USD/JPY, GBP/USD and AUD/USD Forecasts – US Dollar Slightly Soft in Early Trading

USD/JPY Technical Analysis

The US dollar tried to rally against the Japanese yen but continues to struggle a bit. There is a fundamental backdrop of a widening interest rate differential as the Federal Reserve is continuing to see a need to hold its rates a little higher, but at the same time the Bank of Japan is showing extreme caution.

The 160-yen level is by far the most important level, I think, on the chart. If we can break above there, we then jump above the verbal intervention level and then we start to threaten the highs that go all the way back to 1990. I think eventually that could happen, but a little bit of a short-term pullback looks to be on the cards at the moment, with the 158-yen level being a potential area of support.

GBP/USD Technical Analysis

The British pound has initially pulled back during trading on Tuesday, but you can see that there is plenty of support near the 1.3250 level. The 200-day EMA above offers a little bit of resistance, so keep that in mind, but it is starting to show a little bit of resiliency due to the market expecting a hawkish hold from the Bank of England on Thursday as they have sticky wage growth and energy-led inflation. This changed the overall outlook when oil started to jump, so perhaps Sterling stays in the range it’s been for the last couple of weeks.

AUD/USD Technical Analysis

The Australian dollar, of course, is looking stronger. They raised rates to 4.10%. The move was in response to very hot inflation and rising energy costs, catching some of the market off guard, but I had expected this to happen.

I think the 0.7150 level is the most important level right now. I consider this a slightly bullish consolidation phase, meaning that short-term pullbacks more likely than not should offer support as long as we can stay above the crucial 0.6950 level.