**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Loses Ground Ahead of Key Economic Data**
*By James Hyerczyk, originally published on FXEmpire*
On early Thursday, the US dollar remained under pressure against major currencies such as the euro, Japanese yen, and Australian dollar. This movement follows a series of economic data releases indicating signs of a potential slowdown in the US economy, while expectations continue to grow for eventual interest rate cuts by the Federal Reserve. Here’s a detailed breakdown of the current market trends influencing the EUR/USD, USD/JPY, and AUD/USD currency pairs.
## Key Market Drivers
Several economic and geopolitical factors are currently influencing forex market movements. As we head into Thursday’s session, the following key drivers are shaping sentiment:
– **Weaker-than-expected US Economic Data**: Recent data, including softer inflation figures and signs of job market cooling, have contributed to downward pressure on US Treasury yields and the dollar.
– **Fed Policy Expectations**: Market participants are increasingly pricing in a more cautious Federal Reserve, with hints at potential rate cuts in the coming months.
– **Rising Risk Appetite**: Improved sentiment in global equities and commodity markets has fueled a move toward riskier assets, thereby weakening the US dollar.
– **ECB and RBA Divergences**: Central bank commentary from the European Central Bank (ECB) and Reserve Bank of Australia (RBA) suggests diverging policy stances relative to the Federal Reserve, which is influencing euro and Australian dollar movements.
## EUR/USD Technical Outlook
The EUR/USD pair is showing signs of strengthening as the US dollar weakens ahead of a key inflation reading.
– The euro rose back above the psychologically important 1.0900 level after briefly dipping below it in previous sessions, supported by improving investor sentiment and reduced demand for safe-haven assets like the dollar.
– On the technical side, the pair remains in an upward trend channel that started building after mid-April lows.
– The 50-day and 200-day moving averages have offered support, with the latest bounce suggesting bullish momentum may extend further.
– Resistance is currently eyed at 1.0950 followed by 1.1000, while near-term support lies at 1.0870 and 1.0820.
Momentum indicators such as Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) remain supportive of further gains.
Fundamentally, traders will be focused on:
– The upcoming US Jobless Claims and Consumer Spending data.
– Any commentary from ECB speakers that may indicate the rate outlook moving into the second half of the year.
## USD/JPY Technical Outlook
The USD/JPY pair remains in a consolidation phase with limited directional bias as traders weigh mixed messages from the Fed and the Bank of Japan (BoJ).
– After peaking near 160.00 last week, the pair has moved lower and is currently testing support near the 155.00 level.
– Japan’s Ministry of Finance is suspected of intervening in the currency markets recently to stem yen weakness, which has injected fresh volatility into this pair.
– Technically, the 50-day moving average sits around the 153.50 level and could act as support. A break below this metric may open the door to additional downside pressure.
– On the upside, resistance remains close to 156.50 and 158.00.
Key factors influencing USD/JPY:
– Yields on US Treasuries, which have been edging lower, reducing the yield differential between the US and Japan—a key factor in yen carry trades.
– Intervention threats from Japanese authorities have made traders cautious about aggressively shorting the yen.
– The BoJ remains committed to ultra-loose policy, but rising inflation domestically may force gradual pullback from stimulus in the medium term.
From a sentiment perspective, the pair continues to blend fundamentals with geopolitical tension and central bank divergence. Traders should remain watchful of sudden sharp
Explore this further here: USD/JPY trading.