- The AUD/JPY has fallen during the trading session on Thursday, as we continue to see a lot of noisy behavior.
- Ultimately, this is a market that I think will see a lot of volatility, mainly since there are a lot of different things pushing it at the same time.
For example, the Australian dollar is highly levered to the commodity markets and risk appetite in general, so that is something to keep in your mind. Because of this, the market will be paying attention to commodities, as the Australian economy is highly levered to the mining sector, as it provides so much in the way of metals to China and other parts of the world. At the same time, you have the Bank of Japan doing everything it can to fight interest rates, so therefore we want to pay attention to interest rates around the world. If they start to spike again, that is negative for the Japanese yen, as the central bank will have to print more currency to buy more bonds to drive rates down.
Be Cautious
As things stand right now, it’s likely that we see the risk appetite out there drive this market more than anything else. After all, the Japanese yen is a safe currency, so be interesting to see if that continues to be the case going forward, even though the Bank of Japan is one of the few central banks around the world that is loosening monetary policy.
If we break down below the 200-Day EMA, then it’s likely that we could go down to the ¥91 level and break down below their kids in this market much lower. On the upside, if we can break above the 50-Day EMA, then we could go looking to the ¥94 level. If the ¥94 level is broken to the upside, then it’s likely that we could go to the ¥95 level. Either way, I think we have a lot of upward momentum coming into the market, something that I’m not anticipating any time soon, but anything is possible at this point. One thing I think you need to be very cautious with is the fact that it is getting close to the holiday season, meaning that liquidity could start to dry up next week.
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