Exchange rate forecasts for today: EUR lower, GBP higher, USD higher, AUD lower, JPY lower

By Will Peters

todays exchange rate forecasts

We present a list of the top exchange rate forecasts and viewpoints issued over the past 24 hours by the key names we follow.

Without fresh cues, the dollar softened slightly against the majors with NY away for the MLK long weekend. The EUR found partial support from higher than expected German 4Q PPI numbers while although Chinese data flow (underlying numbers belied the slight optimism surrounding the better than expected headline GDP print out) on Monday did not offer significant support for the AUD.

Tuesday has seen the EUR weaken on the back of some poor German ZEW data.

Meanwhile the NZD was the star performer of the day; USD/NUSD surged past 0.8300 late Monday as 4Q 13 CPI came in at a warmer than expected +1.6% yoy.

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Pound sterling to US dollar exchange rate forecast

The key for the pound sterling in coming sessions is tomorrow's unemployment data: "A dip in the unemployment rate to 7.3% would provide further support to the GBP bull case. We would not expect anything from the MPC minutes to discourage this at this stage," say Lloyds Bank Research.

With regards to the forecast for the pound dollar exchange rate, Camilla Sutton at Scotiabank reckons the GBP/USD is currently priced for perfection. However, declines through the course of 2014 are likely as USD strength starts to factor:

exchange rates

"This week will mark some important fundamental developments, including the release of employment and the BoE minutes, which should provide a foundation for the path of GBP. We suggest that the currency has been priced for perfection and even in an environment of improving employment, with inflation at target, the BoE will remain cautious for longer than the market currently
expects. We hold a year‐end GBP target of 1.59."

Matthew Weller at GFT says: "The GBP/USD pulled back off 1.6450 resistance late last week, but rates have since recovered back up to test that key resistance level. The pair put in a 4hr Bullish Pin Candle to start the week, showing a shift from selling to buying pressure and serving as an omen for a rally back to the 1.6450 level. For today, a break and close above the key 1.6450 barrier would expose the recent highs at 1.6500 next."

Euro dollar exchange rate forecasts for today

"All signals are in sell territory and spot closed below the 100‐day MA on Friday. Technically the currency is weak; with the next support level at 1.3500," says a currency forecast note from Scotiabank.

ICN Financial say:

"The pair is trading below Linear Regression Indicators and the broken support that turned to resistance residing currently around 1.3625. Stability below the referred to levels is negative and might extend the bearish correction. Stochastic is showing o positive crossover at oversold signals, whereas the pair has to consolidate below 1.3520 represented in 61.8% correction shown on graph to cancel the possibility of being affected by the oversold signals.

"Anyhow, we will count on 1.3665 to keep our negative expectations. But today we will count on stabilising below the broken support that turned to resistance around 1.3625."

Dollar Yen forecast

"We expect that as the increased sales tax is implemented the BOJ will turn increasingly dovish in order to reach its 2% inflation goal. However, in the near-term the focus will remain outside of Japan. We hold a Q114 target of 102 and a year‐end target of 109." - Scotiabank.

"The USD/JPY has dripped lower so far this week, with bulls attempting to defend the 104.00 level in today’s Asian and now early North American trade. The failure to rally meaningfully late last week suggests buyers may be reaching a point of exhaustion on a longer-term basis. Heading into today’s North American trade, readers should watch for support to emerge around the near-term Fibonacci support levels at 103.64 (61.8%) and 103.29 (78.6%)." - GFT.

Australian dollar / US dollar forecast

"We expect AUD to close Q1 at 0.87 but to stabilise into year‐end closing at 0.90." - Scotiabank.

The AUD/USD has ticked modestly higher to start this week’s trade after dropping to a new multi-year low late last week. The slightly stronger-than-expected economic data out of China has lent some support to the pair, though the tentative reaction underscores the bulls’ caution.  Moving forward, the bias has to remain generally to the downside under the .8840 level, and we will watch for sell opportunities on bounces toward that level in the early part of this week." - GFT.

ICN Financial have told clients that they are short on the Aus / US dollar rate below 0.8835 with targets at 0.8770 and 0.8735. Stop loss above 0.8890:

"The pair extended the upside pullback towards the broken support area, which turns to a resistance now among 0.8820-0.8850, where we expect the price to resume the bearish wave after testing that area. Holding below 0.8850 is required for price maintains the bearish bias; a break above the latter may extend corrections a bit deeper."