EUR/USD, USD/JPY and GBP/USD Forecast – US Dollar Flattens Out on Monday

EUR/USD Technical Analysis

The US dollar was pretty quiet on Monday as a holiday in America dampened some volume. The Euro has gone back and forth during the course of the early hours here on Monday as we continue to hang around the 1.1850 level. This is an area that I think is very important to pay close attention to as we had broken out, we came back to somewhat test the overall potential support based on the previous resistance.

As a result, one would expect a bounce from here, but we don’t really have it yet. What I do find interesting is there’s almost no US data, at least not until we get to the end of Wednesday, that’s the FOMC meeting minutes. And then you get the weekly unemployment claims on Thursday and PMI on Friday.

So, this could be a situation where we’re waiting for PMI out of the United States and Europe, and it could keep this fairly quiet. All things being equal, I think this is still a very neutral pair with more of a slightly upward bias, but if we were to break down below the 50-day EMA, which is tucked just below the 1.18 level, I think that changes a lot, and we probably see the dollar strengthen everywhere.

USD/JPY Technical Analysis

Speaking of a strengthening dollar, this is a pair I’m watching very closely. As you know, for quite some time I’ve been bullish on Dollar/Yen. I understand things have changed recently, but the question is, have they really? At this point, a break above 154 Yen could open up a nice buying opportunity with the support being at the 200-day EMA.

That being said, keep in mind that Asian trading is going to be missing China all week for the Spring Festival, so it’ll be interesting to see how this plays out. Now on Monday, we have the President’s Day holiday in the United States, so as I record this, I’m not expecting much over the next several hours. In fact, it could be Europe that decides whether or not we break higher.

GBP/USD Technical Analysis

The British pound is choppy again, but it’s almost like a flagging pattern. My take on this is that we are in this consolidation range again between 1.35 and 1.3750, and as we’re at 1.3646, we’re basically in the middle. I think we’re just waiting on some information here. We do have retail sales coming out of Britain on Friday, as well as PMI. We also have CPI on Wednesday coming out of England, and the claimant count changes on Tuesday.

So there is plenty of data to get this going and that’s why I brought this one up. Watch those numbers because that could be the beginning of something that determines the next directional move. As things stand right now, you have to assume that it’s range-bound trading just waiting to happen.