EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Strengthens Slightly in the Early Hours of Tuesday

EUR/USD Technical Analysis

The euro initially did try to rally a bit during the trading session on Tuesday but gave back gains and showed signs of hesitation. Ultimately, this is a market that I think given enough time probably needs to make a bigger decision, but as things stand right now, you have to look at this through the prism of trying to figure out where to go next.

The 1.08 level is an area that of course is a large round psychologically significant figure and an area that you will have to pay close attention to. I do think that there’s probably a zone of support that extends all the way down to the 1.0750 level and runs all the way up to the 1.0850 level. So, I think in this scenario, the market is just simply killing time, trying to figure out whether or not the selling is over.

USD/JPY Technical Analysis

The US dollar continues to rally against the Japanese yen as we are knee deep in the carry trade again, and this of course has been a big winner for us. The 152 yen level underneath should now be support. I think at this point in time, we very well could be looking to get to the 155 yen level but do keep in mind that we get the weekly job claims and the monthly jobs numbers at the end of the week. So, I do think that volatility is probably going to show up. And on top of that, you have the Bank of Japan interest rate decision on Thursday. So probably not as clear of a path higher as the charts may suggest.

AUD/USD Technical Analysis

The Australian dollar continues to drift lower. And I think at this point in time, it’s all about the US dollar strengthening. When you look at the currency markets, I don’t think it’s necessarily anything against the Aussie dollar itself. It’s just that it’s not the US dollar.

So, with that being said and yields rising in America, I think we do continue to see a lot of US dollar strength going forward, but it’s not a stretch of the imagination to suggest that perhaps the US dollar is a little overbought at this point in time. A bounce from here does make a certain amount of sense, but the 0.6650 level above should be a bit like a ceiling. The 0.6450 level underneath could very well end up being the target.