USD/JPY
The USD/JPY pair initially fell on Wednesday as we continue to see volatility in the USD/JPY pair overall. I think that pullbacks continue to offer value, and therefore it does not surprise me at all that buyers have jumped into this market after falling. I believe that the 115 level is massively supportive, and essentially the “floor” in this region. Given enough time, I think that the market reaches towards the 120 handle, but I also recognize that during this time year volatility and more importantly volume isn’t going to be very strong. I think this is a “buy only” type of situation, so pullbacks continue to offer that value that people look for. In fact, I don’t even have a scenario which a willing to sell his pair after the recent massive move higher.
AUD/USD
The Australian dollar initially rallied on Wednesday, but fell and reached down to the 0.7250 level. The hammer that form during the Tuesday session is a sign that there are buyers just below, so I think that we may have to grind sideways overall to continue going lower. After all, there is a large amount of order flow just below that has to be chewed through so that the market can continue to go lower, reaching towards the 0.70 level which is my longer-term target.
You have to remember that the gold markets have a massive amount of influence on the Australian dollar in the of course look very soft at the moment. I think rallies offer “value” in the US dollar and that the 0.73 level above is the “ceiling” in this market now. I have no interest in buying, and at this point in time don’t see a situation where I would be looking to reverse any trades that I have now. Selling should continue to be the way going forward, but it’s going to be a bunch of short-term moves due to the time of the year.
