AUDJPY has been moving sideways, bouncing off the range support at the 78.50 minor psychological level and ready to test resistance at the 80.50 minor psychological level. The 100 SMA is below the 200 SMA on the 4-hour time frame so the path of least resistance is to the downside.
In addition, the 200 SMA lines up with the top of the range and this might hold as a dynamic inflection point. RSI is on the move down to indicate that sellers are taking control of AUDJPY price action. Similarly stochastic is heading south to show that bearish pressure is building up.
In that case, another move towards the range support might be seen, as price continues to attempt to break lower. A return in bullish momentum in that area, however, could lead to yet another bounce toward the range resistance.
Earlier in the week, the RBA refrained from cutting interest rates in their latest rate statement, allowing AUDJPY to bounce. Today the Chinese trade balance churned out weaker than expected headline readings but underlying data showed gains for both imports and exports.
Analysts remarked that the pickup in imports was likely spurred by improving global economic conditions and a rebound in domestic demand. This could be positive for the Australian dollar because a bulk of the economy’s raw material commodity exports go to China.
As for the Japanese yen, the currency regained a bit of ground upon seeing downbeat current account balance data, which led to a bit of risk aversion in the early Asian session. No other reports are due from Australia, China, or Japan for the rest of the week so risk appetite might dictate price action.
Continued risk taking on the heels of stronger commodity prices could keep the Australian dollar strong against the yen until the end of the week, although profit-taking might take place before the weekend.
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