Good morning forex friends! For this week, I’m in watch mode with an action packed economic calendar, and what I have set my sights on is AUD/JPY!
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It was tough to find a setup that wouldn’t be affected by the huge amount of event risk coming up, but I think I found it with AUD/JPY. There are a couple of major events for both the Aussie and the Yen–the Bank of Japan monetary policy meeting and Australian PPI data–but I think this may work in my favor.
The expectation for the former is that the BOJ will stay inline with recent positive rhetoric on Japan’s recovery and that there will not be any new QE measures taken at this time. Unless we get some sort of new action, volatility isn’t likely to spike outta wack. For Australian PPI, the expectation is for the quarterly number to tick higher than previous (0.6% vs. 0.2%), but last week we got a downside surprise from the CPI number so we may see something similar. I think both are the most likely scenarios and if they do come around, I think there’s a good chance they can take the pair lower.
If that’s the case, my watch area is the 50% – 61% Fib area, or roughly the 93.00 – 94.00 area. If it retests and holds here, and the market drivers haven’t drastically changed, I think this area could be an opportunity to jump into the longer term trend higher.
So, that’s my thoughts on AUD/JPY…what do you think? Are you bullish or bearish on this pair? I’d love to hear your thoughts, so please leave a comment below!