The US dollar initially pulled back during trading on Wednesday but found enough support underneath to bounce a bit. This is a market that’s going to be very choppy after the Federal Reserve announcement and the projection of future interest rate hikes. I think at this point, the market is probably going to continue to grind between the 105.50 level on the bottom, and the 107.50 level on the top. If we break down below the 105 level, the market breaks down significantly and reaches towards the 100 level. Alternately, if we can clear the 107.50 level, the market should then go looking towards the 110 handle. I think the one thing you can count on over the next couple of sessions is going to be a lot of choppiness, and it might be easier to trade the dollar against other currencies such as the EUR and the GBP.
The Australian dollar initially fell during training on Wednesday but took off after the Federal Reserve announcement. However, I think we have a lot of resistance above, so it’s going to be interesting to see how this plays out. I think that there is most certainly more downside risk than of eventually, but you would need to see signs of exhaustion to start selling. In the short term, we could go as high 0.78, but it’s not until we break above there that I become a bit more convinced about the longer-term outlook for the Australian dollar to the upside. Otherwise, we could roll over and reach towards the 0.77 handle, and then perhaps even the uptrend line from the daily uptrend channel.