**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Exhibits Modest Weakness**
*Original analysis by Christopher Lewis, adapted and expanded with acknowledgment to FXEmpire.com.*
In the latest trading sessions, the US Dollar demonstrated slight softening across several major currency pairs, influenced by mixed economic data and market expectations about potential monetary policy shifts. Currencies such as the Euro, the Japanese Yen, and the Australian Dollar showed modest gains against the greenback, creating short-term fluctuations and potential trend signals for Forex traders.
This report examines the recent performance and future outlook of the EUR/USD, USD/JPY, and AUD/USD pairs, analyzing technical patterns, macroeconomic drivers, and investor sentiment, based on the forecast originally published by Christopher Lewis on FXEmpire.
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### EUR/USD: Euro Gains Slightly as Dollar Pulls Back
The EUR/USD pair saw mild upward movement during the recent trading period, fueled by continued speculation that the Federal Reserve may be nearing the end of its rate-hiking cycle. Meanwhile, the European Central Bank (ECB) maintains a cautious but firm stance on inflation, supporting the euro against the dollar.
**Key Highlights:**
– The EUR/USD currency pair traded near the 1.0880 level in the last session, maintaining its gradual push higher.
– The US Dollar’s retreat was partly driven by slightly disappointing economic data, particularly surrounding jobless claims and manufacturing sector softness.
– With the ECB focused on addressing persistent inflation within the eurozone, there’s growing belief that interest rates may remain elevated longer in Europe, which underpins euro strength.
**Technical Outlook:**
– The pair is testing resistance near the 1.0900 level, which previously acted as both support and resistance.
– A move above 1.0900 may open a path toward the next resistance area at 1.1000, aligning with the upper bound of the recent consolidation range.
– Support rests near 1.0800, and a break below this zone could lead to a re-test of the 1.0700 area.
**Macro Factors to Watch:**
– Eurozone inflation readings and GDP figures will be key for ECB rate expectations.
– US data on job creation and inflation could steer Federal Reserve policy guidance.
– Divergence between the ECB and Fed monetary paths could favor further EUR/USD upside in the medium term.
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### USD/JPY: Yen Attempts Recovery Amid Dollar Softness
The USD/JPY pair retreated slightly from recent highs, reflecting a modest pullback in the Dollar Index and a tentative rebound in the Yen. Japanese authorities continue to monitor the yen’s depreciation closely, with increasing market chatter about potential intervention if weakness persists.
**Key Highlights:**
– USD/JPY slipped below the 157.00 mark after testing multi-decade highs near 160.00 in recent weeks.
– The pullback corresponds with declining US Treasury yields, reducing the appeal of dollar-denominated assets relative to the low-yielding Yen.
– Bank of Japan (BoJ) policy adjustments, while gradual, indicate an evolving stance that could support the Japanese currency if inflation expectations firm.
**Technical Picture:**
– Support is likely found near 156.00, an area that previously provided buying interest.
– Should the pair resume its climb, 158.50 and 160.00 remain significant resistance zones.
– Momentum indicators such as RSI (Relative Strength Index) have drifted lower, suggesting cooling bullish pressure for the time being.
**Fundamental Considerations:**
– Japan’s inflation trajectory and Bank of Japan commentary will be critical for the Yen.
– US interest rate expectations continue to be the dominant driver, impacting yield differentials central to USD/JPY dynamics.
– Potential intervention from Japanese financial authorities remains a wildcard. Verbal warnings have increased, indicating official discomfort with yen weakness.
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### AUD/USD: Australian Dollar Pushes Higher on Commodity Optimism
The Australian Dollar gained ground against the US Dollar, with the AUD/USD pair
Explore this further here: USD/JPY trading.