AUD/JPY Faces Strong Psychological Resistance Level 100.000

Zi Cheng

Traders' Opinions

Forex

Summary:

The cautious outlook from the Bank of Japan (BoJ) and positive Australian data offer some backing to the currency pair.

Fundamental Analysis

During the early European session on Thursday, the AUD/JPY cross continues to climb, reaching two-week highs around 99.92. The dovish stance taken by the Bank of Japan (BoJ) in its March meeting, coupled with the absence of clear guidance on future policy actions, has exerted downward pressure on the Japanese Yen (JPY). Investors are now awaiting the release of Australia's Trade Balance for March on Friday, which could offer fresh momentum.

Despite the BoJ's first interest rate hike in 17 years, the JPY failed to gain traction, given that interest rates in Japan remain substantially lower compared to global rates. Additionally, concerns about the BoJ's cautious approach to further rate hikes, coupled with the lack of clarity on the pace of policy normalization, weigh on the safe-haven appeal of the JPY against the Australian Dollar (AUD), consequently favoring the AUD/JPY cross.

In Australia, business activity showed signs of improvement in March. The final reading of Australia's Judo Bank Services PMI increased to 54.4 from the previous 53.5, while the Composite PMI figure rose to 53.3 compared to 52.4 previously. This upbeat data lends support to the AUD, especially amid positive sentiment in equity markets on Thursday.

However, the upside potential of the AUD/JPY cross may be limited by the heightened likelihood of intervention by Japanese authorities in the foreign exchange (FX) market to prevent excessive depreciation of the JPY.

Technical Analysis

AUD/JPY has been bullish for the week with huge bullish candlesticks and fair value gaps as well. This means that the buyers are very aggressive and wants to push AUD/JPY to a higher price. I personally think it is too late to jump in for a long position now as the risk-reward ratio doesn't suit my risk appetite.

AUD/JPY is also at a key resistance level confluencing with psychological level 100.000. This level has previously rejected price with a huge long wick and huge bearish candlestick. This is one of the reason why it is not advisable to long currently.

Most of the traders might have the idea to sell but it is not recommended as well because the buying pressure is still very strong it could pierce through the resistance easily. Main goal in trading is to follow the trend, it increases the probability.

My outlook would be waiting for retracement back to around 50% of the Fibonnaci which we also a small support area there as well for confluence. If it does not retrace, I will wait for a clean breakout then look for long positions.

AUD/JPY Faces Strong Psychological Resistance Level 100.000_1

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education