EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Softens Early on Wednesday

EUR/USD Technical Analysis

The euro has rallied a bit during the early hours on Thursday as we are continuing to see the market try to break above the 1.14 level, but it does offer quite a bit of resistance. At this point in time, a little bit of a pullback, at least in my estimation, makes quite a bit of sense considering that the euro is overbought.

Furthermore, you have to keep in mind that Thursday has an ECB meeting, so I think traders might be a bit cautious about putting on a lot of risk before that interest rate cut, but more importantly, the press conference and statement afterwards, they could surprise with a much more dovish statement than anticipated considering everything that’s going on. And therefore, it’s very dangerous to chase the euro up in this level.

USD/JPY Technical Analysis

The US dollar has fallen against the Japanese yen during the early hours again on Wednesday. But just like what we’ve seen over the last couple of days, there does seem to be a bit of a pushback in this area as 142 yen has become very important. After that, we have the 140 yen level, which I think will end up being a massive floor as well.

This doesn’t mean that I think the market’s going to suddenly take off to the upside. I just think that a bounce makes some sense. The 145 yen level will be difficult to get above, but if we were to break above that level, it would obviously be a very bullish sign. If we were to turn around and break down below the 140 yen level, then the market probably enters some type of freefall at that juncture.

AUD/USD Technical Analysis

The Australian dollar has rallied again during the trading session, but we continue to see a lot of resistance near the 0.64 level, as it is not only a major resistance barrier recently, but it also is where the 200-day EMA currently resides. With that being the case, I still think you’re looking for signs of exhaustion to short, or maybe we enter some type of range between 0.62 and 0.64 above, which is basically what we did for a couple of months there.

So, you could make a bullish argument here, but you need to clear the 200 day EMA decisively in order to make that argument. Furthermore, you would have to ignore the fact that the market is extraordinarily overbought, at least in the short term. So, this is why I’m not as excited about the Aussie dollar as I could be, just simply because I think gravity will continue to be an issue, at least for the short term.

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