US Dollar Mixed as it Waits for the Fed – Technical Analysis for EUR/USD, USD/JPY, and AUD/USD

EUR/USD Technical Analysis

The euro has gone back and forth during the session here in the early hours of Tuesday, as we continue to dance around the 1.05 level. I think this is how the market is going to behave, at least until we get to the Federal Reserve interest rate decision, and probably more importantly, the Federal Reserve press conference, statement, etcetera. So really at this point in time, I don’t expect much until late Wednesday.

The central banks around the world have all been cutting rates and it does appear that the Federal Reserve is likely to fall right in line. But the question is, are they going to be hawkish after that? Most traders believe that in January they’ll be sitting on the sidelines. So, any knee-jerk reaction to the upside probably gets sold against the Euro.

USD/JPY Technical Analysis

The US dollar has rallied pretty significantly over the last five or six sessions against the Japanese yen, but Tuesday opens up with a little bit of a pullback. I do think this is probably necessary, especially considering the Federal Reserve is on Wednesday and the Bank of Japan is on Thursday, both giving interest rate decisions and monetary policy statements, as well as press conferences.

So there’s a high likelihood of volatility. If you had bought somewhere near the 150 yen level, there’s no need to ride out this volatility. Any pullback will more likely than not be a buying opportunity, but we’ll have to wait and see.

AUD/USD Technical Analysis

The Australian dollar has fallen again in the early hours of Tuesday, as quite frankly, there’s just nothing good going on in Australia. And of course, China looks like it’s ready to ease monetary policy again, and as rates plummet in China, it does have an interest in Australia so much as the Australian economy is highly dependent on China to buy its goods.

And right now, it looks like China is going to be struggling, as the bond market in China looks miserable. So, with this, we are testing a major swing low that extends down to the 0.63 level. I do think that rallies at this point in time will more likely than not offer selling opportunities at the first sign of exhaustion.

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