USD/JPY Technical Analysis
The US dollar has flexed its muscles against the Japanese yen and it’s interesting that the 145 yen level has been like a brick wall. If we can make a fresh high above the early part of the week and the 50 day EMA, I think that will bring in a lot more buyers of US dollars and people willing to take advantage of the interest rate differential as it certainly favors the US dollar. At that point in time, we could be looking at a move to the 148 yen level. In the meantime, I think short-term pullbacks continue to be buying opportunities as it looks like we’re trying to base here.
AUD/USD Technical Analysis
The Australian dollar initially tried to rally but has given back gains. We are getting dangerously close to seeing a reversal here as well. A move below the 50 day EMA is enough for me. At that point in time, I start shorting. I think it was obvious after the Federal Reserve meeting that the Fed is not going to cut rates in June, unlike what most of the trading community seemed to be banking on.
And now, the odds of a rate cut later this year are starting to drop a little bit as well. People still believe in a couple of rate cuts coming out of the Federal Reserve, but at the same time, he made it pretty clear during the press conference yesterday that he really didn’t know what they were going to do because there were far too many variables out there that caused confusion.
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