USD/JPY
The USD/JPY pair rallied on Friday, using the 115 level as support. This is an area that I suspect will be supportive going forward as well, and a possible floor if you will. Ultimately, I have no interest in shorting this market, and believe that the support will extend all the way down to the 111.50 level underneath. I still believe that the market will target the 120 level, but I am the first to admit that perhaps we need to consolidate a little bit further, or even pullback to build up enough momentum to go higher. The Japanese yen continues to selloff in my estimation, especially considering that the Bank of Japan will remain dovish for as long as we can see.
AUD/USD
The Australian dollar tried to rally on Friday but turned around to form a negative candle. By breaking below the 0.73 level, the market suggests that we are going to go lower again. A break down below the bottom of the range for the session on Friday sends this market much lower, perhaps reaching towards the 0.7150 level. I don’t like buying the Australian dollar anyway, because quite frankly gold markets look like they are going to continue the longer-term downtrend as well, and of course the US dollar continues to be the strongest currency that I follow.
Even if we rally from here, the market will attract more sellers as the Australian dollar has been in a longer-term downtrend. Ultimately, I think that we will reach towards the 0.70 level underneath, which is a much more substantial support level. I believe that this market will remain in a downtrend until we can somehow break above the 0.75 handle, which seems very unlikely. The recent move to the upside has been somewhat impressive, but in the end I think it is still just a bounce in what is a strong downtrend longer-term.
