Four reasons for USD strength – Forex trading strong vs weak AUD/CAD [Video]

USD is strong right across the board in every pair.

Here, for example, you may remember we chased NZD strength all summer; price action hit resistance, and now USD has taken over as the stronger currency.

Let’s take a look at why.

In today’s Market Outlook, let’s take a look at Forex trading on Brent Crude Oil, Gold, XAU/USD, AUD/CAD, USD/JPY, USD/CAD, EUR/USD and NZD/USD.

If you are wondering if NZD/USD has more room to fall, we see the next key levels several days below.

However, if we move out to the 4-hour chart, we see price at support in what might be a descending triangle, so we need to see a break below.

We see the same on EUR/USD.

On USD/CAD, we have price moving strongly with very little consolidation, but watch your technicals.

Also, any news on US/Canada trade or the price of oil will affect CAD.

So, USD is strong these days for a few reasons.

Firstly, inflation is not improving, mostly due to the Iran war and pointless tariff wars, and the US Federal Reserve will have to raise interest rates again.

Secondly, because of political instability and the shockingly high $40 trillion debt, US Treasury Bill yields are getting higher.

Thirdly, other currencies are generally weaker for many reasons, especially Japan’s yen, whose economy is struggling.

And, of course, we have overall geopolitical risk around the wars in Iran and Ukraine.

So, if USD is the strongest currency, what is the weakest?

As you guessed, JPY is the weakest, but we see price action on USDJPY around 157 yen near a key level.

Don’t be fooled by the technicals, as this is a fundamental story.

An important economic news event coming up early Thursday morning is the Australian change.

This is important as the consensus is that the RBA will raise rates next week, making AUD stronger, so employment figures are important.

So, here is when we want to look at a strong currency vs a weak currency like AUDCAD.

You may remember that we followed this ranging market for weeks on AUDCAD, but price has broken out to the upside based on the expectation of higher interest rates.

Let’s keep an eye on all AUD pairs.

A stronger USD and higher bond yields usually put downward pressure on gold, and we see price action at a key level of support, with price action in a descending triangle.

And, for you Fibonacci fans, this level is spot on the 50% retracement level, so we need to see a break below or a bounce before we can determine the next direction.

Of course, we need to take a quick look at oil, and we see a downtrend in the 4-hour chart on Brent Crude.

But if we look at the daily chart, we see a different story, but, to be honest, this is a fundamental trade, and we need to hear some more news regarding Iran: good or bad.