AUD/JPY traded lower on Thursday, breaking below the key support (now turned into resistance) barrier of 84.50. The rate has been printing lower highs since October 21st, but it had never fallen below the 84.50 zones since then. Yesterday’s slide confirmed a lower low and, in our view, signaled a short-term trend reversal.

Following are the key headlines from the November RBA monetary policy statement, via Reuters, as presented by Governor Phillip Lowe.

Will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target rangeCentral forecast is for GDP growth of 3 percent over 2021 and 5½ per cent and 2½ per cent over the following two years. This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currentlyOne important source of uncertainty continues to be the possibility of a further setback on the health frontBoard is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2½ per cent at the end of 2023 and for only a gradual increase in wages growthCentral forecast is for the unemployment rate to trend lower over the next couple of years, reaching 4¼ per cent at the end of 2022 and 4 per cent at the end of 2023.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

At the time of writing, the rate is hovering slightly above the 83.80 barriers, marked by the inside swing high of October 12th, the break of which may encourage the bears to take the action down to the 83.00 zones, which provided support on October 12th. If they are not willing to stop there either, then a break lower could see scope for declines towards the 82.10 area, near the inside swing high of October 8th.

In the daily chart, the AUD/JPY broke below the neckline of a double-top at 84.60. Additionally, the 84.00 gave way to AUD/JPY sellers, which seem to be in control for the last couple of sessions. Despite that, in the near term, the cross-currency pair has a downward bias; the longer-term trend is up. The daily moving averages (DMA’s) remain below the spot price but would be at risk of being breached as they lie below the double-top target at 83.00, within the 81.80-82.80 range.

AUDJPY might fall a bit lower at EMA50

Nov 07 2021