AUD/JPY to continue rising through the second quarter
|For most of 2020, the Australian dollar has been the main source of support for the AUD/JPY cross. But over the past six weeks, the interest rate based ascent of the US dollar has taken over, providing new impetus and driving the AUD/JPY pair to 84.57 on Monday, its highest finish in three years. For the AUD/JPY, the mathematical product of the AUD/USD and the USD/JPY, it is irrelevant if one component, or both, are rising. Thus, AUD/JPY should continue its ascent, Joseph Trevisani, an Analyst at FXStreet, briefs.
Key quotes
“One of the AUD/JPY components, the AUD/USD or the USD/JPY, will have a strong first half. It is entirely possible that both will rise. Odds are with the dollar/yen for a greater improvement because the potential for a US economic recovery and higher Treasury rates is strong. But it is also credible that global growth will boost the Australian economy and the aussie and could even spur the Reserve Bank of Australia to increase rates.”
“The sharp gains of the last five months have been founded on a fundamental change, the end of the pandemic. A US and global recovery is expected, higher interest rates, higher commodity usage and for the AUD/JPY, the unusual circumstance two rising components.”
“The resistance lines all date from 2018 and earlier and are weaker than the more recent support levels. The Relative Strength Index at 68.06, though slightly overbought, is not a sell signal in the current context. The 21-day moving average at 83.27 is active support. The 100-day at 79.28 and the 200-day at 77.37 are too distant for relevance.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.