USD/JPY
The US dollar rallied after initially pulling back on Wednesday, to break above the ¥109 level late in trading. We are testing the 50% Fibonacci retracement level from the massive move lower, so I think there is a lot of noise just above waiting to jump into the fray. Beyond that, I think that the ¥110 level will also offer plenty of resistance so I believe that somewhere around there we have even more sellers to jump in. I think this is a nice short-term selling opportunity presenting itself. Ultimately, I think that this pair will continue to move right along with the stock markets, but of course the US/China trade negotiations will have its effect as well. With that being said, and perhaps even the government shutdown being an issue, I suspect that it’s only a matter of time before we sell off. I believe that the ¥110 level is the “ceiling” in this pair.
AUD/USD
The Australian dollar spent most of the day falling as well but did find a little bit of support late in the day. I think given enough time, the market probably continues to find plenty of reasons to shun the US dollar, not the least of which of course will be the Federal Reserve. The Japanese yen is considered to be a safety currency, so keep that in mind as well. Overall, I do think that the massive technical damage that has been done recently will be remembered, so it’s a bit difficult to imagine a scenario where we go higher with the lot of the ease.
