ZuluTrade Blog

A potential Setup for AUDJPY

Market View | Monday, May 13, 2019 2:34 PM GMT

A potentially rewarding bearish scenario could materialize for AUDJPY if the pair tests the trend lines #1 and #2 of the 1H chart.

The trend line #2 is additionally supported by the 1H Upper Bollinger Band of the pair.

The bearish scenario could be considered busted, if AUDJPY reaches the 77.95 level.

1H Timeframe AUDJPY: 

Strengths of AUDJPY:

  • Australia is currently having the first surplus budget in the decade and is heading towards elections on Sunday.
  • improving macro readings: current account, home loans, unemployment, M1, service PMI (crossed above 50), private sector credit, private capital expenditure, AIG manufacturing index, household consumption, consumer's sentiment, wage price index.


Weaknesses of AUDJPY:

  • the current depreciation of CNY, that followed the collapse of the USA-China trade negotiations is pressuring AUD.
  • the Japanese domestic demand is expected to pick up due to increased government spending and the current monetary policy.
  • Westpac, one of the top four Australian banks, is expecting two rate cuts, in August and November 2019. RBA has not committed a rate cut at the last week’s meeting, as it has been expected, but this could happen at the next meeting.
  • latest Manufacturing and Non-manufacturing PMI releases from China, a top importer of Australian products, are still above the 50 threshold but they are decreasing. China further disappointed with the latest trade balance, new loans and M2 reading.
  • deteriorating macro readings for the Australian Economy: GDP, inflation gauge, unemployment, job advertisements, inflation expectations, retail sales, trade balance, manufacturing PMI,home sales, building approvals, AIG construction index, company operating profits, decreasing capital expenditure, business confidence



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