The US dollar initially spent most the day trying to rally against the Japanese yen but has struggled to retain any gains that have happened. Ultimately, we turned around to form a shooting star, and I think that shows just how “risk off” the market is starting to become. I believe that the 105.50 level offer support, and I think that the support extends down to the 105 level. If we break down below that level, I feel that this market goes looking towards the 100 handle. We have the Federal Reserve releasing a statement this week, and although an interest rate hike is expected, the question now becomes whether there are going to be 3 or 4 interest rate hikes this year. In the meantime, I think the market is going to chop around this area, but if we do get 4 interest rate hikes this year, that will be bullish for the US dollar.
The Australian dollar has gone back and forth during the trading session on Monday, as we hang about the 0.77 level. During a session that was very noisy and most other markets, this one was very quiet. 0.77 has been important more than once, and I think that is part of what is keeping this market afloat. I think we can break above the 0.7750 level, I’d be a buyer of this pair. Otherwise, if we break down below the bottom of the candle for the Monday session, we will probably drift down to the uptrend line that you see on the daily chart, coinciding roughly with the 0.76 handle. A breakdown below there would wipe out the entire move higher since the beginning of December, meaning that we go down to the 0.75 level where I see significant support.