- The Australian dollar has rallied a bit against the Japanese yen during the trading session on Wednesday, which of course is a “risk on move”, as the Australian dollar is considered to be a risk-based currency.
- Furthermore, the Japanese yen is considered to be a “safety currency”, and as a result a lot of people will run to it if there is a lot of concern out there.
- At this point, there are plenty of reasons to be concerned, so the last move to the downside was not a huge surprise considering just how chaotic everything is getting.
Technical Analysis
The technical analysis for this market is interesting, as we are bouncing around the 200 Day EMA, as well as the 50 Day EMA. Because of this, it’s likely that there will be a lot of noise in this neighborhood and based upon the previous reaction to the ¥95 level, I think it does make a certain amount of sense that we have rallied. Furthermore, I would also point out that we broke above the inverted hammer from Monday, so that is bullish.
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However, you also have to keep in mind that there is a lot of volatility out there, which doesn’t necessarily help the currency pair on the whole. With this, I think you need to be cautious, but at this point it looks like we are at least trying to reach the 97.50 level again, although I think it’s going to be very difficult to get there.
On the other hand, if we were to break down below the ¥95 level, we could drop to the ¥94 level, but that is an area that I think we will see a lot of noise at this juncture. Ultimately, the markets will continue to be very shaky, so make sure you keep your position size reasonable. This is a pair that can move rather rapidly on headlines.
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