- AUD/JPY is holding the support of the trendline rising from August lows.
- The pair has come under pressure amid renewed US-China political tensions and dismal Aussie data.
- RBA QE speculation will likely cap bounce from the trendline, if any.
AUD/JPY is down by not out.
The currency pair is currently trading at 74.04, representing a 0.24% loss on the day. The decline could be associated with US President Trump’s decision to sign the Hong Kong Democracy bill and the resulting haven demand for the anti-risk Japanese Yen.
The dismal Aussie data released a few minutes before press time may have added to bearish pressures. Australian business investment fell unexpectedly in the September quarter, creating downside risks for next week’s GDP report. Private sector capital expenditure (capex) slipped 0.2% during the quarter after adjusting for seasonality. Markets were expecting a 0.1% drop.
While the AUD/JPY pair is under pressure, it is still holding the support of the trendline connecting the Aug. 26 and Sept. 10 lows.
A strong bounce from the trendline would imply a continuation of the rally from the Aug. 26 low of 69.96.
However, that looks unlikely amid speculation that the Reserve Bank of Australia is on track to hit the zero lower bound and will have to do QE. The pair could face stronger selling pressure if the ascending trendline is breached.
Daily chart
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Trend: Neutral
Technical levels
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