USD/JPY
The US dollar rallied against the Japanese yen again during trading on Tuesday, breaking the top of the shooting star from the previous session. As we approached the ¥113 level, resistance built up and slowed the ascension. I see a lot of noise between here and ¥114, so quite frankly I think it is probably prudent to wait for pullbacks to get involved to the upside. I think that the “floor” is closer to the ¥111.25 level, but I also see a significant amount of demand at the ¥112 level. I’m a buyer on pullbacks but recognize that this market will be very noisy going forward. Fundamentally speaking, the Federal Reserve will do several interest rate hikes over the next year, while the Bank of Japan is nowhere near tightening its monetary policy.
AUD/USD
The Australian dollar initially rallied during the trading session on Tuesday but found the 0.7450 level to be far too resistive to continue going higher. We fell down and reached below the 10.74 level to continue the consolidation yet again. I think that the market is going to continue to grind back and forth and try to build some type of bottoming pattern based upon the weekly hammers that seem to suggest the 0.7350 level as a major area of demand longer-term. It’s not until we get a daily close above the 50 EMA, pictured in red on the chart, that I think momentum is going to shift significantly higher to the upside. Otherwise, if we break down below the 0.7350 level, the market probably heads to the 0.72 level, followed by the 0.70 level longer-term.
