The US dollar is back with a vengeance as markets scramble to assess whether a rate hike is coming in December. 

US dollar and Japanese yen notes
Source: Bloomberg

GBP/USD could fall to $1.4910

Friday’ action saw the pair push below the October low, with cable opening below the $1.51 level for the first time since April. The dramatic move of the final two days of last week raises the possibility that we see a move down towards $1.4985 and then $1.4910. Any bounce needs to get back above $1.51 if it is to maintain upward movement, with further targets around $1.5178 and then $1.5295.

EUR/USD sellers in control

This pair has seen a steady trend lower over the past two weeks, with Friday’s slump putting new life into the move. Sellers will be watching for a break of $1.07 as confirmation that more losses are on the way, but we may see a move back towards $1.09 in the short term, which would provide another potential opportunity to sell on the bounce. Until the price clears $1.10 again it looks like the sellers hold sway here.

AUD/USD bearish outlook persists

This pair broke through the late October low around $0.7070, and while it has bounced overnight, it would not be surprising to see a continuation of the move back towards $0.6950. This more bearish outlook would be negated if we move back above $0.71, but even this would be a short-term bounce unless the price can clear the 100-day moving average at $0.7262. 

USD/JPY could see more upside

USD/JPY is at levels not seen since the August sell-off, with dollar strength putting ¥124 and above back on the agenda. Friday’s high of ¥123.50 is the area to watch for a breakout to the upside, but otherwise a drift back to ¥122.68 or even ¥122 would not seriously imperil the uptrend. In fact, a move back down to ¥121.50 would see a test of the rising trendline off the October lows. The wisest course for fresh longs may well be to wait for a pullback, rather than chasing Friday’s move. 

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