EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Trying to Stabilize

EUR/USD Technical Analysis

The euro initially tried to rally during the early hours on Monday, but it looks like the 1.05 level is going to continue to be a bit of a barrier that traders are going to have to deal with. The 1.05 level, of course, is very difficult to overcome due to market memory and at this point, I think short-term pullbacks probably make a lot of sense.

Now the question is whether or not we will continue to see downward pressure. I think that’s going to come from the bond markets. We’ll have to wait and see, but at this point in time, it looks like we’re still very much in the previous consolidation area. So, I certainly wouldn’t be chasing the trade to the upside from here.

USD/JPY Technical Analysis

The US dollar has fallen pretty significantly against the Japanese yen yet again, as Japan is starting to fight inflation. The question of course is whether or not the market is going to continue to buy the yen, I don’t I think this is a move that’s long term. I think this is a repricing of the dollar against the yen, not necessarily a shift change. We could, of course, have that happen, but right now it looks very much like a situation where traders are going to look at the 150 yen level underneath that as a potential support barrier.

AUD/USD Technical Analysis

The Australian dollar has rallied a bit, but it does look a little sluggish. It’s going to be interesting to see how this plays out because we do have the RBA coming out with an interest rate decision first thing on Tuesday morning, and that obviously will determine what happens next.

The Australians are expected to cut by 25 basis points, but if they cut by more or if they end up sounding like they’re going to continue to mark interest rates down going forward, then I think you’ll see the Australian dollar roll back over, and then we will see more US dollar strength.

At this point, I’d be very leery. I think we really need to see how the Tuesday close looks on the daily chart to really start to think about putting money into this market. Keep in mind that we’re still very much in a downtrend, so that should be in the back of your mind as well.

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