AUDJPY has been trading in a forex downtrend, as a descending trend line can be drawn to connect the pair’s recent highs. Price is currently testing the falling resistance level around the 97.00 major psychological resistance for now and stochastic is indicating a return in selling pressure.
If so, price could fall back to its recent lows around the 94.00 major psychological support and perhaps go for new ones. However, the pair is moving very close to the trend line and may be due for an upside break if buyers are strong enough. If that happens, the pair could go for the next resistance level at the 98.00 handle or all the way up past the 100.00 mark.
Forex Downtrend Outlook
Australia released stronger than expected jobs data last week, which explains why the Australian dollar is able to stay afloat even when risk aversion has extended its stay in the financial markets. The event risks for this forex downtrend trade this week include the release of top-tier Chinese data, such as the GDP and retail sales on Tuesday.
China’s GDP is slated to ease from 7.3% to 7.2% in Q4, which might prompt more talks of a slowdown in the world’s second largest economy and consequently the global economy. In that case, the Australian dollar could suffer heavier selling pressure, especially if the actual figure comes in short of expectations. After all, a bulk of Australia’s commodity exports are shipped to China and weaker demand could mean lower revenues for the Land Down Under.
On Wednesday, the Bank of Japan is set to announce its monetary policy decision but might be likely to hold off any major changes for now. Data from Japan appears to have stabilized, although the central bank might want to ramp up its money supply to counteract the effect of weak inflationary pressures on the Japanese economy. Dovish remarks could lead to an AUDJPY forex downtrend reversal.
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