Weekly #forex Forecast: US Dollar Index,#EURUSD,#AUDUSD,#USDJPY,#GBPJPY,#USDCAD & #USDCHF (30 MAY- 3 JUNE 2022)

 Technical Analysis

U.S. Dollar Index

The weekly price chart below shows the U.S. Dollar Index fell again last week, against the long-term bullish trend, printing a bearish candlestick that closed very close to the bottom of its range. This reversal is not very notable technically, apart from its location in the chart confluent with a long-term high, with reinforces the bearish case that we may have seen a major bearish inflection point.

A notable feature in the Forex market this week was that the selloff in the greenback has been against almost all other currencies, showing the market is currently being driven by US Dollar weakness.

Despite the long-term bullish trend, it will probably be a mistake to expect a rising Dollar over this coming week.

USD/CAD

I had expected the level at $1.2869 might function as resistance, as it had previously functioned as both support and resistance. Note how such “flipping” levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with a bearish pin bar at the start of the New York session last Wednesday, which is typically a great time to be trading Forex. The entry point is marked by up down arrow within the price chart below. This trade has been nicely profitable so far, achieving a maximum positive risk reward ratio of more than 4 to 1 based upon the size of the entry candlestick.

GBP/USD

The British pound has rallied significantly last week to break above the 1.26 handle. However, we started to show signs of hesitation as we closed the week, so I believe that this coming week will probably see more of a “fade the rally” type of attitude. If we were to break above the 1.27 level, then we may see a recovery rally to the 1.30 handle, but that would take some type of massive drop in the US dollar across the board. For what it is worth, the British pound does seem to be one of the stronger currencies out there over the last two weeks.

EUR/USD

The euro had a strong move to the upside for a majority of last week but reached close enough to the 1.08 level to see sellers come back in. This is an area that had been previous support, and now is offering resistance. The market has been in a downtrend for quite some time, so it’s not a huge surprise to see that we rallied during the day. The 1.05 level could be a target for sellers. On the other hand, if we were to break above the 1.09 level, that could open up fresh buying. I don’t see that happening though, so more likely than not, we will see plenty of sellers.

AUD/USD

The Australian dollar rallied significantly last week to the 0.7150 area. The 0.72 level above is a significant amount of resistance on daily charts, so this is going to be an interesting chart to watch. We have recently seen a nice bounce, but a lot of this is going to come down to what’s happening with the bond markets. If the bond markets continue to lose yield, then it’s likely that the US dollar will lose some of its luster. Underneath, the 0.70 level should offer quite a bit of support.

CAD/JPY

The Canadian dollar pulled back last week but has found a bit of support underneath. Currently, the pair seems to be comfortable hanging around the ¥100 level, and this suggests that we are going to see a lot of back and forth. If we can turn around and take out the top of the candlestick from the previous week, then it’s likely that we could continue. On the other hand, if the Canadian dollar drops down below the ¥98 level, we may get a pullback of a couple of hundred pips.

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