Australian Dollar Rallies on Risk Appetite, Japanese Yen Weakens Across the Board
The Australian dollar advanced following a shift in market sentiment and is the best performing currency against the greenback on Thursday as investors raise their appetite for risk. The AUD/USD remains 170+pips higher from the open after moving 113% of its daily ATR, and exchange rate may continue to push higher going into the Asian trade as risk trends dictate price action in the currency market. However, as the 30-minute RSI falls back from oversold territory, with price action holding below the 10-Day SMA at 0.8441, the aussie-dollar may fall back over the next few hours of trading and look to fill-in the gap from the 240-SMA at 0.8256. Nevertheless, as investors scale back expectations for a rate hike and speculate the Reserve Bank of Australia to maintain a neutral policy stance going into the second-half of the year, the AUD/USD may face downside pressures over the medium-term as investors weigh the prospects for future policy.
The Japanese Yen halted the three-day rally and pushed lower across the board following a rise in risk sentiment, and increased demands for higher-yielding assets could lead to further weakness as the Yen remains the most popular funding-currency. The USD/JPY is 60+pips higher on the day after moving 51% of its average true range, and another leg higher could lead the pair to test the 200-Day SMA at 91.03. However, as the 30-minute RSI approaches overbought territory, price action may hold below the 200-Day SMA, would could lead the pair to trade around the 240-SMA at 90.08. As we head into the end of the week, with market liquidity tapering off ahead of the weekend, the exchange rate may hold a narrow range over the next 24 hours of trading unless we get another shift in risk sentiment.
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