**EUR/USD, USD/JPY, and AUD/USD: U.S. Dollar Shows Early Strength**
*Original author: Christopher Lewis, FXEmpire*
The U.S. dollar is exhibiting notable strength at the start of the week, impacting major currency pairs like EUR/USD, USD/JPY, and AUD/USD. This movement comes amid a mix of global economic factors, central bank policy expectations, and investor sentiment. Below, we analyze the recent price actions, technical levels, and fundamental drivers influencing each of these pairs, drawing on insights from Christopher Lewis (FXEmpire) and incorporating additional market research.
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## Overview: Dollar Strength and Market Environment
The U.S. dollar’s recent rally can be attributed to several key factors:
– Persistent expectations of higher U.S. interest rates as the Federal Reserve maintains its hawkish stance
– Cautious risk sentiment due to mixed global economic data and lingering concerns over growth
– Divergence in monetary policy between the Federal Reserve and other major central banks, including the European Central Bank (ECB) and Bank of Japan (BoJ)
– Safe-haven flows amid geopolitical uncertainties
These factors have led to renewed bullish momentum for the dollar, influencing major forex pairs at the onset of the trading week.
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## EUR/USD Analysis: Testing Support amid U.S. Dollar Pressure
**Technical Outlook**
The EUR/USD pair came under renewed pressure in early Monday trading, sliding closer to key support zones. The currency pair has been stuck in a range, with recent price action showing:
– Resistance between the 1.0850-1.0890 area
– Support around the 1.0700 psychological level and the 1.0675 area, a zone that represents recent swing lows
The 50-day Exponential Moving Average (EMA) is trending above the market, while the 200-day EMA remains positioned further below as longer-term support.
Recent technical signals indicate:
– Repeated inability to break above 1.0850, reflecting a lack of bullish conviction
– Bearish candlestick patterns forming on the 4-hour and daily charts as sellers defend resistance
– Converging moving averages, suggesting consolidation but biasing toward downside risk
**Fundamental Drivers**
The euro’s lackluster performance is explained by several factors:
– Softer Eurozone economic data, with weak PMI figures and subdued inflation trends
– Growing speculation that the ECB may implement rate cuts ahead of the Federal Reserve
– The U.S. dollar’s appeal on the back of stronger economic resilience in the United States
Investors are keeping an eye on upcoming U.S. employment data, which could further bolster the Fed’s hawkish rhetoric and increase downside pressure on the euro if the data beats expectations.
**Key Levels to Watch**
– Resistance: 1.0850 and 1.0890
– Support: 1.0700 and 1.0675
– Below 1.0675, the next significant support is near
Read more on AUD/USD trading.