USD/JPY
The US dollar initially rallied to open up the week after gapping lower against the Japanese yen. We turned around form a shooting star of sorts though, and most certainly look to be having a lot of trouble near the ¥112.50 level. I think that the market may have to pull back to find more demand, may be closer to the ¥111.25 level. I think this is a market that will eventually go higher, but right now we may be a little bit overextended. Keep in mind that the pair is highly sensitive to risk appetite as well. Longer-term speaking though, the US dollar has much more juice behind it than the Japanese yen, as interest rates are going higher in America while the Bank of Japan is on the sidelines.
AUD/USD
The Australian dollar tried to rally during the day on Monday but gave back the gains. The 0.7450 level above looks exhaustive, and the 0.75 level most certainly looks like it will be more resistance as well, especially considering that the 50 day EMA is in the same neighborhood as well. I believe that the market also has plenty of support near the 0.7350 level. Because of this, I anticipate a lot of back-and-forth sideways action, perhaps in some type of churning. Overall, the weekly charts show a few hammers, and that of course is a bullish sign and we could be trying to put in a bit of a “floor” near the 0.7350 level. However, right now the market is a bit tight, so I think it’s going to be a lot of back and forth a range bound trading over the next couple of sessions. We have our levels to watch, and now we need the market to break through one of them.
