EUR/USD, USD/JPY, AUD/USD – US Dollar Recovers After an Initial Drop on Wednesday

EUR/USD Technical Analysis

The euro initially did rally against the US dollar on Wednesday, but we have since seen a bit of a turnaround, and now it looks like we are going to stay in the same range between 1.0750 at the bottom and 1.0850 on the top.

That’s not a huge surprise because we do have non-farm payroll coming out on Friday. And then again, we have the presidential election on Tuesday of next week. But the real driver of this pair lately, I believe at least has been the bond yields in America spiking. So, continue to watch those for clarity.

USD/JPY Technical Analysis

The US dollar has gone back and forth during the trading session on Wednesday, but it looks at this point in time as if we are starting to go positive. And I think the 154 yen level above being broken would be a very positive sign for this pair, sending it much higher. Keep in mind that the jobs report will cause a lot of volatility in this pair, but we also have the Bank of Japan interest rate decision on Thursday, which clearly will.

We are a little overdone at this point, but quite frankly, I don’t think the market cares. It looks to me like the carry trade is back in full force, which is not a huge surprise considering that the Bank of Japan has admitted that they can’t really tighten monetary policy. So, we’ll have to see how that plays out, but it certainly looks like a buy on the dip type of scenario.

AUD/USD Technical Analysis

Over here in the Australian dollar, we are hanging around the 0.6550 region, an area that’s been important a couple of times in the past. I do think ultimately this is a pair that you have to be somewhat cognizant of the fact that it is highly sensitive to Asia and of course global growth.

The jobs number on Friday of course causes a little bit of a headache as will the presidential election but I think at the end of the day the Australian dollar is probably sinking due to the bonds in America having yield spiking. Either way it doesn’t really matter. We are at an area of support, and we are trying to hang on, but rallies at this point in time, I think, would have to be looked at with a certain amount of suspicion. And the 200 day EMA here at the 0.6660 level probably offers a bit of a ceiling.

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