Australian Dollar Outperforms, Japanese Yen Loses Ground

The Australian dollar rallied 100+pips against the greenback following the rebound in risk appetite, and the higher yielding currency may continue to appreciate over the coming month as investors speculate the Reserve Bank of Australia to tighten policy throughout the second-half of the year. The AUD/USD remains the best performing currency on the day after moving nearly 120% of its average true range however, as the RSI approaches overbought territory, the aussie-dollar may fall back below the 20-Day moving average at 0.9087. The AUD/USD looks as though it may have reached a top this month after rising to 0.9330 on 10/21, and we may see the pair continue to search for a bottom in November as its fails to retrace the previous week’s decline.

The Japanese yen weakened against the greenback, with the USD/JPY advancing to a high of 91.46 following the rise in market sentiment however, the lack of momentum to hold above the 50-Day SMA (91.30) may push the pair lower over the remainder of the week as the October rally stalls ahead of the September high at 93.44. The dollar-yen is 40+pips higher from the open after moving 122% of its daily ATR, and the pair may continue to consolidate throughout the North American trade as investors weigh the prospects for a sustainable recovery in the U.S. As the USD/JPY fails to push back above 91.50, we may see the pair work its way towards the 20-Day SMA at 90.35 to test for near-term support, but a break below would expose the October low at 87.99 and could lead the pair to maintain the downtrend from April.