- The AUD is taking a beating, courtesy of political turmoil in Australia.
- The US-China trade tensions could add to the bearish tone around the Aussie.
The AUD/JPY fell 0.6 percent to a session low of 80.73 in Asia as domestic political uncertainty likely forced investors to venture out of the AUD longs.
The upheaval in Canberra took a turn for the worse earlier today as the government adjourned parliament to resolve a leadership crisis that has crippled PM Malcolm Turnbull.
Further, the trade tiff between the US and China is set to escalate further as the former is set to begin collecting tariffs on $16 billion worth of Chinese goods from today.
As a result, there is little incentive to hold the Aussie dollar. What's more, the renewed trade war fears could put a bid under the anti-risk JPY. So, it seems safe to say that for AUD/JPY, the path of least resistance is to the downside.
AUD/JPY Technical Outlook
The currency pair created a doji candle yesterday, signaling indecision in the marketplace. A bearish doji reversal would be confirmed if the pair closes below the previous day's low of 80.92. That would mean the corrective rally from the recent low of 79.70 has ended.
On the higher side, the bulls need to beat the recent high of 81.49 to re-establish the corrective rally.
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