US Dollar Exchange Rates: Forecasters Continue to Favour USD But Monday Sees a Soft Start
- Written by: Gary Howes
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Expectations that the Federal Reserve will continue to reduce stimulus, has fuelled a greater demand for the dollar preventing further advancement in cable and other crosses.
It is this expectation on Fed action that sees the USD a favourite amongst currency forecasters for 2014.
Over the course of recent trading sessions the US Dollar climbed to its highest-level since November against the Euro. A series of positive data reports out of the world’s largest economy has seen the Dollar find support at the expense of its peers.
Monday has seen dollar buying ease back and we expect volumes to be subdued with the US on holiday today.
Today's US Dollar Exchange Rates
- The pound sterling to US dollar exchange rate (GBP/USD) is 0.09 pct higher than seen on Friday's close having reached 1.6440.
- The euro dollar exchange rate (EUR/USD) is 0.11 pct higher at 1.3556.
- The Australian to US dollar exchange rate (AUD/USD) is 0.39 pct higher at 0.8816.
- The New Zealand to US dollar exchange rate (NZD/USD) is 0.02 pct lower at 0.8257.
Note: Our USD quotes are taken from the wholesale spot markets. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.
What is driving the US dollar exchange rate at present?
The USD held firm last week supported by some decent domestic data and some positive comments from policy makers, who suggested a further ‘taper’ is possible at the January 28/29th FOMC meeting.
The market is likely to continue to look for further supportive evidence in the data. However, there are few key releases on the US calendar this week; instead market focus may turn briefly to the UK and Eurozone where there are key releases this week. It’s a US holiday today which suggests a relatively quiet session ahead.
A Citigroup Inc gauge last week, showed economic data was exceeding expectations by the most in almost two years, further supporting a stronger dollar. It may not be long before the dollar dictates play once again, but for today at least, trading around 1.64 looks more likely.
Outlook for US dollar exchange rates today
Euro dollar exchange rate forecasts: "Mixed US economic data did manage to drag EUR/USD below 1.36 and more range trading is likely to prevail today between 1.35 and 1.3570 given the very light daily calendar and the US holiday." - UniCredit Bank.
"EUR/USD started the week weaker. The pair retreated to 1.3508 on stronger bearish momentum. As the sentiment turns mild, stops are building sub-1.3500. Option bets are skewed on the downside for the week ahead. We remains sellers on rallies." - Swissquote Bank.
"Further selling extended this morning to test support at 1.3524, a close below which would be negative, triggering a deeper sell-off to 1.3296.
Resistance is at 1.3699." - Gareth Berry at UBS.
ICN Financial say:
"The drop last Friday broke the bullish key support level of the ascending channel as showing on graph reversing trading below 1.3665 levels to negative and might extend the downside move this week.
"Of note, stabilising below 1.3520 is required to confirm bearishness and limit any bullish correction. Linear Regression Indicators and MACD are negative. But momentum indicators require stability below 1.3595 so the pair won’t respond to the oversold signals showing on Stochastic.
"Based on the above, sell the pair below 1.3560 targeting 1.3470, 1.3365 then 1.3295 and stop-loss above 1.3665
"If the stop-loss was triggered, buy the pair above 1.3665 targeting 1.3715, 1.3770 then 1.3830 and stop-loss below 1.3590."
MIG Bank tell us:
"EUR/USD remains in a corrective phase after its failed attempt to break the resistance at 1.3832 (25/10/2013 high), as can be seen by the recent lower lows. The support at 1.3524 is challenged. Other supports can be found at 1.3490 and 1.3400. Hourly resistances stand at 1.3583 (16/01/2014 low) and 1.3650 (16/01/2014 high)."
Regarding the pound dollar exchange rate (GBP/USD) forecast:
"Having tested the main support at 1.6317, the risk is for extension of the consolidation phase within a bullish trend. Next support is at 1.6220. Resistance is at 1.6517 ahead of 1.6622." - Gareth Berry at UBS.
Luc Luyet at MIG Bank says:
"GBP/USD has bounced sharply near the support at 1.6305. A short-term bullish flag is favoured as long as the initial support at 1.6396 (intraday low) holds. Hourly resistances stand at 1.6464 and 1.6517.
"The break of the major resistance area between 1.6381 and 1.6466 favours a further long-term rise towards the strong resistance at 1.7043 (05/08/2009 high). However, a break of the support at 1.6220 would negate this positive outlook. Another key resistance lies at 1.6747 (28/04/2011 high)."
Regarding the Australian / US dollar (AUD/USD):
"As a reaction to last week’s decline, the immediate risk appears to be for a short-term recovery which should be limited to resistance at 0.8883. The broader potential remains for a test of strong support at 0.8545." - Gareth Berry at UBS.
Dollar Yen Forecast (USD/JPY):
MIG Bank analyst Luc Luyet says:
"USD/JPY has thus far failed to invalidate its succession of lower highs since the start of the year. As a result, we favour further short-term weakness towards the recent lows at 102.86. Hourly supports can be found at 103.87 (50% retracement) and 103.54 (intraday low). A break of the hourly resistance at 104.48 (17/01/2014 high) is needed to improve the short-term technical structure.
"The failure to break the resistance at 105.50 (61.8% retracement of the decline that started in June 2007) coupled with general overbought conditions favours a corrective phase towards the support at 101.63. A strong support lies at 99.57 (19/11/2013 low, see also the 200 day moving average), while a major resistance stands at 110.66 (15/08/2008 high)."
ICN Financial say:
"USDJPY moved lower on Friday, and starts the week under pressure retesting 103.85 support area, which if broken may signal further downside towards 102.85. Overall, the sideways bias is expected to dominate this week , among the potential symmetrical triangle shown on chart. Accordingly, we expected sideways movement this week."
