Are risk-off flows picking up today?
If so, here’s a channel-within-a-channel bearish setup on AUD/JPY that you should see.
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Australia’s MI inflation gauge picked up from 0.2% to 0.9% m/m in Jan
Australian retail sales down by 3.9% y/y in Jan as expected
BOJ Gov Kuroda: Will seek to hit 2% inflation target in a sustainable manner
Rumors swirl that Amamiya will be next BOJ Governor
Yen pairs gap sharply higher in early Asian session trading
German factory orders rebounded by 3.2% m/m vs. previous 4.4% slump, expected 2.1% gain
OPEC Secretary General: October oil output cut was the right move
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone Sentix investor confidence index at 9:30 am GMT
U.K. construction PMI at 9:30 am GMT
Eurozone retail sales at 10:00 am GMT
Canadian Ivey PMI at 3:00 pm GMT
RBA monetary policy decision at 3:30 am GMT (Feb. 7)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/JPY
Yen bears were eager to place their bets early this week, leading AUD/JPY to gap sharply higher.
Can the safe-haven currency get back on its feet soon?
The pair is still within a short-term descending channel, and it looks like the near-term resistance could keep gains in check.
After all, the 100 SMA already crossed below the 200 SMA to confirm that the selloff is more likely to carry on than to reverse. The 200 SMA even lines up with the channel top to add to its strength as a ceiling.
In addition, Stochastic is in the overbought region and is starting to head south, so price could follow suit as sellers take over.
Don’t forget that the pair is also edging below the mid-channel area of interest on a longer-term rising channel, which confirms that bearish pressure is in play.
If that’s the case, AUD/JPY could fall back to the nearby support at the 90.50 area and close the gap. It might even drop all the way down to the bottom of the larger channel closer to 90.00!
Mid-tier economic data from the Land Down Under turned out mixed today, with retail sales printing a sharp 3.9% year-over-year decline as expected and the MI inflation gauge pointing to stronger price pressures.
Just keep an eye out for the upcoming RBA decision in the next Asian session, as the central bank is expected to announce a 0.25% interest rate hike.
