EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Strengthens After Tax Cuts Pass

EUR/USD Technical Analysis

The euro has initially tried to do everything it could to rally, but the 1,05 level continues to be rather difficult and somewhat troublesome for those looking to buy. The area above 1.05, I believe, extends all the way to the 1.06 level as a massive barrier, if you will. So, with that, I think it’s probably a market that is going to continue to struggle with upward momentum.

Underneath, we have the 50-day EMA offering support, but if we were to break down below the 1.04 level, then that shows US dollar strength in my estimation probably across the board, not just against the euro. All things being equal, we’re at the top of a range and we’re struggling to break out.

USD/JPY Technical Analysis

The US dollar has stabilized a bit against the Japanese yen during the early session as we continue to hang around just below the crucial 150 yen level. The 150 yen level of course is a large round psychologically significant figure and an area that a lot of people will have a lot of interest in. If we can break above there and perhaps more importantly, the Friday inverted hammer from last week, then I think the US dollar has a real shot at going higher.

The interest rate differential continues to favor the United States, and I do think that comes into play sooner rather than later. Yes, I recognize that the Bank of Japan is more likely than not going to continue to try to tighten monetary policy, but they are so far behind the US that I think it’s a little bit of a losing battle at the moment.

AUD/USD Technical Analysis

The Australian dollar has fallen rather significantly during the trading session on Wednesday as CPI in Australia came in lighter than anticipated. Because of this, it’s not a huge surprise to see the Australian dollar dipping below the 50 day EMA. The question of course now is going to be whether or not the Aussie dollar can continue to go lower, perhaps reaching towards a 0.62 level.

I would think that’s a very real possibility, but as we are hanging around the 0.63 level, there is a certain amount of short-term support here just waiting to happen. And because of that, you have to be somewhat cautious. Ultimately, I think this is a market that will find its way via the US dollar, not the Australian dollar. So, pay attention to what the US dollar is doing elsewhere, as it’ll give you the right direction in this market.

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