US DOLLAR FORECAST – USD/JPY, GBP/USD, AUD/USD
- The U.S. dollar extends its advance despite the pullback in U.S. Treasury yields
- Attention will be on the November U.S. employment report later this week
- This article focuses on the technical outlook for USD/JPY, GBP/USD and AUD/USD, taking into account recent price action as well as prevailing market sentiment
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The U.S. dollar, as measured by the DXY index, was a tad firmer on Tuesday, up about 0.3% to 103.95, despite the pullback in U.S. Treasury yields following disappointing JOLTS data, which revealed a much lower number of job openings in October than anticipated.
While bulls may be encouraged by the greenback’s rebound since late November, the move may be driven by technical factors rather than changing underlying dynamics; after all, fundamentals have deteriorated somewhat of late, with the U.S. economy showing more signs of slowing down materially this quarter.
We’ll get more clues about the broader outlook and health of the economy on Friday when the U.S. Bureau of Labor Statistics releases its latest nonfarm payrolls report. In terms of estimates, U.S. employers are forecast to have added 170,000 jobs last month, after hiring 150,000 workers in October.
Weak employment growth is likely to increase rate-cut bets, paving the way for the U.S. dollar to resume its downward correction. Conversely, strong job creation may have the opposite effect on markets, prompting traders to unwind excessive monetary easing wagers. This could reinforce the U.S. currency’s recovery.
In this article, we’ll focus on the technical outlook for USD/JPY, GBP/USD and AUD/USD, analyzing critical price levels that could come into play in the coming trading sessions.
Explore the impact of crowd mentality on FX trading dynamics. Download our sentiment guide to understand how market positioning can offer clues about USD/JPY’s trajectory.
| Change in | Longs | Shorts | OI |
| Daily | -3% | 2% | 0% |
| Weekly | 6% | -9% | -6% |
USD/JPY TECHNICAL ANALYSIS
USD/JPY sank and closed below its 100-day moving average last Friday. However, the downward momentum faded this week when prices were unable to breach the lower limit of a rising channel in play since March. Rejection of support sparked a modest rebound, with the exchange rate consolidating above the 147.00 handle over the past two days.
If gains accelerate in the coming trading sessions, resistance can be spotted in the 147.15/147.00 range. Successfully piloting above this technical barrier can open the door for a rally towards 149.70. On continued strength, the focus shifts to the psychological 152.00 region.
On the other hand, if sellers return and trigger a bearish reversal, the first floor to monitor extends from 146.30 to 146.00, but further losses may be in store on a push below this area, with the next downside target situated at 144.50, followed by 144.00.
USD/JPY TECHNICAL CHART
USD/JPY Chart Created Using TradingView
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GBP/USD TECHNICAL ANALYSIS
GBP/USD fell on Tuesday, extending its drop for a second consecutive day after failing to clear a key ceiling near 1.2720, which corresponds to the 61.8% Fibonacci retracement of the July/October slump. Should losses deepen this week, it is important to watch how prices behave around the 1.2590-1.2570 support zone, bearing in mind that a breakdown could expose the 200-day simple moving average.
Conversely, if cable manages to rebound from current levels, technical resistance is positioned at 1.2720. Cementing the underlying bullish outlook requires the pair to take out this hurdle on daily closing prices, with a decisive breakout likely to draw fresh buyers into the market and foster conditions conducive to a rally above 1.2800.
GBP/USD TECHNICAL CHART
GBP/USD Chart Created Using TradingView
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AUD/USD TECHNICAL ANALYSIS
AUD/USD extended its pullback on Tuesday, falling for the second straight day and slipping below its 200-day SMA, a bearish technical signal. If the pair is unable to reclaim this moving average over the course of the next few trading sessions, sentiment could deteriorate sharply, setting the stage for a drop towards 0.6525. On further weakness, attention transitions to 0.6460.
On the flip side, if the bulls regain the upper hand and propel the exchange rate above its 200-day simple moving average, upward impetus could pick up steam, paving the way for a possible retest of trendline resistance near 0.6665. Pushing past this technical barrier will be difficult, yet a breakout could signal a potential move towards the 0.6800 handle.
AUD/USD TECHNICAL CHART
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Boosting USD/JPY and Plunging AUD/USD: The Latest on GBP/USD’s Downward Spiral
If you’re a forex trader, or even just someone interested in the global economy, you may have noticed some significant fluctuations in major currency pairs recently. In particular, the Japanese yen and Australian dollar have been making headlines for their opposite trajectories, with the USD/JPY pair going up and AUD/USD going down. But what does this all mean and how is the British pound (GBP/USD) involved? Let’s explore the latest market movements and potential impacts.
The USD/JPY pair has been on a steady rise in recent weeks, reaching its highest levels in over a year. This is largely due to strong economic data from the United States, including positive GDP growth and an impressive jobs report. These factors have boosted the value of the US dollar, making it more attractive to investors. On the other hand, the Japanese yen has been struggling with economic uncertainty and a struggling economy, leading to its decline in value.
So why is the GBP/USD on a downward spiral? Well, the British pound has been under pressure for a while now due to a combination of factors. Firstly, there is the ongoing Brexit saga, which has caused a great deal of uncertainty and volatility in the UK economy. As the deadline for the UK to leave the EU approaches, the pound has been subjected to significant volatility, often dropping in value as negotiations and talks unfold. Additionally, the UK economy has been struggling, with weak inflation and sluggish growth, further contributing to the pound’s poor performance.
But why is the Japanese yen rallying while the Australian dollar is plunging? It all comes down to contrasting monetary policies. The Japanese yen is considered a safe haven currency, meaning that during times of economic uncertainty or turmoil, investors tend to flock to it for stability. With the global economy facing various challenges such as the US-China trade war and Brexit, the Japanese yen has gained in popularity, boosting its value. On the other hand, the Australian dollar, which relies heavily on exports, has been affected by the trade tensions between the US and China. As Australia’s major trading partner, any negative impact on China’s economy has a ripple effect on Australia’s, putting downward pressure on the AUD.
So, what can traders expect in the coming weeks and months? It’s always difficult to make accurate predictions in the forex market, but there are some key factors to keep an eye on. For the USD/JPY, the upward trend may continue if the US economy maintains its strength and the trade tensions between the US and China ease. However, if the global economy continues to show signs of slowing down, we may see investors turning to the Japanese yen as a safe haven, pushing the pair even higher.
For the GBP/USD, much of its future movement will depend on the outcome of Brexit. If a deal is reached and the UK leaves the EU smoothly, we may see a resurgence in the pound’s value. However, if the situation continues to drag on or if the UK leaves without a deal, the pound may continue on its downward spiral. Additionally, any changes in the monetary policy of either the US or Japan can also impact the GBP/USD, as these are two major players in the forex market.
In conclusion, the recent trends in the USD/JPY and AUD/USD pairs have been largely driven by economic data and global events. The strong performance of the US economy and global economic uncertainty have boosted the USD/JPY pair, while the weaker economic outlook in Australia has caused a decline in the AUD/USD. The GBP/USD has been caught in the middle, facing its own challenges and uncertainties. As with any trading, it’s essential to closely monitor the market and stay informed to make well-informed decisions. Traders should also be prepared for potential fluctuations and have strategies in place to mitigate risk. Happy trading!
