AUD/JPY: Bears dominate as BOJ, dovish comments from RBA’s Lowe join risk-off

Easy BOJ, hints of rate cuts from RBA’s Lowe and FOMC continues to favor risk aversion.
Press conference by the BOJ’s Kuroda will be on the spotlight for fresh impulse.

Anil Panchal FXStreet

With the BOJ’s s sustained support for easy monetary policy and hints of another rate cut from RBA’s Lowe joining the previous risk aversion mood, the AUD/JPY dropped to 74.13 before taking the rounds near 74.18 during early Thursday.

The Bank of Japan (BOJ) held its monetary policy unchanged with -0.10% interest rates while targeting 0.0% from 10-year Japanese government bond yields. The central bank cited macro risk to be the main factor towards expecting no rate change at least through early 2020.

On the other hand, Reserve Bank of Australia’s (RBA) Governor Philip Lowe was also on wires while speaking at the Committee for the Economic Development of Australia luncheon, in Adelaide. Mr. Lowe said its "not unrealistic" to expect a further reduction in the cash rate and added that its "Unrealistic" to think one 1/4 point rate cut can alter growth path. With this, speculations of further rate cuts from RBA unearthed and dragged the Australian Dollar (AUD) down.

Other than BOJ and RBA’s Lowe, market sentiment remains tilted towards risk-off as Fed’s dovish tone joins the chorus of central bank bears amid expectations of weakness in global economic growth.

Adding to the risk aversion could be on-going US-Iran tussle where the US added 1,000 troops to its forces in the Middle East while latest news from Iran claims that the OPEC member downed one of the US drone.

On the contrary, the US President’s latest positive statement to have good relations with China and Russia during the FOX interview gained little attention from the global markets.

While political news may keep directing short-term trade moves, press conference from the BOJ Governor Haruhiko Kuroda can be observed for fresh immediate direction.

Technical Analysis

Current month low near 73.92 acts as immediate support with 14-day relative strength index (RSI) being in the oversold territory, a break of which can recall 73.00 ahead of diverting the moves to the year 2016 bottom of 72.40.

Meanwhile, 74.80 and 75.00 can restrict the pair’s immediate upside before highlighting 21-day simple moving average (SMA) level of 75.27.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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