Technical Analysis

AUD/JPY highlights the mood in markets so far today

The classic currency pair in determining risk sentiment is down by 1.1%


And that makes AUD/JPY the biggest mover in the major currencies space in trading so far. The pair is down by 90 pips in trading and is testing a key swing region support at around 81.40. And when AUD/JPY swing moves are the biggest among major currencies, almost every single time it’ll be because of a shift in risk sentiment.

Today, it’s all about the risk off mood in markets. Things started with the Hang Seng index moving lower after the lunch break falling by close to 2% and that sparked selling in S&P 500 futures too. The negative sentiment slowly turned into an even uglier one as Italy’s budget worries once again added to market jitters and here we are right now.

Technically, AUD/JPY looks to be breaking below the 100-day MA (red line) @ 81.92 and if price manages to sustain a break back below the 81.40 handle then the downside bias will be more attractive in the coming days. However, a break below 81.00 will serve to add to that conviction even more otherwise that is another layer of support that needs to be broken first.

Subsequently, further support levels is seen at around 80.50 and the 80.00 handle before the year’s lows at around 78.60 will come into focus. The issue with the risk off mood seen today is that there isn’t much to have sparked it off at all in my view. And that makes for a good case for US trading to fade some of the moves here. But if we do get key technical breaks then it’s hard to argue with that too and there it’d be unwise to challenge that notion unless the technical bias shifts back.

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