USD/JPY
The US dollar rallied again during the day on Friday against the Japanese yen, but quite frankly I think we are getting overextended. The 110 level offered a bit of support but I just am not comfortable going long at this point. I think given enough time we will get a bit of a pullback in this market, and that should be a nice buying opportunity. I would love to see some type of pullback and a supportive candle along the lines of a hammer in order to take advantage of perceived value. This market has certainly reacted in a very positive light after the surprise election of Donald Trump, and I believe that it is an expectation of a stronger US economy going forward. Remember, the US dollar will likely see an interest-rate hike fairly soon, selling the Japanese yen will be seen anytime in the perceivable future.
AUD/USD
The AUD/USD pair fell hard on Friday again, as we start to reach towards the 0.73 level again. This is a market that should be sold every time it rallies, and I believe that the 0.7450 level above continues to offer quite a bit of resistance. In fact, I think of it as the “ceiling” in the market, and that it’s only a matter of time before sellers would reenter on any test of that level. At this point, I believe that we’re going to go down to the 0.70 level over the longer term, and perhaps even lower. I have no interest in buying this market until we break above the 0.75 handle, something that doesn’t look very likely to happen anytime soon. Because of this, and the fact that gold seems to be a bit soft, I think that this is a bit of a “one-way trade”, but am the first to admit that we are bit oversold at this point. Because of this, I prefer selling rallies over anything else.
