USD/JPY
The USD/JPY pair fell significantly during the course of the day on Friday after initially trying to rally. By breaking above the 118.50 level, we managed to find quite a bit of selling pressure. That being the case, we ended up trying to test the lows that we had to head on Thursday. If we can break down below the bottom of the Thursday range, which would be smashing through the bottom of a hammer, I believe that the market should continue to go much lower, reaching towards the 116 handle. A rally from here should be an opportunity to start selling as well, on signs of exhaustion. It’s not until we break above the 119 level that I would consider buying this pair with any significance. Ultimately, I believe that this market probably will reach the 116 level in the short-term.
AUD/USD
Without a doubt, one of the weakest currencies that I am tracking right now is the Australian dollar. I believe that this is essentially because of the Chinese economy, as many currency traders will use the Australian dollar as a bit of a proxy for the Chinese economy overall. After all, the Australians supply the Chinese with quite a bit of raw materials, and I think that selling in the AUD has been greatly influenced by that.
Gold markets of course caused quite a bit of influence in this market as well, but I find it interesting that while gold is going higher, the Aussie is going lower. It is because of this that I feel that the Australian dollar is focusing more on the Chinese situation, and as a result I think that the market will continue to sell the Aussie and as a result I believe that a break down below the bottom of the range for the session on Friday is a selling opportunity, just as a rally that show signs of exhaustion will be.
