USD/JPY
The US dollar rallied against the Japanese yen during trading on Wednesday as we continue to bounce around. Market participants continue to find value at the ¥111 level, so I think at this point it’s likely that we could continue to see more of the same. After all, the US dollar is favored over many other currencies around the world, but this pair is a bit sensitive to risk, so it might be a bit stubborn. This is exactly why I think the market is essentially trying to go nowhere at this point, but there is a major downtrend line just above on the chart, and I think that we will eventually break above there. However, we will probably need some type of “risk on” event, or massive US dollar strength that overpowers everything else. It’s very unlikely to show up in this pair though, if anything it will just keep it a little bit more buoyant in a “risk off” move. I think that buying dips should continue to work though, especially near the ¥111 level.
AUD/USD
The Australian dollar had a negative session during trading on Tuesday but seems to be comfortable around the 0.71 handled. At this point, I think we will eventually see sellers but we may get a short-term rally in the meantime. I think that the 0.7150 level should be massive resistance, and that will continue to be the case as long as we have a lot of concerns when it comes to the Sino-American relations, and those seem to be getting worse. Remember, Australia is a major provider of raw materials to the Chinese economy, so it makes sense that it will continue to suffer. Beyond that, the US dollar has been strong anyway, so that will naturally put downward pressure on this market. I think we are heading towards the 0.70 level underneath.
