- Pessimism surrounding RBA’s rate-cut and China data took a toll on the AUD/JPY pair.
- 77.80 and 79.00 can confine the pair’s near-term moves.
AUD/JPY trades near 78.55 during early Wednesday. The pair stalls previous two-day upside as speculations concerning the RBA’s rate-cut join drop in China’s industrial profits. Details on the US-China trade deal and developments surrounding market risk events could offer near-term directions to the pair traders.
While risk-on sentiment helped the AUD/JPY to recover from seven-week-old ascending support-line, the pair took a U-turn from 61.8% Fibonacci retracement of its December 2018 to January 2019 downturn.
During early Wednesday, reports came out from Nomura expecting weaker Australian gross domestic production (GDP) and two rate-cuts from the Reserve Bank of Australia (RBA) during the present year. The Japanese bank isn’t the only one foreseeing weakness of the Aussie economy as Bloomberg survey points toward many other analysts on the same side.
With the Aussie pessimism already taking over after the rate-cut speculations, Reuters’ report that China’s industrial profit plunged 14% to the lowest since October 2011 during the first two months of 2018 strengthened the AUD/JPY bears.
It should also be noted that early-day market moves portrayed risk aversion and helped the Japanese Yen (JPY) to recover some of its latest losses.
Looking forward, developments surrounding the US-China trade deal and risk events concerning the US and the UK economies may offer near-term direction to traders. Recently, Bloomberg reported that the US President Donald Trump said to fellow Republican lawmakers that he won’t settle for less than an “excellent deal” ahead of a two-day visit by the US diplomats to Beijing starting from Thursday.
AUD/JPY Technical Analysis
Inability to surpass 79.00 mark comprising 61.8% Fibonacci can drag the pair to 78.30 prior to highlighting an upward sloping support-line stretched since early February at 77.80. However, extended declines past-77.80 can please sellers with 77.40-35 area that also includes 50% Fibonacci retracement.
Alternatively, a successful break of 79.00 can propel the quote towards a descending resistance-line since February 21, at 79.30, whereas 100-day simple moving average (SMA) could challenge buyers around 79.60 ahead of offering them 80.00 round-figure.
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