Thursday saw the AUDJPY currency pair maintaining a steady course despite Australian data exerting downward pressure on the Australian dollar. The most recent labour statistics revealed that the Australian unemployment rate met market expectations at 3.9%. However, the employment change figure was a significant setback at -65.1K. This substantial decrease nearly wiped out the previous gain of 72.6K, falling well short of the market consensus, which anticipated a 17.6K increase.
The labour market’s apparent easing wiped out concerns about wage growth, potentially influencing the Reserve Bank of Australia’s (RBA) decision in February on whether further tightening measures are necessary. With the market factoring in the possibility of peaked rates, there’s speculation that the RBA may maintain current rates in the upcoming meeting.
Traders closely following the AUDJPY pair are now turning their attention to Japanese inflation data later this week to gauge the next move for this currency pair.
Technical
On the daily chart, a symmetrical triangle has emerged, with the momentum relatively neutral, as displayed by the 14-day RSI and the convergence of the 50-SMA (blue line) with the 25-SMA (green line). This leaves the potential for a breakout in either direction as the currency pair trades sideways between 96.716 and 97.242.
If the pair moves below 96.716, the triangle could be at serious risk of a breakdown, as the shift below the 25-SMA and 50-SMA could signal a bearish tilt. The breakdown could push the pair down toward the 100-SMA (orange line) at 95.995 in search of support for a retracement. If support at this level fails, the 61.8% Fibonacci golden ratio could be a level of interest at 95.228.
However, a breakout above 97.242 could have the opposite effect, putting the dynamic resistance of the triangle under pressure. If a breakout occurs, traders could be looking toward resistance at 97.843 and 98.576 as potential interest levels to the upside in the coming days.
Summary
The AUDJPY maintained its sideways trajectory despite bearish developments in the Australian labour market. Support and resistance at 96.716 and 97.242, respectively, could be worth keeping an eye on, as a movement in either direction could put the symmetrical triangle at risk of a breakout.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
