The US dollar has recovered a bit in the early hours of Thursday trading as the Non-Farm Payroll announcement came out much hotter than expected. However, we are still in a negative feedback loop for the dollar at the moment, and one has to wonder about the sustainability in some markets.
The euro has pulled back a bit during the trading session here on Thursday in the early morning as the non-farm payroll number came out hotter than anticipated in the United States, which of course has people buying the US dollar on the idea that the Federal Reserve may have to stay tighter for longer.
Whether or not this is sustainable as far as a pullback is concerned remains to be seen, but I would have a very strong interest in paying attention to what happens near the 1.16 level if we do in fact start dropping quickly. That’s an area that previously had been significant resistance. So, I fully would anticipate that it ends up being support on the way back down.
The US dollar has skyrocketed against the Japanese yen, breaking above the 145 yen level almost immediately, and now we are threatening that 50 day EMA. Ultimately, I do think this is a situation where traders will eventually try to push this market back to the upside anyways, because quite frankly, the Bank of Japan has a major issue on its hands in the form of a lackluster bond market. They will sooner or later be forced to do a bit of quantitative easing. When they do, the Japanese yen will sink. This is one of the few places that I expect a complete turnaround in the US dollar. So, I like buying dips. I think we will go higher.
And yet again, we find ourselves near the 0.6550 level in the Australian dollar. The market broke down below that level for a brief moment, only to turn around and bounce a bit. So, it’ll be interesting to see how this plays out, but I do think you have a situation where traders are going to continue to look at this as a magnet for price. If it can hold for support, then that’s a good sign for the Australian dollar. It could send the Aussie dollar as high as 0.67, we’ll just have to wait and see.
The move higher has been in an extreme grind more than anything else. So, if you’re a short term kind of scalper type of trade aficionado, then you’ll love the Aussie. Clearly, it’s a buy on the dip market, but as far as momentum to the upside, it’s very slow trading indeed.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.