USD/JPY
The US dollar went back and forth during the course of the session on Tuesday against the Japanese yen, essentially settling nothing. I still believe in going long of this market will we pullback and show signs of support, but at this point in time we don’t have it. A supportive candle could be reason enough to go long, but at this point I think we need to go a little bit lower in order to find massive support, probably somewhere near the 103 level. A break above the 105 level would be a longer-term “buy-and-hold” type of situation. I have no interest in shorting this market as the Bank of Japan continues to try to push this currency pair higher, and I believe that the 100 level is essentially the “line in the sand.”
AUD/USD
The Australian dollar initially tried to rally during the course of the session on Tuesday, testing the 0.77 handle. By pulling back, we gave back about half of the gains for the day and formed a less than exceptional candle. At this point in time, I believe that the market will more than likely find plenty of support below, so a supportive candle at lower levels will be reason enough to suspect that the buyers are going to return. I believe that the 0.75 level below is massively supportive as well and essentially the “floor” in the consolidating region that we find yourselves and, with the ceiling being out the 0.7750 level.
Pay attention to the gold markets, because quite frankly it’s likely to have a massive influence over the Australian dollar, and a break above the 0.7750 level continues the longer-term uptrend. At that point I would be aiming for the 0.80 handle, which historically has been extraordinarily important in this pair. On the other hand, we break down below the 0.75 handle I feel that the market will then circle lower yet again. Typically, it follows gold and therefore we have to watch both.