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  • AUD/JPY struggles around 78.60 in the initial trading hours of Wednesday.
  • Weakest consumer confidence reading since September 2015 from Westpac grabbed market attention.
  • 50-day SMA can offer immediate support at 78.50 with 79.00 acting as nearby resistance.

The AUD/JPY pair trades near 78.60 on early Wednesday. The quote dropped to day’s low of 78.50 after current month Westpac consumer confidence reversed previous gain of +4.3% with -4.7% figure. With no major economic data on hand, traders may now concentrate on the macro news affecting market risk sentiment and communicating developments of the trade negotiation between the US and China.

While February month consumer sentiment index from Westpac surged to the highest since May 2016, the gauge fails to hold its strength in March and slide beneath January reading to the lowest since September 2015.

It should also be noted that recently released core machinery orders and producer price index (PPI) data from Japan could do little harm to the Japanese Yen (JPY). The January month machinery orders shrink -5.4% on a monthly basis versus -1.7% forecast and -0.1% prior whereas yearly number declined to -2.9% from +0.9% and against -2.3% market consensus.

With the recent weakness in the US Dollar and overall improvement in market risk sentiment, AUD/JPY has been on recovery mode since Friday. Investors can observe catalysts challenging risk-on, like Brexit, in addition to developments surrounding the US-China trade deal for fresh impulse amid important data.

Given the Theresa May’s inability to get her second deal pass through parliament on Tuesday’s voting, upcoming polls on no-deal Brexit departure and delay in exit date seem important for the risk watchers. On the other hand, US officials including the trade representative Robert Lighthizer and the secretary of state Mike Pompeo have started criticizing China and raising bars to doubt a trade deal between the world’s two biggest economies.

AUD/JPY Technical Analysis

In spite of revisiting the 50-day simple moving average (SMA) figure of 78.50, the AUD/JPY can’t be termed weak to visit 77.00 unless it closes beneath an upward sloping support-line stretched since January 07 at 77.70.

On the upside, 79.00, 79.40 and 80.00 are likely nearby resistances that buyers may aim during further advances.