AUDJPY might be done with its recent downtrend, as the pair created a double bottom on its 4-hour time frame. This could be a signal that an uptrend is about to take place, provided that price is able to break above the neckline of the formation around the 92.00 major psychological mark.
At the moment, the pair seems to be finding it difficult to break past the resistance, which also lines up with the 200 SMA dynamic inflection point. At the same time, the 100 SMA is safely below the 200 SMA, confirming that the downtrend could carry on.
Aside from that, stochastic is making its way down from the overbought zone, signaling that a pickup in selling pressure could be seen. Similarly, RSI is starting to move down from the overbought area as well.
AUDJPY Fundamental Factors
So far this week, fundamentals support further gains for the Aussie. Retail sales came in better than expected at 0.7% versus the projected 0.5% increase while the trade balance showed a smaller than expected deficit. Aside from that, the RBA acknowledged that the Aussie is already adjusting to falling commodity prices instead of saying that further declines are likely and necessary.
In contrast, data from Japan has fallen short of expectations, as average hourly earnings fell by 2.4% instead of showing the projected 0.9% uptick. As for Australia’s labor market, the jobs report is still up for release tomorrow and it might show a faster pace of jobs growth at 12.5K from the previous 7.3K.
Stronger than expected jobs data from Australia could allow the Aussie to advance against the yen, pushing AUDJPY past the 92.00 barrier and possibly 250 pips higher. Note that the double bottom is roughly 250 pips in height so the resulting breakout could be of the same size.
Weak jobs figures could mean that the neckline would hold as support, possibly sending AUDJPY back down to the previous lows around 89.50.
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