USD/JPY and AUD/USD Analysis: Key Levels and Dollar Volatility

What to Know

• USD/JPY remains volatile near long-term resistance at the 158 level
• A breakout above 158 could open the door toward 160–161
• Pullbacks toward the 50-day EMA near 156 may attract buyers
• AUD/USD struggles below 0.68 with short-term support near 0.6650
• Diverging central bank outlooks keep volatility elevated in both pairs

USD/JPY

The US dollar has gone back and forth against the Japanese yen during trading here on Tuesday as we continue to hover around the 158 yen level. This is an area that’s been major resistance more than once and if we can clear this area, it opens up the door to somewhere in the neighborhood of around 160 yen, possibly 161 yen.

The Japanese bond markets are seeing a lot of volatility and this of course is part of what’s going on, but quite frankly, there’s a lot of issues with the US dollar at the moment right along with the Japanese yen. I think this is an epicenter of a lot of volatility. Nonetheless, the market is going to continue to see a lot of chop, but upward trajectory.

I think pullbacks at this point in time continue to be buying opportunities. If we do drop from here, the 50-day EMA right around 156 yen probably comes back into the picture.

AUD/USD

The Australian dollar has rallied a bit during the trading session but has not broken out to the upside quite yet. I do think that we have a situation where the 0.68 level continues to be a bit of a barrier that’s going to be difficult to overcome. Pullbacks I think offer buying opportunities with the 0.6650 level offering support. This is a short-term trader’s market and should be treated as such.

On to the Global Stage

We have a lot of noise out there about Greenland at the moment; it’s a nonsensical sideshow. At the end of the day, there will be some type of negotiated settlement because we have a situation where missiles from China, and planes for that matter, can reach the United States in 12 minutes going over Greenland. That is something that enough people are not talking about to bring it to the forefront.

Yes, there are rare earth minerals there and there is geopolitical concern about keeping the Chinese and the Russians out of the Arctic. But at the end of the day, the Europeans are showing hesitation to go along with Trump, as you would expect, but ultimately this gets settled. The Europeans cannot defend Greenland, nor do I think they want to.

So with all of that being said, this will sort itself out. In the short term, volatility that we’re seeing in the dollar should die off soon. The Australian dollar of course is highly levered to China which did see manufacturing pick up a bit last month and that’s part of what’s going on here. The RBA in fact is one of the few central banks out there ready to raise rates. So I like the Aussie, I think the Yen is in serious trouble with the bond situation, directly tying the macro back to these pairs.

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