EUR/USD, USD/JPY, AUD/USD Forecast – US Dollar Continues to See Strengthening on Monday

EUR/USD Technical Analysis

In the Euro against the US dollar, we have seen a little bit of negativity on Monday, although I would not put too much into it other than the idea that perhaps we are continuing to see the markets question the idea of just how aggressive the Fed will get with its interest rate cuts.

We are approaching the crucial 1.09 level, and that of course is an area that could have a significant influence as we’ve seen it be both support and resistance, at least in a minor sense of the word previously. That being said, it’s also worth noting that it is Columbus Day in the United States, so it’s a bank holiday. We will have to see exactly what happens with liquidity, but as things stand right now, we are probably going to continue to at least look somewhat neutral.

USD/JPY Technical Analysis

The US dollar against the Japanese yen has risen slightly during the trading session and it looks like we are going to challenge the crucial 150 yen level. The 150 yen level of course is a large round psychologically significant figure and an area that’s been important in the past. We also in the last session have broken above the 200 day EMA. So, in that scenario, it is technically a bullish sign. So, I think that could be a sign that we are getting ready to continue to the upside.

Short term pullbacks, I do believe, will continue to be bought into as the interest rate differential continues to attract traders. Although the US dollar has strengthened during the day, I suspect this is probably more about the Japanese yen than the dollar as I’ve seen the Japanese yen lose strength against multiple currencies, as the Bank of Japan has recently admitted that they are not going to be able to tighten monetary policy further.

AUD/USD Technical Analysis

And finally, in the Australian dollar, we continue to see the Aussie slip a bit against the US dollar as I suspect we’re probably focusing more on the Fed than anything else. We are between the 50 day EMA and the 200 day EMA indicators, and that generally is an area where you would expect to see a lot of noise.

Typically speaking, we will bust out of this area rather rapidly, but we just don’t know when that is. We are at a potential inflection point with the 0.6650 level underneath. I believe being pretty significant from a market memory standpoint. If we were to break down below there, we probably would not only see the Australian dollar losing strength against the US dollar, but we would probably see several other major currencies as well.

Keep in mind that the Australian dollar is highly levered to the commodities market and of course Asia. And it’s probably worth noting that over the weekend, China announced stimulus measures that just really weren’t that impressive. So, this could be suffering a little bit of a knock-on effect from that as well.

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