USD/JPY
The USD/JPY pair initially fell during the day on Wednesday but turned around to form a bit of a hammer as we bounced. The 105 level below seems to be supportive, and that support also seems to extend all the way to the 106 level. Now that we have formed this hammer, and looks as if we are trying to continue to build some type of base in this market, and that could be the beginning of an attempt to go higher. I still believe that the 110 level above is massively resistive though, so it’s not until we break above there that I would be a buyer on longer-term charts.
Keep in the back of your mind that the pair tends to be very sensitive to risk appetite, so if we see money flowing back into the stock markets, it’s likely that this pair will go higher as well. Also, the reaction to the Bank of Japan not adding to quantitative easing was probably a bit much, as they will almost certainly do so in the future.
AUD/USD
The AUD/USD pair initially broke higher during the day on Wednesday, but found the area above the 0.75 level be far too resistive. Because of that, we turned around and it now looks as if we are trying to grind our way down to the bottom of the support “zone”, which I have marked as the 0.74 handle. If we can get below there, this market will continue to go much lower and quite frankly the Australian dollar is of course suffering at the hands of the Reserve Bank of Australia and its somewhat surprising interest-rate cut the other day, so we very well could see this move. On the other hand, if we get some type of rally from here I would be looking for short-term resistive candles to sell and sell again as the market seems to be intent on punishing the Aussie.
