EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Drifts Lower on Wednesday

EUR/USD Technical Analysis

The euro has rallied ever so slightly during the early hours here on Wednesday, as we are hanging around the 50 day EMA. Quite frankly, with the non-farm payroll announcement coming out on Friday, it makes sense that the market would go back and forth. We have been grinding back and forth, mainly due to the fact, I believe, that traders are trying to get to grips on whether or not the Federal Reserve will cut rates and exactly what that means.

That could be bad news, and if that’s bad news, the US dollar tends to strengthen. On the other hand, if we see the US dollar fall apart, if we break above the 1.18 level, then the market goes much higher. As things stand right now, sideways back and forth action, I think, continues to be the case.

USD/JPY Technical Analysis

The US dollar initially rallied a bit during the trading session on Wednesday against the Japanese yen breaking above the 148.50 yen level, but gave back a bit of the gains. At this point, I’m still bullish about this pair, but I recognize it’s going to be difficult for it to truly take off to the upside before we get those important jobs numbers. A short-term pullback from here makes quite a bit of sense, but really, I think we would just stay in the same consolidation that we had been in previously. If we can break out to the upside, the 151 yen level becomes the target.

AUD/USD Technical Analysis

The Australian dollar initially pulled back just a little bit during the trading session here on Wednesday to test the 50 day EMA and then rallied again. I think again, this is a situation where we’re not necessarily going to see the US dollar fall apart. I think what we’ve got is a market that’s somewhat locked up. It really doesn’t know what to do. And you could probably say that going all the way back to the end of April. It’s just been a grind in the Australian dollar, and I don’t see why today that would change. I do favor the downside at the moment, but I would need to see exhaustion in order to get involved.

If we were to break above the 0.6650 level, then it would be a fresh new high. You would assume that the Aussie would rally. That would have to be accompanied by US dollar weakness around the world though. As things stand, this has been one of the worst performers against the dollar over the last several months. So, if the US dollar suddenly overwhelms everything, one would extrapolate that the Aussie should fall.

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