AUD/JPY: eyes on USD/CNH, USD/JPY and DXY while AUD/USD holds below key 0.72 confluence level

• AUD/JPY sold off heavily in late Asia and tumbled all the way from 82.48 and dropped to 81.38, just shy of completing a full retracement of the 27th September where the cross climbed from 81.81 to 82.48.
• Currently, the pair trades at 81.71, consolidating the volatility but remains in a bearish zone on the shorter time frames and below the 21-hr SMA.  

AUD/JPY found a bid as markets started to recover late in the European day and while USD/JPY regathered from lows of 11360 to a high of 113.90 in London.  However, USD/JPY was choppy and made a low of 113.53 in NY before recovering back to 113.81 only to run into fresh supply that sent the pair back into the 113.50’s and below the European lows. As for the Aussie, it lost its footing below the 0.72 handle, (a key support zone of confluence), and made a low of 0.7161 in European trade before climbing back 0.7201, again, running into supply that sent the pair back into the 0.7180s.  

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AUD/JPY levels

AUD/JPY has now started to move sideways below S3 at 81.81 as we enter a quiet looking Asian session for the pair with only Aussie building permits scheduled on the calendar.  However, sentiment remains fragile and USD/JPY is it a critical supporting level at S2 around 113.50. A break of 113.50 and with momentum could trigger a move that has been targetting a retrecament back to 113.04 as the 23.6% fibo target – if this trade were to play out, AUD/JPY would be well on its way for a test towards the 50% retracement of the early 78.68 low – 82.50 26th Sep highs – (However, AUD/USD will be subject to USD/CNH which could well break to the upside on renewed dollar strength that is holding its form on the 95 handle at the key 95.30 level).