The Recent Performance of the AUD/JPY Pair
The AUD/JPY currency pair has been trading in a rather tight range since March 2016. The pair was confined to the 84 – 86 handle for much of March, before weakening dramatically from 1 April when it plunged from 86.0092 a low of 81.192 on 7 April. Then the AUD started to strengthen against the JPY with back-to-back sessions of strong gains taking place right through until 26 April when the pair reached 86.128. This was followed by a steep decline to a low of 79.613 on 3 May, and strong gains posted shortly thereafter. These were the result of several factors, namely the RBA rate cut and oil price weakness impacting on the strength of the USD which hit a 15-month low earlier in May.
The AUD/JPY pair tends to plunge in times of ‘risk-off’ economic environments, and it tends to appreciate in ‘low-risk’ economic environments. Earlier this week, the USD recorded its best come back since November 2015. The most notable factor impacting on the AUD/JPY currency pair was the RBA rate cut (analysts gave this a 50% likelihood), and the new Australian interest rate of 1.75% was certainly a surprising turn of events for those bullish on Australian dollar. The rate cut for the Australian dollar naturally weakens the currency, and that is precisely what happened. As a result of bearish headwinds with the USD and the rate cut with the AUD, the AUD/JPY currency pair is now trading near its lowest level for the year to date.
Presently, the AUD/JPY currency pair is testing the levels set in late February 2016. When the currency pair traded at 79.59 (23 February, 2016), analysts were expecting the pair to continue on its downtrend towards the 77.50 handle.
The AUD/JPY currency pair has the following resistance levels:
- R1 – 80.63
- R2 – 80.84
- R3 – 81.04
The AUD/JPY currency pair has the following support levels:
- S3 – 79.24
- S2 – 79.44
- S1 – 79.64
