Fundamental & Technical Outlook: AUD/JPY

Fundamental Outlook (AUD/JPY)

There was no tier one data during the London session. The oil rally stalled with WTI trading down about 80 cents off the highs. Equities traded lower through London pushing the JPY higher for most of the session.

In today’s session we expect the strongest currency to be JPY as risk off was the tone through the majority of London.

The weakest currency is expected to be AUD after ratings agency Moody's places a negative outlook to Australia's major banks which prompted immediate weakness in the currency that continued through the London session. Growth concern for China are also a factor as home price rises in the country's largest cities are showing signs of easing, adding to fears that one of the key economic drivers is cooling.

The main events for the NY session are the Canadian CPI and Retail Sales figures. As always be cautious on Fridays as end of the week trading can see profit taking become a factor. The risk to the AUDJPY trade is an increase in risk appetite during the NY session.

The AUDJPY pair is currently priced at 76.32.

There are several levels including the current price level which can be considered for selling opportunities:

The price levels below could be used to sell from as price retraces into them:

76.50, 76.70, 76.80

Source: Jarratt Davis

Technical Outlook (AUD/JPY) Weekly Chart)

Indicators: Bearish (50 sma below 200 sma)

Price action: The price is currently trading within a bearish channel

Summary: I am expecting the price to pull back to the upper trend channel before resuming its downtrend. If the critical support zone is broken, I am expecting more downside to the price projection zone as shown in the chart above.