Fundamental Analysis of AUD/JPY for December 7, 2017

AUD/JPY has been impulsively bearish recently after bouncing off the 85.50 and dynamic level of 20 EMA as resistance. AUD/JPY is currently residing inside the support area of 84.40 to 85.40 which is expected to be broken lower in the coming days. JPY has been stronger than AUD recently as the Australian economy was recently struggling to provide upbeat economic reports to help its currency recover losses. Today, Australia’s Trade Balance report was published which showed a significant decrease to 0.11B from the previous figure of 1.60B and AIG Construction Index was published with an increase to 57.2 from the previous figure of 53.2. The rise in imports in comparison to exports has been a great setback for Australia’s economy that is expected to provide JPY with more momentum in the coming days. On the other hand, today Japan’s Leading Indicators’ report was published with a slight decrease to 106.1% from the previous value of 106.4% which was expected to be at 106.2%. Despite the worse report, JPY gain was quite stable and was able to keep the price low with a steady gain against AUD today. Moreover, tomorrow Japan’s Final GDP report is going to be published which is expected to increase to 0.4% from the previous value of 0.3% and Bank Lending report is expected to be released with an unchanged value of 2.8%. To sum up, JPY is currently showing a lot of resilience to gain over AUD in the coming days that may be a warning sign for AUD as breaking below the nearest support is expected to lead to a further 150-200 pips drop in the future which might be costly enough for AUD.

Now let us look at the technical chart. The price was recently quite bearish after rejecting off the 85.40 and dynamic level of 20 EMA. The price is currently residing above the support level of 84.40 which is expected to be breached very soon and lead to further bearish pressure towards 82.00-83.00 support area in the coming days. As the price remains below the dynamic level of 20 EMA and 85.40 resistance area, the bearish bias is expected to continue further.

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