USD/JPY
This is probably one of the more dangerous markets to be involved in during the day on Friday, as it is highly sensitive to the jobs number coming out at 8:30 AM GMT. Ultimately, if we get a strong number, that typically send this market higher, reaching towards the 112 level initially, and then eventually the 112.50 level. Alternately, if the market gets a disappointing number, it’s likely that we will turn around and reach towards the 110 level. That area should be supportive, but a breakdown below there sends the market down to the 108 level. Ultimately, the market will be volatile during the day, that is typical for these sessions. Frankly, it’s safer to be out of the market, but I suspect there’s probably more of an upward bias, so pullbacks will more likely find buyers below.
AUD/USD
The Australian dollar initially rallied on Thursday, but found enough resistance near the 0.7450 level to turn around and fall significantly. By doing so, we ended up closing towards the bottom of the range, and that is indeed a very negative sign. It looks as if the 0.75 level above, the 38.2% Fibonacci retracement level, is going to hold as significant resistance. The market continues to drop, and I believe we will test the lows from last month. If we can break below the 0.7325 level, the market should then go looking for the 0.7150 level next. The market looks extraordinarily bearish, so I would be suspicious of rallies until we can get a daily close above the 0.75 level, something that is very unlikely to happen anytime soon. The negativity in this market has been somewhat relentless, so one would have to believe that it will continue to be the base case scenario when it comes for the Aussie going forward.
