USD/JPY
The US dollar fell significantly during the day on Tuesday, reaching much lower. However, we bounced enough to show signs of life, and it appears to me that the market is looking at the 110 level as a major buying opportunity. If we can stay above that level, I think it’s only a matter of time before we break out to the upside, and could reach towards the 112.50 level above. However, I recognize that we will probably be very volatile and sideways in the short term. If we can break down below the lows of the session on Friday, I think the market could drift towards the 109 handle. I recognize that there is a lot of volatility in this market, so taking small positions might be the best way to handle whatever happens next.
AUD/USD
The Australian dollar had a choppy session during the day on Tuesday, as we continue to tread water just above the 0.7875 handle. The candle is very neutral, and I believe it shows that the market is trying to figure out whether this area is supportive or not. If we break down below the 0.7850 level, I think we would then reach towards the 0.7750 level underneath. Alternately, if we can break above the highs from the session on Monday, then I think the market would make yet another attempt at the 0.80 level above. This is a market that is highly influenced by the gold markets, so pay attention to what’s going on over there, as it can give you an idea as to where the Aussie may go next. The 0.80 level is very important on longer-term charts, going back decades. Because of this, it seems very likely that it will take several attempts to break out to the upside if we ever do.
