AUDJPY has previously broken below support at the 84.00 major psychological level and is currently pulling up to that area of interest. Using the Fib tool on the latest swing high and lows shows that this area lines up with the 50% retracement level, which might keep gains in check.
However, price seems to have pulled up a little higher to the 61.8% Fib and the 200 SMA, which might be the line in the sand for the correction. A move past this area could signal that a reversal from the selloff is in order.
Note, however, that the 100 SMA is below the 200 SMA, which means that further losses are likely. Stochastic is also indicating overbought conditions, along with RSI, suggesting that buying pressure is probably exhausted. In that case, a move back to the previous lows around 82.00 might take place.
AUDJPY Fundamental Factors
Data from Australia has shown notable weaknesses, with the NAB business confidence index slumping from 4 to 1 and the Westpac consumer confidence figure showing a 5.6% decline. To top it off, the trade balance from China showed a 5.5% drop in exports and a 14.8% slide in imports, reflecting a considerable downturn in demand.
With that, Australia could see lower raw material exports to China, possibly weighing on business revenue and production activity later on. The Australian jobs report is up for release later on this week and a meager 5.2K gain in hiring is expected while the jobless rate might still drop from 5.3% to 5.2% due to lower labor force participation.
The Chinese CPI release could also pose an event risk for this trade, as weak readings could spark fears of another global inflation downturn and trigger a selloff in Chinese equities. This usually spills over to other global stock markets, leading to a downturn in risk appetite and further weakness for AUDJPY.
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