EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Softens a Bit in the Early Monday Hours

EUR/USD Technical Analysis

The Euro has rallied just a little bit during the early hour on Monday, as the 1.08 level continues to be a significant support level. This is an area where market participants have pushed back a couple of times now, and in the past has been important.

The question will be whether or not we break down from here or if we can bounce and perhaps try to get to the 200 day EMA. If the market bounces enough to reach towards the 200-day EMA, I suspect the first signs of exhaustion will get sold into. Interest rates in America have been spiking, and that, of course, has a major influence on US dollar strength. If we break down below 1.0750, the market falls apart, and we drop another 100 points.

USD/JPY Technical Analysis

The US dollar gapped higher against the Japanese yen to kick off the trading session on Monday, but it has pulled back a bit. Nonetheless, this tells me that there is still very much the possibility that the carry trade is going to be in vogue. Japanese politics overnight gave us an indecisive election, so that might be part of what’s going on, but nonetheless, the interest rate differential continues to favor the US dollar.

Momentum most certainly does, and now that we are above the 152 yen level, we have broken yet another previous barrier. At this point, I do think we will get to the 155 yen level. We just don’t know how long it takes to get there. Short-term pullbacks should continue to be buying opportunities.

AUD/USD Technical Analysis

The Australian dollar fell a bit during the early hours on Monday, only to turn around and show signs of life. We are oversold here regardless of what you think about the long-term. So, I do think a little bit of a bounce does make some sense. The 0.6650 level is an area that I think a lot of people will be looking at for potential resistance, especially as the 200-day EMA sits right around the same area.

If we were to break above there, then the market could go looking to the 50-day EMA, but that seems somewhat unlikely in the risk environment that we find ourselves in and more specifically what the bond markets in America are doing. If we break down below the lows of the trading session, then I think we will probably continue to see this market drift towards the 0.65 region.