USD/JPY
The US dollar initially fell against the Japanese yen during the session on Tuesday but turned around to form a hammer like candle. It looks as if the 112 level is offering a little bit of support, and the fact that it is at the 38.2% Fibonacci retracement level tells me that the market is more than likely going to find buyers. Because of this, I am bullish on a break above the top of the candle, as we should then reach towards the 115 handle. If we did breakdown below the 111.50 level, I believe that the market should then reach towards the 50% Fibonacci retracement level. I still believe in the longer-term uptrend, and believe that most of the market does as well.
AUD/USD
The Australian dollar initially tried to rally during the session on Tuesday, but turned around to show signs of weakness. However, I have no interest whatsoever in selling this market as I see significant amounts of support underneath current levels, and therefore I feel that it’s only a matter of time before the buyers return and continue to push the value of the Australian dollar higher. Ultimately, the gold market has a strong correlation to the Australian dollar, and as it is rallying, I believe that the gold markets will eventually put a fire underneath the Australian dollar. I recognize that the 0.7650 level is supportive, the 0.76 level underneath there is supportive, and given enough time the 0.75 level under that is a “floor.”
Given enough time, we should break above the 0.7750 level but we obviously have a lot of work to do. Once we do break above there though, the market should be free to go much higher and I would have a longer-term target of 0.80 once that happens. I have no interest in selling the Aussie although I recognize there could be a pullback coming.
