USD/JPY, AUD/USD and NZD/USD Forecasts – US Dollar Continues to Control FX Markets

USD/JPY Technical Analysis

The US dollar pulled back just a touch during the trading session on Friday against the Japanese yen in what is rapidly becoming one of the more interesting currency pairs in the world to trade. Quite frankly, we have a situation where traders are looking to get involved, but it’s also worth noting that we are doing a major breakout at the moment that goes all the way back to the 1980s.

At this juncture, the only thing that’s going to keep this pair from going higher is going to be the Bank of Japan, and that will only be temporary. The interest rate differential continues to favor the US dollar, and we need to be careful, but we also need to recognize that with the Federal Reserve likely to raise rates later this year, this is only going to get more obvious.

AUD/USD Technical Analysis

The Australian dollar initially fell during the trading session, but it is trying to turn things around and stay within the consolidation area that we had been in. This does make a certain amount of sense because, of course, heading into a 3-day weekend in the United States, there wasn’t as much liquidity. Ultimately, I think we’re just hanging around between the 0.70 level and the 0.7075 level. Probably more downward pressure than up in the short term, but you’re going to be hard-pressed to do anything more than a short-term scalp in either direction.

NZD/USD Technical Analysis

The New Zealand dollar fell early in the session, but as we head into the New York session, which will be very thin, we are seeing some profit-taking. The 0.57 level underneath should be support. If we were to break down below there, that could send the New Zealand dollar down to the 0.56 level. A rally from here is opening up a potential move to 0.58, where I think you run into a lot of trouble. I do prefer the US dollar over the New Zealand dollar, but we are a little extended to the downside.

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