The Aussie dollar continues to look for momentum to the upside, as we are near the bottom of the range that we have been in.
AUD/JPY
The Australian dollar is somewhat choppy against the Japanese yen during the early trading on Wednesday as we continue to bounce from the overall range that we have been in. The ¥110 level is an area that has been very supportive, and it also has the 200-day EMA sitting there. So, I think all things being equal, it makes a certain amount of sense that we see some buying.
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The interest rate differential favors Australia by a huge margin, especially with the RBA expected to be hiking in the future. That being said, the Bank of Japan has an interest rate decision coming out on Friday, and they are expected to raise rates by 25 basis points. But ultimately, the question will come down to forward guidance.
The pair has been in a consolidation since basically April
At this junction, technical analysts will look at this as a situation where traders are looking for a little bit of value. It does make a certain amount of sense, and the ¥109 level being violated is exactly what I would need to see to think this pair is going much lower.
The pair has been in a consolidation since basically April, and it just looks like it is trying to do more of the same. The Australian dollar is a decent carry trade currency against the Japanese yen. You do get paid to be patient, and I think that is probably how I continue to look at this.
The ¥115 level is the top of the range. Breaking that would obviously be extraordinarily bullish, but we are 450 pips or so from that level. That is something to think about in the long term.
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