Japanese Yen Rebounds Against Greenback, Australian Dollar Weighed Following RBA

The Japanese Yen bounced back against the greenback and is the best performing currency on Tuesday, and the exchange rate may continue to push lower throughout the U.S. trade as the pair maintains the narrow range carried over from the previous week. The USD/JPY remains nearly 30pips lower on the day after moving 60% of its daily ATR, and we may see the pair close the gap from the 240-SMA at 90.14, as price action continues holds within the downward trenching channel from the January high (93.79). However, as the 30-minute RSI approaches oversold territory, we may see price action hold along the 120-SMA at 90.45, but a sharp reversal could lead the pair to test the 20-Day SMA (90.97) going into the Asian trade.

The Australian dollar tumbled lower during the overnight trade as the Reserve Bank of Australia unexpectedly held the benchmark interest rate at 3.75%, and the high-yielding currency may face increased selling-pressures going into the Asian session as investors scale back expectations for a rate hike. The AUD/USD remains 80pips lower on the day after moving 124% of its average true range, but the pair looks to be coming back as it finds short-term support at the weekly low of 0.8781, with the 30-minute RSI climbing back from oversold territory. As a result, we may see the aussie-dollar cross back above the 120-SMA (0.8858) and cover the gap from the 240-SMA at 0.8917, but the lack of momentum to break above the 10-Day SMA at 0.8963 may push the pair lower throughout the remainder of the week as the RBA holds a neutral outlook for future policy. Nevertheless, a break below the December low (0.8733) is likely to expose the 200-Day SMA at 0.8547, but we are likely to see a corrective retracement over the near-term as the daily RSI continues to trend lower.

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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com