**EUR/USD, USD/JPY, and AUD/USD Forecast: US Dollar Gains Momentum**
*Based on and expanded from content by Azeez Mustapha at FX Empire, with additional analysis and supporting data.*
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## Overview
The US Dollar (USD) has recently demonstrated renewed strength against a backdrop of shifting expectations around Federal Reserve policy and lingering global economic uncertainties. Major currency pairs, notably EUR/USD, USD/JPY, and AUD/USD, have experienced notable moves as the greenback finds support from economic fundamentals and investor sentiment. This article analyzes recent trends in these key Forex pairs, highlights underlying economic factors, and considers technical levels for traders to watch over the near term.
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## Key Drivers of US Dollar Strength
Several macroeconomic and policy-oriented factors have contributed to the uptick in dollar momentum:
– **US Economic Data:** Recent releases, such as jobs figures and inflation reports, have supported the case for a robust American economy. Although not uniformly strong, the data has generally come in above expectations, especially compared to the Eurozone and Japan.
– **Central Bank Policy Divergence:** The Federal Reserve has maintained a hawkish stance, while the European Central Bank (ECB) and the Bank of Japan (BoJ) have shown more dovish signals, widening the policy gap and boosting the dollar.
– **Safe-haven Demand:** Ongoing geopolitical tensions and doubts about global recovery have spurred demand for the safety of US assets.
– **Yield Differentials:** Higher yields on US Treasury bonds have made the dollar more attractive versus its major rivals, encouraging capital inflows.
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## EUR/USD Analysis
### Fundamental Backdrop
Eurozone economic data, including weaker-than-expected GDP growth and subdued inflation, has failed to inspire confidence in the EUR. The ECB is expected to pivot toward rate cuts as the year progresses, while the Fed remains cautious about easing too soon. These dynamics have fostered a bearish environment for the EUR/USD pair.
**Recent developments include:**
– Germany, the Eurozone’s largest economy, reported stagnation in key sectors.
– Inflation data continues to lag behind both ECB targets and US inflation, fueling speculation of ECB rate cuts.
– Eurozone composite PMI figures reflect economic sluggishness across member states.
**Federal Reserve signals:**
– Chair Jerome Powell and other officials have indicated a data-dependent approach with little urgency to lower rates.
– Market participants are now pricing in a potential reduction in Fed rate cuts for the remainder of 2024 compared to earlier expectations.
### Technical Outlook
After a brief attempt to reclaim the 1.0800 handle, the EUR/USD pair has reverted to a bearish trajectory. Below are key technical levels for traders to monitor:
– *Immediate Resistance Levels:*
– 1.0780 (recent local high)
– 1.0800 (psychological level and former support-turned-resistance)
– *Near-term Support Levels:*
– 1.0700 (recent low, psychological support)
Read more on AUD/USD trading.