**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Shows Early Strength (Based on James Hyerczyk’s Analysis at FXEmpire, Enhanced with Additional Market Insights)**
The US dollar kicked off the week on a strong note, reinforcing the ongoing narrative around global currency markets. With shifting expectations around the US Federal Reserve’s monetary policy, and significant economic data on the horizon, major currency pairs such as EUR/USD, USD/JPY, and AUD/USD are displaying volatility and directional movement favored by dollar bulls. In this analysis, we delve into these pairs, summarizing and expanding upon James Hyerczyk’s report for FXEmpire and including pertinent insights from broader financial commentary.
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**Market Overview**
– The US dollar continued its upward trajectory in Monday’s early trading sessions, buoyed by firm treasury yields and relatively hawkish tone from Federal Reserve officials.
– Investors are closely monitoring upcoming US economic reports, notably inflation figures and labor market data, aiming to glean clues regarding the Fed’s interest rate path.
– Rising tension in global markets—especially with the ongoing conflict in Ukraine and uncertainty in Asian trade—also buttresses demand for the greenback, given its status as a safe-haven asset.
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**EUR/USD: Pressured by Diverging Monetary Policies**
– The euro came under pressure versus the dollar, reflecting the contrasting outlooks between the European Central Bank (ECB) and the US Federal Reserve.
– As Hyerczyk notes, persistent concerns over the Eurozone’s economic recovery and inflation dynamics have limited the euro’s ability to rally.
– The ECB has recently signaled a data-dependent approach to monetary policy, while investors are increasingly of the view that the Fed will maintain higher rates for longer, particularly as US inflation readings have surprised to the upside.
**Technical Analysis:**
– The EUR/USD pair failed to sustain gains above the 1.0850 resistance, quickly retracing and re-testing lower support levels.
– Sellers remain in control, with the pair hovering near the 1.0800 psychological mark.
– Technical indicators on the daily chart show bearish momentum, with the 50-day and 200-day moving averages capping the upside.
– Key support is seen around 1.0780 and further at 1.0750, while resistance remains at 1.0850 and 1.0900.
**Fundamental Drivers:**
– Eurozone economic indicators, such as weak industrial production and tepid core inflation, have put downward pressure on the currency.
– In contrast, US data has generally surprised to the upside, leading investors to bet on a more aggressive Fed stance.
– A recent uptick in US bond yields, particularly the 10-year note, underpins the dollar’s strength versus the euro.
**Upcoming Catalysts:**
– The publication of the US Consumer Price Index (CPI) and Producer Price Index (PPI) figures will be crucial in setting the near-term direction for the EUR/USD pair.
– Any upside
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