AUD/JPY finds some reprieve at the lows
AUD/JPY is the worst performing major currency pair today as risk-off trading prevails in markets. Equities are beaten down, bond yields are weighed lower, and oil is tumbling. It basically checks all the boxes for a bad day for the aussie and a good one for the yen.
The pair is down by about 1.3% on the day now to 81.20 after having started the week near the 84.00 handle where it met resistance from the figure level and things just came crashing back down as risk slumped on Tuesday and in trading today.
The only positive spin I can put on the drop here is that we’re now approaching key technical support levels for the pair and that could help limit further declines seen on the day. There is a confluence of support levels nearby here from the 100-day MA (red line) @ 81.25 and then the 50.0 retracement level @ 81.30 and the broken trendline which sits near 81.00.
It’s a trifecta of key support levels to help hold up the pair amid the sour risk sentiment seen in trading today. However, do be reminded that we’re yet to see what US markets have to offer us later in the day.
Considering the heavy declines already seen, I reckon it’s only going to take a massacre in US stocks and a further meltdown in Treasury yields to drive a move lower below the key technical support levels above. If those levels fail to hold, it’s going to be a rather painful drop for AUD/JPY in the coming sessions.
Otherwise, we may have just found the bottom in price action for today.