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Start the week of August 1, 2022 with our Forex forecast focusing on major currency pairs here.
AUD/USD
The AUD/USD currency pair initially tried to rally last week to break above the 0.70 level but then fell from that level. The 0.70 level is a significant round figure that a lot of people have paid attention to. The 0.70 level has offered quite a bit of support multiple times, so a bit of “market memory” probably comes into the picture. However, if we were to break above the 0.7050 level, then it’s possible that we could go looking to the 0.72 level.
Ultimately, I think we will probably continue to look at this as a “fade the rally” scenario. The market could go down to the 0.68 level underneath.
USD/JPY
The USD/JPY currency pair initially tried to rally last week but found the area above the ¥135 level to be a bit too much. Now that we have broken down below there, the market has reached the ¥133.50 level. The market is reaching lower levels and a support level in the range of ¥131.50, which is where I think we more likely than not will find buyers.
Keep in mind that the Bank of Japan continues to buy government bonds in an unlimited amount. This is essentially the same thing as quantitative easing, so it’s worth noting that the longer-term trend should hold.
EUR/USD
The EUR/USD currency pair has gone back and forth over the course of the week, and now it looks like we are trying to figure out whether or not we are going to rise or fall as the candlestick is somewhat neutral. That being said, the parity level is just below and should offer a significant amount of support. To the upside, the 1.04 level should be a massive amount of resistance. Ultimately, this is a market that I think continues to see a lot of noisy behavior more than anything else.
GBP/USD
The GBP/USD rallied significantly last week to reach above the 1.22 level, only to turn around and fall. Ultimately, the market still looks as if it’s going to try to fight its way to the upside, but given interest rates in the United States, this is all about the US dollar and the possibility that the Federal Reserve could pivot. (They are not going to.) That being said, the market is trying to price something in, so pay attention to the 10-year yield.
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