USD/JPY
The US dollar fell initially during the day on Wednesday, as people are reacting to all of the news out of North Korea. Ultimately, this market looks to be finding support underneath the 110 level, so I think if we can break above the top of the candle for the Wednesday session, the markets should then go looking towards the 111 level. A break above there since the market to the 112.50 level. I believe that the pair has been oversold, especially considering that nobody in Korea is going to be launching nuclear warheads. Because of this, I think as soon as the markets calm down, we will see the buyers jump back into this market. Ultimately, if we break down below the bottom of the hammer, that would be negative and could send this market down to the 109 handle rather quickly.
AUD/USD
The Australian dollar fell during the day as well, as the “risk off” trade came back into play. We formed a little bit of a supportive candle but there is even more support below at the 0.7750 level. That was the scene of a massive breakout previously, so I think it’s only a matter of time before we find buyers. If we can break above the top of the candle for the day on Wednesday, that’s reason enough to go long. However, if we drop down to the 0.7750 level, the market should find plenty of support as it was so important in the past. Because of this, I believe that the market will buyers sooner or later, the pair looks likely to recover from the selloff that was so rapid. However, I think that the markets will make yet another attempt at the 0.80 handle above.
