US DOLLAR FORECAST – USD/JPY, GBP/USD, AUD/USD
- The U.S. dollar extends its advance despite the pullback in U.S. Treasury yields
- Attention will be on the November U.S. employment report later this week
- This article focuses on the technical outlook for USD/JPY, GBP/USD and AUD/USD, taking into account recent price action as well as prevailing market sentiment
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The U.S. dollar, as measured by the DXY index, was a tad firmer on Tuesday, up about 0.3% to 103.95, despite the pullback in U.S. Treasury yields following disappointing JOLTS data, which revealed a much lower number of job openings in October than anticipated.
While bulls may be encouraged by the greenback’s rebound since late November, the move may be driven by technical factors rather than changing underlying dynamics; after all, fundamentals have deteriorated somewhat of late, with the U.S. economy showing more signs of slowing down materially this quarter.
We’ll get more clues about the broader outlook and health of the economy on Friday when the U.S. Bureau of Labor Statistics releases its latest nonfarm payrolls report. In terms of estimates, U.S. employers are forecast to have added 170,000 jobs last month, after hiring 150,000 workers in October.
Weak employment growth is likely to increase rate-cut bets, paving the way for the U.S. dollar to resume its downward correction. Conversely, strong job creation may have the opposite effect on markets, prompting traders to unwind excessive monetary easing wagers. This could reinforce the U.S. currency’s recovery.
In this article, we’ll focus on the technical outlook for USD/JPY, GBP/USD and AUD/USD, analyzing critical price levels that could come into play in the coming trading sessions.
Explore the impact of crowd mentality on FX trading dynamics. Download our sentiment guide to understand how market positioning can offer clues about USD/JPY’s trajectory.
| Change in | Longs | Shorts | OI |
| Daily | -3% | 2% | 0% |
| Weekly | 6% | -9% | -6% |
USD/JPY TECHNICAL ANALYSIS
USD/JPY sank and closed below its 100-day moving average last Friday. However, the downward momentum faded this week when prices were unable to breach the lower limit of a rising channel in play since March. Rejection of support sparked a modest rebound, with the exchange rate consolidating above the 147.00 handle over the past two days.
If gains accelerate in the coming trading sessions, resistance can be spotted in the 147.15/147.00 range. Successfully piloting above this technical barrier can open the door for a rally towards 149.70. On continued strength, the focus shifts to the psychological 152.00 region.
On the other hand, if sellers return and trigger a bearish reversal, the first floor to monitor extends from 146.30 to 146.00, but further losses may be in store on a push below this area, with the next downside target situated at 144.50, followed by 144.00.
USD/JPY TECHNICAL CHART
USD/JPY Chart Created Using TradingView
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GBP/USD TECHNICAL ANALYSIS
GBP/USD fell on Tuesday, extending its drop for a second consecutive day after failing to clear a key ceiling near 1.2720, which corresponds to the 61.8% Fibonacci retracement of the July/October slump. Should losses deepen this week, it is important to watch how prices behave around the 1.2590-1.2570 support zone, bearing in mind that a breakdown could expose the 200-day simple moving average.
Conversely, if cable manages to rebound from current levels, technical resistance is positioned at 1.2720. Cementing the underlying bullish outlook requires the pair to take out this hurdle on daily closing prices, with a decisive breakout likely to draw fresh buyers into the market and foster conditions conducive to a rally above 1.2800.
GBP/USD TECHNICAL CHART
GBP/USD Chart Created Using TradingView
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AUD/USD TECHNICAL ANALYSIS
AUD/USD extended its pullback on Tuesday, falling for the second straight day and slipping below its 200-day SMA, a bearish technical signal. If the pair is unable to reclaim this moving average over the course of the next few trading sessions, sentiment could deteriorate sharply, setting the stage for a drop towards 0.6525. On further weakness, attention transitions to 0.6460.
On the flip side, if the bulls regain the upper hand and propel the exchange rate above its 200-day simple moving average, upward impetus could pick up steam, paving the way for a possible retest of trendline resistance near 0.6665. Pushing past this technical barrier will be difficult, yet a breakout could signal a potential move towards the 0.6800 handle.