EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Strengthens Again

EUR/USD Technical Analysis

The euro broke down pretty significantly during the early hours on Monday, as we have seen the US dollar really start to flex its muscles. At this point, it looks to me like the market is going to threaten the 1.06 level and a breakdown below there could really put the downward pressure on this pair down towards the 1.05 level.

A bounce from here would make a certain amount of sense, but it’s not a trade I’m willing to take. That being said, for what it’s worth, the stochastic oscillator is reaching the oversold condition on the daily chart, and it is suggesting that it could turn around and bounce from here. So, there’s that. That being said though, the euro looks really sick.

USD/JPY Technical Analysis

The US dollar has rallied significantly against the Japanese yen, and that of course could open up a move to the 155 yen level again, which is a large round psychologically significant figure and an area where we have seen some resistance previously. With that being the case, I think you have to look at this through the prism of whether or not yields in America continue to climb, which they are, and whether or not the Bank of Japan can do anything to support the yen, which of course it can’t. So given enough time, I do think a breakout happens.

AUD/USD Technical Analysis

The Australian dollar has been fairly quiet against the US dollar, rallying ever so slightly in the early part of the day, but keep in mind that the Reserve Bank of Australia recently decided to keep interest rates flat, and that’s part of what’s going on here. It’s not really that the Aussie’s strong, it’s just it’s not as weak as so many other currencies.

So, with that being said, I think you do have a situation where you stay in the same range you’ve been in for quite some time, and unfortunately for anybody wanting to put a trade on, we are at roughly dead in the middle between the bottom and the top of a 200 point range. So, it’s about as neutral as a currency pair can get.

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