AUD/JPY gapped higher ahead of the U.S. Presidential Election, with the advance in the exchange rate accompanied by a pickup in risk appetite.
With Democratic nominee Hillary Clinton leading the polls ahead of the U.S. Presidential election, AUD/JPY appears to be making another attempt to break out of the long-term trend, and a further improvement in market sentiment may heighten the appeal of the higher-yielding currency especially as the Reserve Bank of Australia (RBA) looks poised to carry its current policy into 2017.
A closing price above the 80.10 (50% expansion) hurdle raises the risk of seeing a move back towards the Fibonacci overlap around 81.30 (61.8% retracement) to 81.70 (38.2% expansion) especially as AUD/JPY breaks the monthly opening range. With that said, we will keep a close eye on the Relative Strength Index (RSI) as the oscillator appears to be highlighting a similar dynamic, with a break of trendline resistance pointing to a more material shift in market behavior.
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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