The US dollar has rallied slightly in the early part of the trading session on Wednesday, as we continue to see the USD jump against the Japanese yen. The question now is whether or not the Bank of Japan is going to intervene, as we are getting close to those levels they defended previously. This is essentially a swing high that dates back to the 1990 trading year, when we started seeing the dollar really fall.

30+ Year Rounding Bottom

We have formed a massive rounding bottom that goes back to that time period. At this juncture, if we were to break out to the upside, you could be talking about a move all the way back to the 225 yen level. That, for me, would be an ultra-long-term prediction, assuming that it even could come true. However, in the short term, I would anticipate that there will probably be a lot of questions asked about this general vicinity. This is an area that could determine what happens for the next several years if history tells us anything.

Most of the time, central bank intervention only temporarily slows down what the market wants. If we do pull back from here, the 160 yen level should be an area that could offer support; after that, we would look at the 50-day EMA, which is presiding right around the 159 yen level. If the Bank of Japan does choose to intervene, I think that’s great—it means a day or two later, I can start buying the dollar again and collecting swap (the interest rate differential) at the end of each trading session. I really don’t see how this pair doesn’t break out eventually. It might be noisy and choppy, but don’t sleep on this market.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

EUR/USD Analysis Summary Today

EUR/USD Trading Signals:

• Buy scenario: From the support level of 1.1490 with a target of 1.1620 and a stop-loss at 1.1400

• Sell scenario: From the resistance level of 1.1680 with a target of 1.1480 and a stop-loss at 1.1750

Technical Analysis of EUR/USD Today

Investors are now focused on the European Central Bank’s decision today, Thursday, which could represent the next major test for the EUR/USD pair’s performance after the recent strong US jobs and inflation figures significantly impacted market expectations regarding the Federal Reserve’s future policies.

Across the best trading platforms, the Euro price fell against the US Dollar to the 1.1499 support level at the beginning of the trading week, before relatively recovering to 1.1575 yesterday. The pair failed to gain enough positive momentum to continue its rebound, as US inflation figures ultimately supported sellers in maintaining control over the trend.

What is expected from the ECB decisions today?

According to currency market trading, the single European currency has shown some nervousness ahead of the crucial ECB decision this Thursday. While the bank is expected to raise interest rates by 25 basis points, the Euro’s weakness suggests markets are cautious that the central bank might adopt a dovish tone.

Ultimately, with a rate hike already anticipated, the tone and forward guidance regarding the probability of future hikes are what will determine the financial market’s reaction.

In general, money markets indicate that investors are prepared for at least one more rate hike in the coming months—specifically, pricing in an approximate 65% probability of additional tightening, equivalent to one and a half standard hikes.

Therefore, the European Central Bank (ECB) must confirm this expectation to maintain the euro’s stability. Given the euro’s decline prior to this event, we anticipate a “buy-on-this-expectation” reaction will be beneficial for the euro if the ECB clarifies that it sees a need to raise interest rates again.

Technical Outlook for EUR/USD Today:

According to performance on the daily timeframe, the overall trend for the EUR/USD pair remains firmly bearish, and stabilizing around and below the 1.1500 psychological support reinforces the sellers’ dominance. Technical indicators still have room to head toward lower support levels before reaching oversold conditions.

The Relative Strength Index (RSI) is moving near the 40 level, reflecting the continuation of negative momentum without having reached oversold territory yet. The MACD indicator shows a bearish bias, and the 100-day Simple Moving Average (SMA) remains below the 200-day SMA.

Conversely, an upside reversal scenario would only begin to take shape if the EUR/USD price rises to break above the 1.1700 resistance barrier once again.

The EUR/USD pair will be influenced today by the European Central Bank’s policy announcement and the release of key US economic data, including the Producer Price Index and weekly jobless claims.

Trading Advice:

EUR/USD price will remain within tight ranges until the market reacts to these high-impact, critical data releases and events, keeping in mind that selling pressures persist.

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Despite the weakness in the pair’s trading, its repeated stability above the additional support level at 213.50, combined with the Stochastics’ attempt to provide positive momentum, has led to the formation of some bullish waves, helping the pair maintain its position around 214.80.

We reiterate the importance of a breakout above the resistance level at 215.50, as this would allow the pair to form strong upward waves. In that case, the price is expected to be attracted initially toward 216.10 and then 216.65.

The expected trading range for today is between 214 and 216

Trend forecast: Bullish

– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: US Dollar Fails to Rally as US CPI Matches Expectations

The Pound US Dollar (GBP/USD) exchange rate advanced on Wednesday, even after the latest US inflation figures showed price pressures continued to build.

At the time of writing, GBP/USD was trading near $1.3401, up approximately 0.2% from the start of the session.

The US Dollar (USD) struggled to attract meaningful support on Wednesday as investors assessed the latest US consumer inflation data.

Figures released by the Bureau of Labor Statistics showed headline inflation accelerated from 3.8% to 4.2% in May, reaching its highest level in over three years. Meanwhile, core inflation edged up from 2.8% to 2.9%.

While the data reinforced expectations that the Federal Reserve may need to maintain a restrictive policy stance, the inflation figures matched market forecasts, limiting their impact on USD exchange rates.

With no major surprises in the report, many investors opted to hold back from placing aggressive bets on the ‘Greenback’.

The Pound (GBP) traded in a tight range through Wednesday’s session as the absence of notable UK economic releases left Sterling without a clear source of direction.

At the same time, conditions in the UK bond market remained relatively calm. Gilt yields were broadly stable, helping to ease concerns over borrowing costs and removing a key driver of recent fluctuations in the currency.

As a result, Sterling was largely guided by external market forces rather than domestic developments.

Near-Term GBP/USD Forecast: US Producer Prices and UK GDP in Focus

Attention now turns to the latter half of the week, where the latest US producer price index could provide fresh direction for the Pound to US Dollar (GBP/USD) exchange rate.

Economists expect factory-gate inflation to ease in May. If producer prices rise by less than anticipated, it may help cool expectations for future inflation and weigh on demand for the US Dollar.

For Sterling, the spotlight will fall on the UK’s latest GDP figures.

April’s growth reading is forecast to show the economy contracted by 0.1% month-on-month, reflecting the impact of ongoing disruption linked to the Middle East crisis. A weaker growth print could reduce expectations that the Bank of England (BoE) will consider raising interest rates in the near term, potentially limiting support for the Pound.

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