USD/JPY
The US dollar initially tried to rally against the Japanese yen during the Thursday session, but the 113-level offered far too much in the way of resistance, and because of this it’s likely that we will continue to see a lot of volatility in this market. We have reached as low as the 112 level during the day, but bounced slightly. I think we are going to see a lot of volatility between now and the New Year’s holiday, but if we were to break down below the 112 level, the market probably goes down to the 111 level after that. Alternately, if we can clear the 113 handle, we go looking towards the 114.50 level. The New Year’s Day holiday is probably going to have to be in the rearview mirror before people are confident enough to put on huge positions.
AUD/USD
The Australian dollar has rallied a bit during the day, in a sign of impressive strength. The US dollar has been beaten up a bit, and it appears that gold is starting to see a lot of interest. Because of this, I believe that the market is trying to find its way towards the 0.7750 level, an area that begins a significant amount of resistance. I think at that point, the sellers will become a bit more aggressive, sending this market back down. The volatility should continue to be a major issue, but I think overall, we are going to see a lot of buying pressure. The marketplace continues to be one that shows a lot of choppiness, and I think between now and the end of the year it is difficult to imagine a scenario in which the market makes a decisive move. A lot of back and forth range bound trading is probably as good as it gets.
