USD/JPY
The US dollar fell significantly during the trading session on Monday, as there was a bit of a “risk off” vibe in the United States. We did get back some of the losses later in the day, but I think there is still plenty of support extending down to the 105 level. The uptrend line underneath should continue to support, and I think that between now and Friday it’s going to be a bit difficult to put a lot of money to work. Once we get the jobs number out on Friday, we could get a little bit of clarity, but I do recognize that a breakdown below the uptrend line is very negative, just as a break above the 107.50 level would be very bullish. Remember, this pair is highly sensitive to risk appetite overall, and this is of course going to continue to be the case.
AUD/USD
The Australian dollar initially tried to rally during the day on Monday, but then rolled over to reach down to the 0.7650 level. The 0.77 level is resistance, but it’s not until we clear the 0.7750 level that I would be comfortable going long. I anticipate that the market will continue to be very noisy and difficult to deal with, but if we were to break down below the uptrend line underneath, that could unwind this market towards the 0.75 handle. If we were to go long on a break to the upside, then I think that the market would go looking towards the 0.79 level. Regardless, this is a market that is going to be highly sensitive to talks about trade wars, as Australia is so highly leveraged to the Chinese economy. I recognize that we are getting close to a very major support level, so I would anticipate a lot of noise.
