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AUD/JPY: Risk sentiment remains challenged around key events, politics

  • Pre-Fed risk aversion joins hands with the political news concerning the US-China trade deal and North Korea’s nuclear plans.
  • While 50-day SMA offers immediate support, upside momentum can be questioned before key events like FOMC.

AUD/JPY trades around 79.00 before European markets open on Wednesday. Trade sentiment remains challenged ahead of key events like the Federal Reserve’s monetary policy meeting whereas developments surrounding the US-China trade talks and recent updates from North Korea add pressure on investors.

The AUD/JPY initially reacted to the report mentioning China likely refraining from trade offers, headline lawmakers like the US treasury secretary Steve Mnuchin and trade representative Robert Lighthizer up for meeting the dragon nation in next week and monetary policy meeting minutes from the Bank of Japan (BOJ).

However, moves were capped off-late as global markets adhered to pre-Fed risk aversion whereas report from South Korea that the North Korean leader Kim Jong Un may announce nuclear details today built further pessimism.

While political moves surrounding the US-China trade talks and updates for North Korea can play background music for near-term trading, the US Fed’s monetary policy meeting may acquire major attention. The reason could be brighter chances for the central bank’s reduction of the 2019 rate-hikes from two to one.

AUD/JPY Technical Analysis

50-day simple moving average (SMA) level of 78.65 may become immediate support ahead of drawing market attention to 78.00 and an upward sloping supportline near 77.80.

Meanwhile, 100-day SMA level of 79.70 acts as immediate resistance, a break of which can push buyers to aim for 80.00 and 80.50 number including 200-day SMA.

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