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USD/JPY
The US dollar broke higher against the Japanese yen during most of the Thursday session, and it’s only quite remarkable: tested the 110 level after forming a shooting star the previous day. This is a very strong sign, and as a result I believe that we are going to break out sooner rather than later. The fact that we reached above the top of the shooting star shows just how much upward momentum there is, but I would be the first to admit that the market seems to be a bit overbought at this point. I look at pullbacks as potential value plays, and we use them as such. I think that the “floor” in the market is somewhere near the 107.50 level, and as a result would even consider selling until we got well below there.
AUD/USD
The Australian dollar broke down below the 0.7450 level, and looks primed to go much lower. I think that we will reach towards the 0.70 level of a longer-term but there are several places where we could see buyers enter the market. I don’t think that any type of bounce coming is going to be strong, it would just simply be a selling opportunity after signs of exhaustion. The 0.75 level should now be the “ceiling” in this market, and if gold starts to break down significantly that of course will put added pressure on the Australian dollar.
Traders are favoring the us dollar in general right now, so it makes no sense go against it, especially in a “riskier” currency such as the Aussie dollar as it is tied to somebody commodities. I continue to short this market until we break well above the 0.75 level on a daily close which is something that I don’t see happening anytime soon. With this, I believe the sellers are firmly in control now.
