**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Attempts a Rebound**
_By Christopher Lewis, adapted and expanded for detailed analysis_
As global markets increasingly focus on fluctuations in the US dollar, forex traders are closely watching the major currency pairs—EUR/USD, USD/JPY, and AUD/USD. Recent price action suggests that the greenback is attempting to recover following last week’s weakness, putting key support and resistance levels into sharper focus. This comprehensive analysis covers the technical and fundamental outlook for the three pairs, the broader forex landscape shaping these moves, and potential scenarios for the days ahead.
## US Dollar Fundamentals: What’s Driving Price Action?
Several forces are driving the US dollar’s recent attempts to stage a comeback:
– **Interest Rate Expectations:** Recent commentary by Federal Reserve officials has fueled speculation about the timing and scale of US interest rate cuts. Sticky inflation and a robust labor market support a ‘higher-for-longer’ rate stance, which lends support to the dollar.
– **Global Macro Trends:** Concerns about slowing European growth and uneven data from China have curbed risk appetite. As a result, investors are seeking safety in the dollar, which is still seen as a “safe haven” in uncertain times.
– **Geopolitical Factors:** Ongoing geopolitical tensions in Eastern Europe and the Middle East, as well as US political uncertainty in an election year, are all factors driving demand for the greenback.
These dynamics provide the backdrop for the following technical analysis of the major pairs.
—
## EUR/USD: Consolidates as Dollar Firms Up
The EUR/USD pair has seen a pullback from recent highs as the US dollar shows signs of recovering. After soaring on dovish Fed expectations, the pair now faces significant resistance and is vulnerable to downward pressure.
### Technical Outlook
– **Resistance Zone:** The 1.09 to 1.10 region stands as a formidable ceiling. Sellers are likely to step in if the pair makes a move towards 1.10, which also corresponds to longer-term downtrend lines and prior swing highs from March and April.
– **Support Levels:** Key support can be found near the 1.08 handle, followed by the 1.07 area, which marks the lower bound of the recent consolidation range. A break below 1.07 could open the way for a test of the early May lows near 1.0650.
– **Momentum Indicators:** The Relative Strength Index (RSI) suggests a neutral-to-slightly-overbought condition, with price action showing signs of stalling around resistance.
### Fundamental Factors
– **ECB Policy:** The European Central Bank is also cautiously considering rate cuts due to lagging Eurozone inflation. Slower euro-area growth puts the ECB on track to move sooner than the Fed, which limits euro gains against the dollar.
– **Upcoming Data:** This week’s slate includes US CPI and Eurozone industrial production. Any significant deviation from forecasted numbers could spark volatility
Read more on AUD/USD trading.