The near-term recovery in AUD/JPY has unraveled as market participants scale back their appetite for risk, and the pair may face a larger decline over the coming days as it carves a series of lower highs & lows going into the last full week of May.
AUD/JPY struggles to preserve the advance following the better-than-expected employment report coming out of Australia, and the recent weakness in global benchmark equity indies may continue to drag on AUD/JPY as market participants utilize the Japanese Yen as a funding-currency. In turn, risk trends may continue to dictate the near-term outlook for aussie-yen, and a further shift in market sentiment may undermine the long-term bullish outlook for aussie-yen as the pair quickly approaches the April-low (81.49).
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AUD/JPY Daily
After failing to clear the topside hurdle around 84.60 (100% expansion) to 85.00 (100% expansion), AUD/JPY appears to be on course to test the upward trend from the 2016-low (72.44) as price and the Relative Strength Index (RSI) fail to preserve the bullish formation carried over from the previous month. In turn, a break/close below 81.60 (50% retracement) may spur a more meaningful test of trendline support, with the next region of interesting coming in around 80.50 (50% expansion).
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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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