AUD/JPY closes above the 200-D EMA but risks loom


  • AUD/JPY bulls will struggle on deteriorating economic data.
  • On the downside, 73.93 is the daily swing low target. 

Antipodean FX outperformed in the G10 basket and AUD/JPY is currently trading at 75.27, capped by the 200-day exponential moving average, EMA, consolidating following a burst through the 21-day EMA overnight. 

The pair is subject to risk appetite which waned leading into the G20 this week as investors turn pessimistic ahead of an expected meeting between the presidents of China and the US. A senior US administration official said the goal of the meeting on June 29 is to reopen negotiations rather than reach a broad trade pact, according to Reuters.

However, there are slim chances of a breakthrough. Analysts at Bank of America Merrill Lynch and Barings both said it is unlikely trade tensions between the world’s two largest economies will be fully resolved at a meeting and recommends defensive investment strategies. Merrill Lynch is predicting that negotiations could “end in another ceasefire, with both sides delaying additional tariffs”- such an outcome should be positive for risk and the AUD/JPY.

As for US data, the May US durable goods headline outturn of -1.3% was weak and weighs on the greenback following yesterday's miss in Consumer Confidence. AUD/JPY will be unable to perform on a deteriorating economic backdrop and stocks will be a key factor going forward. As can be seen in the chart below, there is a strong correlation between U.S. consumer confidence the price of the S&P 500 index, (red), with periods of US recession:

AUD/JPY levels

The cross has met the 200-D EMA and eyes are set on the 76 handle meeting the 50-D EMA. Stochastics on the daily chart are leaning bullish, crossing over 50 having turned higher out of oversold territory earlier in the month as the price broke above the trendline resistance. On the downside, 73.93 is the daily swing low target. 

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD mute just above 1.1200, waiting for a signal

The EUR/USD pair is stable and confined to a tight intraday range, unable to run, despite upbeat EU inflation and disappointing US housing figures. Dismal market’s mood backing the greenback without boosting it.

EUR/USD News

GBP/USD bounced from fresh yearly lows at 1.2381

Sterling remains depressed amid Brexit jitters pushing investors away from the currency. UK data did not help as inflation met the market’s expectations in June.

GBP/USD News

USD/JPY consolidates in a range, comfortably above 108.00 handle

Reviving safe-haven demand underpins JPY and exerts some pressure. Renewed weakness in the US bond yields further weighed on the USD. The downside remains limited amid tempered Fed rate cut expectations.

USD/JPY News

Gold: Yellow metal gets intraday boost above the 1,400.00 figure

Gold is currently consolidating gains in a triangle above its main daily simple moving averages (DSMAs). The market is trading above the 1,400.00 mark and the main SMAs suggesting bullish momentum in the medium term.

 

Gold News

Forex Today: US dollar corrects, US-Japan eye a trade deal, and Bitcoin bounces

US dollar reverses a part of Tuesday’s US retail sales data-led rally. US-Japan are working towards a trade deal by September. Bitcoin recovers, but remains below the 10k mark.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •