With not a lot of top-tier economic releases on the docket, forex price action is mostly dictated by market sentiment.
Will banking concerns extend AUD/JPY’s short-term downtrend?
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:
Over the weekend, FOMC member Neel Kashkari the Fed is “monitoring very, very closely” the recession risks of the recent bank turmoil, implying that the Fed is close to its “peak rates”
Putin announces Russia’s ability to move tactical nuclear weapons to Belarus
North Korea fired two short-range ballistic missiles into its eastern waters as the U.S. moved an aircraft carrier strike group towards a South Korean naval base.
FDIC: First Citizens BancShares Inc bought all of SVB’s loans and deposits and, in return, gave the FDIC equity rights worth as much as $500 million.
Japan’s services producer price index accelerated from 1.6% to 1.8% y/y in February, the third monthly acceleration for the report
Profits of China’s industrial enterprises dropped by 22.9% from a year ago in the Jan-Feb period on high costs and disappointing demand.
Improved business expectations helped push Germany’s Ifo business-climate index from 91.1 to 93.3 in March, its highest reading since May 2022.
Price Action News
Overlay of JPY Pairs 15-minOverlay of JPY Pairs 15-min
Asian session traders started the week by pricing in banking sector concerns that Friday’s Deutche Bank credit default swap headlines inspired.
It didn’t help that China’s industrial profits printed lower and that Japan’s services producer prices showed further acceleration.
However, the tides turned for the safe-haven at the start of the European session as markets turned cautiously optimistic after the FDIC announced that First Citizen BancShares Inc. bought all of SVB’s loans and deposits.
Hopes of containing the banking problems dragged JPY to new intraday lows with Asian session’s lows serving as intraday resistance.
Upcoming Potential Catalysts on the Forex Economic Calendar:
UK CBI realized sales at 10:00 am GMT
BOE Gov. Bailey to give a speech at 5:00 pm GMT
UK BRC shop price index at 11:01 pm GMT
AU retail sales at 12:30 am GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
AUD/JPY: 15-minute
AUD/JPY is having trouble extending an upswing from late last week!
The pair found resistance at the 87.50 area, which isn’t surprising since the minor psychological level lines up with a support level from last week, the R1 of today’s Standard Pivot Points, and the 61.8% Fibonacci retracement of last week’s downswing.
Oh, and have I mentioned that the area is also near the halfway point of its AUD/JPY’s daily ATR.
AUD/JPY eventually found support at 87.00 but I’m not holding my breath waiting for sustained buying.
For one thing, Australia’s retail sales scheduled in the next Asian session is expected to print a much lower growth than the previous month.
More importantly, traders are remaining cautious over a possible bank contagion situation even though authorities and major bank players have made moves to limit spillovers from the banking failures that we’ve seen so far.
With not a lot of data on tap, risk sentiment will likely feature in the next trading sessions’ price action.
Flights to safe-havens like the yen could extend AUD/JPY’s downtrend and drag the pair down to the 86.50 or 86.00 previous support zones.
But if policymakers manage to convince the markets of their commitment to support the banking sector, then AUD/JPY just might bust above its trend line resistance.
