Exchange rate forecasts today: Euro vs Dollar, Pound vs Dollar, Dollar vs Yen, Australian vs US dollar

By Rob Samson

Pound Sterling Live presents a compilation of exchange rate forecasts issued by those analysts we follow.

Good news out of Europe has muddled the picture for near-term exchange rate forecasters; driving exchange rate markets on Thursday is a stronger set of Eurozone data releases, details of which can be found here.

Earlier, Chinese manufacturing activity contracted in January; the HSBC/Markit Manufacturing PMI fell to 49.6 from 50.5.

Asian stocks dropped on soft Chinese data; Nikkei stocks retreated 0.79%, Hang Seng wrote-off 1.41%, while the Shanghai’s Composite dropped 0.47% (at the time of writing). China started the year on weak performance: softer lending, slower GDP growth, and contracting manufacturing activity which will likely weigh on the likes of the Australian dollar and affiliated currencies.

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Pound to US dollar exchange rate forecast

Analysts at Citigroup are bullish on Sterling owing to their view that a rate hike will come in Q4 2014 whereas consensus appears to be for a hike to come in Q1 2015. Such a view is bullish for the British pound:

"Citi analysts anticipate that U.K. unemployment rate may fall to 6.4% in Q4 2014 and U.K. GDP may grow by 3.3% this year. Therefore, the Bank of England may raise rates earlier in Q4 2014. This will likely be GBP-positive. Technically, GBP/USD may test higher to 1.6618-1.6747, with support at 1.6381."

UBS also offer a bullish forecast on the pound to US dollar: "The recent sharp advance reinforces the bullish picture. Resistance focus is
at 1.6622, a break above which would open 1.6747. Support is at 1.6400."

Emmanuel Ng at OCBC Bank says:

"With the better than expected set of labor market numbers under its wings, the GBP-USD surfaced above 1.6500 and closed above 1.6550. Noteworthy also were the BOE MPC minutes, which layered on an additional buffer of optimism for the pound.

"Going ahead, investors are expected to continue to dwell on the BOE’s forward guidance, with tension better expectations for an earlier than expected rate hikes and the fact that the BOE has indicated that the unemployment rate trigger is not automatic. In the near term, the backdrop for the pair may be looking slightly more constructive pending a sustained breach above 1.6600."

Euro dollar exchange rate forecast

"With the trending indicators bearish, there’s scope for more downside in the near-term to test support at 1.3458 and then onto 1.3296. Resistance is at 1.3604 ahead of 1.3699," say UBS.

Swissquote Bank say:

"EUR/USD traded in the tight range of 1.3530/58 in Asia. The key support zone is at 1.3500/24 (fibo 61.8%), resistance is seen at 1.3595 & 1.3665 (fibo 50% & 38.2%). Technically, the 21-dma (1.3440) tests the 50-dma (1.3636) on the downside, the MACD is steadily negative. We remain sellers on rallies. Stops are seen below 1.3500."

"Markets may continue to fade upside moves in the EUR-USD ahead of the FOMC next week. If 1.3565 is not challenged successfully multi-session, expect the pair to be drawn towards the 1.3500 area instead," says Emmanuel Ng at OCBC Bank.

Japanese Yen forecasts

OCBC Bank offer the following forecast for the dollar yen exchange rate:

"The BOJ policy meeting outcome yielded little surprises on Wednesday with little indications from the central bank that additional easing was imminent. Nonetheless, firmer Treasury yields prompted the USD-JPY to end firmer on the day with early bids urging the pair higher past 104.50 on Thursday morning. Going ahead, the USD-JPY may continue to bounce around in recent range of 103.00-105.40."

Swissquote Bank say:

"JPY crosses traded up in early Tokyo on PM Abe’s promises to cut corporate taxes in Davos. USDJPY climbed to 104.84 before easing alongside with the Nikkei stocks. Option barriers expiring today are placed at 105.00/50/80 and 106.00. Support is seen at 103.90/104.00. EURJPY trades a stone’s throw above the 50-day MA (140.92) with solid selling pressures below pre-142.00. NZDJPY hovers around the 21-dma (86.492).

"The technicals start giving signs of weakness, a close below 86.800 suggests deeper downside correction to 85.814 (fibo 23.6% on Oct 13’ – Jan 14’ rally), then 85.240 (50-dma)."

UBS say: "As broader bullish trend firmly in place, focus is on resistance at 104.92, a break above which would open the way to critical 105.75. Support is at 103.86 ahead of 102.86."

Australian dollar forecast

UBS: "Fresh selling materialised after testing resistance at 0.8883. The risk is skewed to the downside to resume the broader bearish trend. Support is at 0.8545 ahead of 0.8067. The next major resistance is at 0.8960."

Swissquote Bank:

"AUDUSD dropped from 0.8853 (intra-day high) to 0.8788. The technicals are now skewed on the downside, the negative MACD suggests the extension of weakness for a daily close below 0.8870. Sizeable offers are reported pre-0.8900. AUDNZD failed attempt to extend yesterday gains, forming a double top at 1.0672 this week."

Emmanuel Ng at OCBC Bank says he is standing on the sidelines when it comes to trading the Australian dollar:

"We continue to stand on the sidelines with respect to the AUD-USD in the near term given that yesterday’s batch of CPI numbers has dulled expectations for near term rate cut prospects but the aussie still has to contend with a supported dollar backdrop. Expect a 0.8760-0.8900 range to hold in the interim."