Forex Forecasts – US Holiday Liquidity Caps Asian Currency Recoveries

AUD/USD Technical Analysis

The Australian dollar rose a bit in the early part of Friday trading as we are testing the 0.6950 level, an area that has been important multiple times. But I think, and we can see this heading into the US session, that we are going to have a little bit of trouble with follow-through, and the most obvious reason is the fact that it is a holiday in the United States. While many brokers will still be open, liquidity will be thin.

At this point, I’m looking for signs of exhaustion to start selling the Australian dollar. But if we can break above the 0.70 level, then I would be convinced that this swing low is in fact real and traders will push this higher. If we break down below the 0.6860 level, then I expect the market to drop to 0.67.

NZD/USD Technical Analysis

The New Zealand dollar rallied as well, but it has pulled back a bit to show signs of exhaustion. This is a pair that I definitely want to be looking at the downside. We’ll just have to wait and see whether or not we break back down below the 0.57 level. If we do, I’m short of this pair. If we rally from here, I’ll be looking to short closer to the 50-day EMA, which is just below the 0.58 level.

USD/JPY Technical Analysis

The US dollar has stabilized a bit against the Japanese yen. It did fall at one point, but it is basically just hanging around, and I’m not expecting much. But I think you’ve got a scenario where traders will be looking to hold on to this longer-term uptrend. Yes, the Bank of Japan intervened again, but quite frankly, all they can really do is slow down the mess that the Japanese yen currently is.

With this, I like the idea of buying this dip, but I’ll be the first to tell you this is an investment, it’s not a short-term trade. You get paid at the end of every trading session. So with that swap, I think eventually we go climbing back toward the 163 level, perhaps even higher than that.

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