**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Shows Early Strength on Friday**
*Based on the analysis by Christopher Lewis on FXEmpire, with expanded context from additional forex market commentary.*
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### Introduction
In early Friday trading, the US dollar displayed renewed strength across key currency pairs including EUR/USD, USD/JPY, and AUD/USD. After a week marked by volatility and mixed data signals, the greenback managed to assert its presence once again. Traders are closely monitoring not only technical levels but also major economic catalysts expected in the days ahead.
This article analyzes the current state and outlook of the US dollar against the euro, Japanese yen, and Australian dollar, drawing heavily from Christopher Lewis’s analysis on FXEmpire and supplementing with additional insights to provide a more comprehensive view of the forex landscape heading into the weekend.
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### The US Dollar Index: Underlying Support
Before delving into specific pairs, it is important to consider the US Dollar Index (DXY), often used as a broad measure of the dollar’s strength against a basket of major currencies. Recently, dollar momentum found support from:
– Federal Reserve signals suggesting higher for longer interest rates
– Persistently robust US economic data, especially in labor markets and ISM surveys
– Rising Treasury yields, which attract foreign investments
– Ongoing risk aversion due to geopolitical uncertainties
The dollar’s rally earlier in the week had been interrupted by profit taking and less hawkish Fed statements, but the underlying foundation, particularly in comparison to its major counterparts, remains solid.
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### EUR/USD: Euro Struggles with Overhead Resistance
The EUR/USD pair continued its struggle just below major resistance levels in early Friday trading. Despite last week’s minor gains, the euro failed to find momentum to break higher, as sentiment remains tempered by diverging economic paths.
#### Factors Affecting EUR/USD
– **Interest Rate Expectations**: The European Central Bank (ECB) is widely perceived as more dovish than the Fed, with recent weak Eurozone economic data reducing likelihood of imminent rate hikes.
– **German Economy**: As the largest Eurozone economy, recent contraction in German GDP and softening business sentiment weighed on the euro.
– **Technical Resistance**: The 1.0850–1.0900 zone acted as a significant barrier, with repeated failures to maintain bullish momentum above this range.
#### Technical Analysis
– **Key Levels**:
– Support near 1.0800 and 1.0750
– Resistance at 1.0900 and 1.1000
– **Candlestick Patterns**: The daily chart showed a series of upper wicks, indicating sellers are active on rallies.
– **Moving Averages**: EUR/USD trades below its 50-day moving average, highlighting bearish trend potential.
#### Market Sentiment
Traders appear cautious, with demand for the euro limited amid ongoing uncertainty regarding ECB policy direction. A break below 1.080
Read more on AUD/USD trading.