attention to US inflation this week. If it comes in hotter than anticipated, we probably see this pair fall even further.

USD/JPY Technical Analysis

The US dollar has rallied a bit against the Japanese yen during trading in the early hours on Monday, as the 150 yen level continues to be of interest. From a technical analysis standpoint, if we can break above the 151.33 level, then I think we probably go higher.

That being said, the interest rate differential continues in favor of the United States, so I do prefer to own this pair instead of shorting it, but right now it looks like we’re just simply killing time and that would make a certain amount of sense considering that we are going to get those inflation numbers over the course of the week. With that being said, watch this 50-day EMA because if we can break above there, things get interesting.

AUD/USD Technical Analysis

The Australian dollar has rallied a bit from extreme lows but still faces a lot of headwinds. Australia also has to deal with the fact that the Chinese economy is somewhat soft and although we saw some stimulus recently, it didn’t seem to impress the markets. The 0.65 level above should be resistance as it was previous support.

The 0.6350 level underneath is massive support. If we were to break down below there, the Aussie would come undone. That being said, the Australian dollar does seem to be holding up a little better than some of its other peers against the greenback during the day at least, but longer term, it looks horrible. So, I’ll be looking to fade short-term rallies that show signs of exhaustion.

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