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Yen crosses on a weakening path

Market Analysis
2017-06-06_14-29-49

AUDJPY, Daily

“Wait and see” seems pretty much the order of the day amid a quiet data calendar. In Asia, Japanese stocks dropped as the Yen surged but it was Australia’s ASX that posted the sharpest losses, as the RBA left rates on hold as expected and highlighted that “slow growth in real wages” is weighing on consumption. USDJPY was the biggest mover today, losing nearly 1% in making six-week lows, extending losses seen in the Tokyo session. This is the third consecutive session the pairing has declined, continuing a downtrend that’s been in place since a six-month peak was logged at 115.50 on May 10. Dollar weakness is one part of the explanation, while risk aversion in global markets has also been keeping the Japanese currency in out-performance, in accordance with the usual correlative pattern. Japanese data today showed wage growth returning in Japan, too.

AUDJPY and most other yen crosses have also been on a weakening path, reflective of yen out-performance. AUDJPY ebbed back below 82.00 after peaking at 82.70 on Friday. In the 4hour chart, pair moves sharply down for 4 consecutive sessions, with large down legged candles which prompted a SHORT entry for us at 81.95. Additionally, the pair manage to break during the day the lower Bollinger Band and also the latest down fractals. However, a significant signal will be  the Cross of 50 Day EMA below 200 Day EMA, in the daily chart to be further confirmed. This level is was set as a Resistance level and it is at 83.50. It is also the confluence of 38.2 Fibonacci level.

Therefore, long-term target was set at 81.50, at to year lows. Target 2 was set at 80.60, which is also the confluence of the 61.8 area, where we might see a possible retracement of the pair. In the Daily chart, RSI is at 38, while Parabolic SAR remains negative since May 16.

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Andria Pichidi

Market Analyst

HotForex

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