USD/JPY
The USD/JPY pair broke higher during the course of the day on Monday, clearing the top of the hammer from the Friday session, and as a result it looks as if the buyers have stepped into the market and asserted their will. This pair is highly sensitive to risk appetite around the world, so if stock markets can continue to go higher it’s likely that this pair will as well. I think that now that we have broken above the top of the hammer, we will more than likely reach towards the 110 level next. This is a market that could be very volatile though, because we are going against the overall trend at this point. It will be a grind, but I expect to see the market reach towards the 110 handle.
AUD/USD
The AUD/USD pair fell again during the day on Monday, as we continue to drive much lower. The 0.73 level being targeted isn’t much of a surprise, after all it was an area of significant resistance previously so the fact that we are down here doesn’t surprise me. However, I do recognize that we could get a bit of a bounce in this area and therefore may have to wait to see whether or not we get an exhaustive candle after that bounce. If that’s the case, the market would offer “value” in the US dollar. Another way to trade this market of course would be a break down below the 0.73 level, and go even lower soon.
The fact that we are closing at the bottom of the range suggests that there is still plenty of bearish pressure, and as a result I have no interest whatsoever in buying this market right now. Although gold markets could bounce a bit, quite frankly I don’t think it has anything to do with what happens with the Australian dollar. After all, the Reserve Bank of Australia has recently cut rates in a bit of a surprise, so that will continue to put massive pressure on the Aussie.
