- AUD/JPY - the risk barometer is under pressure, suggesting the post-Fed risk aversion is here to stay.
- AUD/JPY created bearish outside day candle.
- Focus on stocks.
The post-Fed minutes pick up in the treasury yields spooked the equity markets, pushing the Yen crosses lower.
The AUD/JPY pair fell from 84.86 to 83.99, creating a bearish outside day candle. So far, the follow-through has been weak, meaning the pair has extended the decline to an eight-day low of 83.76. The bearish outside day candle and a negative follow-through indicate the downtrend (that began on Jan. 23) has resumed.
Moreover, AUD/JPY is widely considered a barometer of risk, thus the decline indicates the risk aversion seen in the US markets and Asian equities could be extended to Europe. As of writing, Germany's DAX futures are down 28 points or 0.23 percent. Also, S&P 500 futures are down 5 points. Meanwhile, The MSCI AC Asia Pacific index is down 0.5 percent.
Ahead in the day, the cross is likely to mimic the action in the stocks. The daily RSI continues to show positive divergence, however, only an uptick in equities could yield a corrective rally in the pair.
AUD/JPY Technical Levels
As of writing, the pair is trading at 83.76. A break below 83.48 (38.2% Fib R of June 2016 low - September 2017 high) would expose 83.32 (Feb. 14 low) and 83.00 (psychological level). On the higher side, a move above 84.11 (session high) could yield a rally to 84.50 (10-day MA) and 84.86 (previous day's high). Only a daily close above 84.86 would signal a short-term bottom has been made.
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