During Asian trading hours on Monday, the AUD/JPY pair edged up to 93.28. Following the Bank of Japan (BoJ) announcement and Chinese central bank rate drop, the cross rebounds off the 92.83 low. According to Bloomberg, the BoJ will begin purchasing Japanese Government Bonds (JBS) at a set rate for an unlimited amount (residual maturity …
During Asian trading hours on Monday, the AUD/JPY pair edged up to 93.28. Following the Bank of Japan (BoJ) announcement and Chinese central bank rate drop, the cross rebounds off the 92.83 low. According to Bloomberg, the BoJ will begin purchasing Japanese Government Bonds (JBS) at a set rate for an unlimited amount (residual maturity of 5YR to 10YR) on August 22. Furthermore, the People’s Bank of China (PBoC) chose to reduce the one-year Loan Prime Rate (LPR) by 10 basis points from 3.555 to 3.45% while keeping the five-year LPR at 4.2% unaltered.
On the four-hour chart above, AUD/JPY is trading within a descending trend channel line that has been in place since the middle of June. However, the AUD/JPY crosses the 50- and 100-hour Exponential Moving Averages (EMAs) with the least resistance to the downside. It’s worth noting that the Relative Strength Index (RSI) remains below 50, favoring sellers for the time being.
The initial level of resistance for the AUD/JPY is at 93.70 (50-hour EMA). The main hurdle is at 94.00, which represents a convergence of the 100-hour EMA and a psychological round number. Another upward filter to keep an eye on is 94.60, the top border of a declining trend channel. Any serious follow-through purchasing above the latter will result in a surge to 94.90 (August 9 high) on the way to 95.40 (July 14 high).
On the other hand, the cross will test the initial support level at 92.80 (August 18 low). The next negative stop is around 92.55 (July 88 low), followed by 92.15 (June 6 low). If the latter is breached, the price will fall below 91.60 (the bottom limit of a declining trend channel).
Risk disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
