Analysts at MUFG Bank, consider the idea of a short AUD/JPY trade with an entry-level at 75.800, a target at 73.100 and a stop-loss at 77.100. They argue that in the near term, the risk of a correction is rising.
Key Quotes
“There are a lot of FX pairs that look stretched and continue to suggest to us greater near-term risks of a correction the other way. We are closing in on the end of the summer trading period with the potential for fresh trading activity over the coming weeks as we commence the month of September. What is clear is that the global risk from the spread of COVID has increased – both in Europe and in Asia and Oceania.”
“AUD has made notable gains against not just USD and JPY but also against NZD and all are looking stretched technically.”
“We place our stop-loss above the highs reached since AUD/JPY rebounded from the COVID lows. AUD/JPY is the go-to trade for reflecting some correction in risk, which we believe is plausible.”
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