EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Strengthens Again as Rates Continue to Climb

EUR/USD Technical Analysis

The euro fell a bit during the trading session on Wednesday as we continue to see US dollar strength and the 1.03 level has been violated. Whether or not we break down drastically remains to be an open question, but I do think eventually the euro will give up this support and go lower. We do have the jobs number coming out on Friday, so I think that might be the final push to determine whether or not that happens quickly or not.

That being said, though, short-term rallies I think are still your opportunities to take advantage of so you can pick up cheap dollars. by simply shorting the first signs of exhaustion, which has worked beautifully multiple times over the last couple of weeks. I have no interest in buying the euro until we break well above the 1.06 level.

USD/JPY Technical Analysis

The US dollar, of course, has risen against the Japanese yen as you would expect with yields rising. And now it looks like the 158 yen level is going to be in the rear view mirror. Short-term pullbacks, I think, are buying opportunities in this pair. And if we can break above this little area near the 158.80 level, this pair almost certainly will go racing towards the recent highs just underneath the 162 yen level. Short-term pullbacks are buying opportunities as far as I can see, and I just don’t see how that changes with the way the US bond market is behaving. The 156.5 level underneath is significant support, followed by the 155 yen level.

AUD/USD Technical Analysis

The Australian dollar is on the verge of falling apart. And as you can see, we are near the lows yet again. If we can clear to a fresh new low, then it’s probably only a matter of time before the Aussie goes looking to the 0.60 level. Australia has the misfortune of being highly levered to the Chinese economy, and all one has to do is look at the Chinese bond market, see how that’s going.

Yields are plummeting in China. In fact, China is one of the few places yields are dropping the way they are. It looks a lot like this chart, actually. That tells you that there’s a little faith in the Chinese economy right now. And as long as that’s going to be the case, the Aussie is going to struggle, especially with the rising yields in America. So it’s a bit of a one-two punch.

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