EUR/USD, USD/JPY, and AUD/USD price forecast: Key resistance and market drivers ahead
Major currency pairs test key levels amid market drivers
EUR/USD traded above $1.09, holding near a four-month-high, as traders focused on Germany’s upcoming Bundestag vote on fiscal reforms. The proposed measures, including a €500 billion infrastructure investment plan, are expected to pass, potentially providing further support for the euro.
Meanwhile, the European Central Bank (ECB) rate cut expectations have been adjusted, with markets now pricing in only two reductions this year, likely in April and June.
Despite the euro’s strength, analysts at Danske Bank caution that U.S. dollar pessimism may be overextended. If upcoming economic data fails to validate market concerns about the U.S. economy, the USD could rebound quickly, putting pressure on the euro.
EUR/USD, USD/JPY, and AUD/USD price forecast (Source: TradingView.)
USD/JPY forecast: Focus on Bank of Japan policy
The Japanese yen weakened past 149.5 per dollar, its lowest level in two weeks, as markets anticipated the Bank of Japan's (BoJ) policy decision. The central bank is widely expected to hold rates steady at 0.5%, with future hikes likely later this year.
Rising Japanese wages and inflationary pressures are key drivers behind expectations of policy normalization. Major Japanese firms have agreed to significant wage hikes for the third consecutive year, boosting consumer spending and reinforcing inflation. However, in the near term, USD/JPY remains bullish, with resistance near 150.00 and potential upside if the BoJ maintains its dovish stance.
AUD/USD forecast: Breakout above key resistance?
The Australian dollar climbed to $0.638, hovering near a three-month-high, fueled by a weaker U.S. dollar and hawkish RBA signals. RBA Assistant Governor Sarah Hunter suggested that February's rate cut was not the start of an easing cycle, keeping markets cautious about further cuts.
Technical analysis suggests AUD/USD could test 0.6410, with strong momentum supporting an upside breakout. A clear move above this resistance could trigger a rally towards 0.6450. However, failure to sustain above 0.6350 may result in a pullback, reinforcing range-bound trading.
As previously discussed, EUR/USD remains supported near $1.09, but a stronger U.S. dollar rebound could cap further upside. USD/JPY traders await BoJ signals, while AUD/USD eyes a breakout above 0.6410, which could trigger further gains.
