EUR/USD, USD/JPY and AUD/USD Forecast – US Dollar Rallies Slightly in Early Friday Trading

EUR/USD Technical Analysis

The euro initially did try to rally a bit during the early part of the Friday session, only to turn around and show signs of weakness. At this point in time, the market looks as if we are going to continue to see a lot of back and forth behavior, with the 1.16 level underneath being a support level right along with that 50 day EMA that sits right there. If we do rally, the 1.18 level should be significant resistance, but really at this point in time, I think we are just hanging around and trying to sort out where to go from a longer term standpoint.

Keep in mind that volume is pretty thin and weak this time of year. And despite the fact that we get some interest rate cuts later this year, the dollar just isn’t rolling over. The core PCE will come out, but probably not matter too much, mainly due to the fact that we seem to know what the Fed’s going to do. I find it interesting that the dollar isn’t falling apart.

USD/JPY Technical Analysis

The US dollar has rallied a bit against the Japanese yen during the early part of the Friday session as well, bouncing from the same area that has offered so much support near the 146.50 yen level. In other words, I don’t think anything’s changed. We are still in consolidation, with the 148 yen level being the beginning of the ceiling as well. And if we can clear 149 yen, this is a market that I think goes much higher over the long term. Interest rate differential still favors the US dollar despite the fact that there will be cuts and the fact that the Japanese suddenly are seeing their interest rates climb, perhaps too aggressively. We may have a situation where the Bank of Japan has to step in and ease things.

AUD/USD Technical Analysis

The Australian dollar has initially tried to rally but has given back those gains as the 0.6550 level offers resistance yet again. If this market drops from here, we could go to the 50-day EMA, possibly as low as 0.64, and quite frankly, that’s what I expect. That doesn’t mean we can’t go higher. It just means that there’s a definite pattern of sideways trading here, and it is probably worth noting that we’ve been drifting ever so slightly lower over time as well during the last month or so. This tells me that if the US dollar strengthens significantly, the Australian dollar is in real trouble.

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