**EUR/USD, USD/JPY, and AUD/USD Forecast: U.S. Dollar Weakens Ahead of Economic Data**
*Based on an article by David Becker, FXEmpire*
On Thursday morning, the U.S. dollar faced downward pressure as market sentiment shifted in anticipation of upcoming economic data reports. The dollar suffered mild losses against key currencies such as the euro, Japanese yen, and Australian dollar. Traders and investors exhibited a cautious stance ahead of pivotal data releases, including jobless claims and the Producer Price Index (PPI), which could influence the Federal Reserve’s monetary policy path.
This article delves into the recent movement in major currency pairs: EUR/USD, USD/JPY, and AUD/USD, with an emphasis on the underlying market sentiment and technical patterns that guide short-term forecasts. Although the dollar has enjoyed a sturdy performance in recent weeks, the current backdrop puts pressure on the greenback in the near term.
## Market Drivers Influencing the U.S. Dollar
Several economic and geopolitical factors contributed to the dollar’s slide early Thursday:
– **Anticipation of U.S. Economic Data**: Market participants are closely monitoring today’s jobless claims and PPI numbers. These figures are key indicators of labor market strength and inflation pressure. A softer-than-expected outcome could reduce the likelihood of continued monetary tightening by the Federal Reserve.
– **Federal Reserve Policy Outlook**: Although the Fed has adopted a data-dependent approach for future rate decisions, recent speeches by Fed officials have suggested a willingness to keep rates high until inflation convincingly moves toward the 2 percent target.
– **Global Risk Appetite**: A slight improvement in risk sentiment globally contributed to the USD’s underperformance. Investors moved towards riskier assets, including higher-yielding currencies like the Australian dollar.
## EUR/USD Analysis: Euro Gains Ground Against the Dollar
The EUR/USD pair advanced modestly on early Thursday, buoyed by a combination of dollar weakness and mild optimism surrounding the eurozone outlook.
– **Latest Movement**: The euro pushed towards resistance levels, recovering after recent losses incurred due to concerns over the economic performance of major eurozone economies, particularly Germany.
– **Economic Indicators**: While Germany’s industrial production data showed some improvement, inflation in parts of the euro area remains subdued. However, expectations that the European Central Bank (ECB) might pause rate hikes or adopt a softer stance have already been mostly priced in.
– **Upcoming Risks**: The release of U.S. PPI and other high-impact economic data could spur volatility. Any indication of weakening inflation pressure in the U.S. could provide more upside for the euro.
### Technical Outlook for EUR/USD
Near-term price action suggests a cautious bullish outlook. The euro’s rise is contingent upon breaching technical resistance levels:
– **Support Levels**: Immediate support stands at 1.0710, with further downside support at 1.0675.
– **Resistance Levels**: The currency faces resistance near 1.0790. A sustained break above this level could open the way to 1.0835.
– **Momentum Indicators**: The Relative Strength Index (RSI) hovers near neutral territory, indicating room for further upside if bullish momentum accelerates.
## USD/JPY Analysis: Yen Strengthens Amid Dollar Weakness
The Japanese yen gained some ground against the U.S. dollar, as USD/JPY retreated from recent highs. The move came largely due to softening demand for the dollar rather than fundamental strength in the yen.
– **Latest Movement**: The yen took advantage of the U.S. dollar’s pullback, testing support levels not seen in the past few sessions.
– **Bank of Japan (BoJ) Positioning**: Despite the yen’s rebound, traders remain cautious regarding the BoJ’s policy stance. The BoJ remains committed to ultra-loose monetary policy, in contrast to other central banks that have raised rates repeatedly in response to inflation.
– **Yield Differential
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