USD/JPY
The US dollar has pulled back a bit during the trading session on Thursday, only to test the ¥110 level. That is an area that has been important more than once, as it was major resistance. The fact that we shot so much higher from that level suggests that there will be plenty of buyers in this market, and that it’s only a matter time before the dips are bought. I think at this point we are very likely to see a range form, with the ¥110 level being the bottom.
To the upside I suspect that the ¥111.50 level is the beginning of resistance extending to the ¥112 level. Ultimately I think that this pair is going to continue to move back and forth, in a rather choppy mode. It’s likely that the pair will move right back and forth just as the S&P 500 has.
AUD/USD
The Australian dollar has initially pushed higher during the trading session on Thursday but gave back the gains as soon as we got close to the 50 day EMA. By doing so it looks as if we are going to pull back from here and perhaps reach towards support underneath. I find a massive amount of support at the 0.70 level, so it’s difficult to imagine shorting this pair, but I do think that short-term pullbacks are simply an opportunity to pick up value.
Overall, this has been a situation where we can pick up little bits of value and close out for 20 or possibly even 30 pips at a time. I have no interest in selling because of this, and I recognize that the level will continue to be a major area of contention.
