EUR/USD, USD/JPY, AUD/USD Technical Analysis – US Dollar Stronger Just a Bit

EUR/USD Technical Analysis

The euro initially did try to rally a bit during the early hours on Monday, but gave back those gains and now the US dollar is showing a little bit of strength. That being said, when I look at the chart what I actually see is a bit of consolidation. It does make a certain amount of sense that we could consolidate in this region because we had fallen so rapidly to the 1.08 level, so a little bit of digestion would make a lot of sense. Above we have the 200 day EMA right around the 1.09 level, which of course is a large, round, psychologically significant figure. And if we break above there, then the market could go looking to the 1.10 level.

Underneath, we have the 1.08 level and breaking down below there could open up a move down to the 1.07 level. All things being equal, I think this is a sign of the market at least trying to stabilize. I haven’t read too much into it quite yet.

USD/JPY Technical Analysis

The US dollar initially fell against the Japanese yen but has turned around and is racing towards that crucial 150 yen level yet again on Monday morning. If we can clear this area, maybe somewhere near the 150.50 yen level, then I think this pair really starts to take off. I do expect that to happen sooner or later, because quite frankly, the interest rate differential favors the US dollar so much.

And of course, the Bank of Japan has recently admitted over the course of the last couple of weeks that they cannot raise interest rates or tighten monetary policy any further. This gives us a clear shot for the carry trade to kick back in. And I think right now we’re just wrestling with the idea of being above the 150 yen level. It’s also worth noting that the 200 day EMA is now acting as a bit of dynamic support.

AUD/USD Technical Analysis

The Australian dollar did initially try to rally a bit during the day but has fallen some. But again, I think this is a lot like the euro where it’s just a mixed move. By the end of the day, it wouldn’t surprise me at all to see this positive. That being said, I don’t think it means much other than we are trying to catch our breath after a significant drop down to the 0.6650 level, which of course is an area that’s been important a couple of times in the past already.

It is probably worth noting that we are stuck between the 50 day EMA and the 200 day EMA indicators. So, I think it all ties together quite nicely for a situation where people are trying to sort out whether or not we can form a floor here. If we can, then the market is likely to go much higher. If we break down below the 0.6650 level, that’s a really bad sign, and at that point I would anticipate not only would the Australian dollar be falling, but probably most other currencies against the greenback.