USD/JPY
The US dollar fell significantly during the day on Wednesday, as the pair drove below the 113 handle, and then the 112 level after that. This pair does tend to be very sensitive to risk, and with the political drama coming out of the United States, it makes sense that stock sold off, and that of course continues to put bearish pressure on this pair. I think the 110 level below will be a nice target, it has attracted a lot of attention in the past. It is also the 50% Fibonacci retracement level from the larger rally, which of course will attract a lot of attention as well. Ultimately, short-term rallies that show signs of exhaustion should be selling opportunities. I would not buy this pair until we get a supportive candle on the daily chart at the very least.
AUD/USD
The Australian dollar initially fell during the session on Wednesday but found enough support at the 0.74 level to turn things around and form a hammer. That is a very bullish sign and it suggests that we are going to try to rally from here. If we can break above the highs from the hammer during the Wednesday session, I think this market probably goes looking for the 0.75 handle. Keep in mind the gold did rally during the day, and that should continue to help the Australian dollar. Having said that, we also must look at the weekly chart, which formed a hammer and that of course is very bullish as well. It looks as if the Australian dollar is ready to rally in general, so I don’t have any interest in selling and believe that it’s only a matter of time before we continue to go higher and reaching towards the 0.75 handle above.
