US dollar forecast – EUR/USD, USD/JPY, GBP/USD, AUD/USD
- of USDThe bearish correction may have room to advance further in the coming days and weeks.
- Lower US Treasury yields will be a headwind for the US currency
- In this article: euro/usd, USD/JPY, GBP/USD and Australian dollar/US dollaranalyzes the dynamics of price movements and important levels that FX traders should pay attention to.
Most read: USD outlook unstable as yield tank – EUR/USD, GBP/USD, AUD/USD settings
The US dollar, as measured by the DXY index, depreciated by nearly 2.75% in November. Losses have gathered momentum and accelerated over the past few sessions after lower-than-expected U.S. inflation and disappointing initial jobless claims numbers, pushing the broader U.S. dollar lower than in early September. pushed up to its lowest level.
Weaker price pressures and a slowing labor market have all but eliminated the possibility of further FOMC tightening, weakening the argument for keeping interest rates high for the long term. Against this backdrop, U.S. Treasury yields have fallen significantly this month, with the 10-year Treasury yield trading at around 4.45%, compared to 4.95% at the end of October.
The downward trend in bond yields is unlikely to end anytime soon. With the effects of past Fed rate hikes continuing to spill over into the real economy and oil prices at multi-month lows, business activity is expected to further cool, and inflation will fall faster than expected, putting pressure on the U.S. Treasury curve. It seems like it will take a while. This, in turn, should weigh on the US currency going forward.
Future information would need to confirm weaker growth and further inflation on the way to give us more confidence in the bearish outlook for the US dollar. There are no major announcements next week, but durable goods data for October could garner some attention. A weak number would be problematic for the USD, while a strong result would have the opposite effect.
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EUR/USD Forecast – Technical Analysis
EUR/USD rose towards the end of the week, clearing resistance around the 1.0900 handle. If this breakout holds in the coming trading sessions, the price is likely to move higher and set the stage for the 61.8% Fibonacci retracement of the July-October downward correction at 1.0960. If it is even stronger, the focus will shift to the 1.1070 area.
On the other hand, if market control shifts to the sellers and the pair turns down, support levels will appear at 1.0900, then 1.0840, and then 1.0765. A clear breach of these technical thresholds could accelerate the bearish momentum and set the stage for a fall towards 1.0650. If the weakness continues, the risk of revisiting trendline support at 1.0575 will increase.
EUR/USD technical chart
EUR/USD chart created using TradingView
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|
change |
long |
shorts |
OI |
| every day | 15% | -8% | -Four% |
| weekly | 18% | -18% | -13% |
Technical analysis of USD/JPY
USD/JPY sold off on Friday and fell towards the 50-day simple moving average, currently sitting just above the 149.00 mark. If the price moves below this technically important area in the coming days, losses could accelerate and open the door to a pullback to 147.25. Below this floor, the next potential support lies at the 100-day simple moving average.
On the other hand, if USD/JPY resumes its rise, overhead resistance is located at 150.90, followed by 152.00. If this ceiling is threatened, Japan could intervene to support the yen. However, absent currency intervention, the price could breakout and rise towards 152.65. Further gains could push it towards the upper end of the medium-term ascending channel at 153.50.
USD/JPY technical chart
USD/JPY chart created using TradingView
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GBP/USD Forecast – Technical Analysis
GBP/USD rose on Friday, breaking above the 200-day simple moving average and the Fibonacci resistance at 1.2461. If cable manages to move higher next week, the 100-day SMA will act as a first line of defense against further progress. However, above this ceiling, the price could rise towards 1.2590. This represents a 50% financial retracement of the July and October declines.
On the contrary, if the sellers regain the upper hand in the forex market and decisively push the exchange rate below the 200-day SMA, the currency pair could inch towards the 1.2320 mark. GBP/USD may bottom in this region before attempting a reversal. However, a breakdown scenario could cause the price to move towards the 50-day SMA and 1.2200 thereafter.
GBP/USD technical chart
GBP/USD chart created using TradingView
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AUD/USD Forecast – Technical Analysis
After a subdued performance on Thursday, AUD/USD rallied into the weekend, breaking above the 100-day simple moving average and pushing towards the overhead resistance near 0.6525. With bullish momentum on its side and sentiment on the mend, the pair could break out on the upside in the coming trading sessions and set itself up for a possible rally towards the 0.6600 handle.
If the sellers return and the price falls below the 100-SMA, we could see a retracement towards 0.6460. For the bulls, it is most important to protect this floor well. Failure to do so could lead to renewed downward pressure and a fall towards 0.6395. If it weakens further, a retest of the 0.6350 area could become a reality.
