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AUD/JPY hits the top of the watchlist for the Asia and London sessions as traders may see continued volatility with economic updates ahead from both Australia and Japan.

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the recent uptrend in USD/CAD, so be sure to check that out to see if there is still a potential play!

Intermarket Update:

Equity Markets Bond Yields Commodities & Crypto
DAX: 15216.27 +0.55%
FTSE: 6881.13 +0.54%
S&P 500: 4323.06 +1.52%
NASDAQ: 14498.88 +1.57%
US 10-YR: 1.22% +0.039
Bund 10-YR: -0.415% -0.004
UK 10-YR: 0.556% -0.01
JPN 10-YR: 0.006% -0.015
Oil: 67.32 +1.355%
Gold: 1,810.30 +0.06%
Bitcoin: $29,961.50 -2.50%
Ethereum: $1,803.66 -1.07%

Fresh Market Headlines & Economic Data:

Dow rebounds more than 500 points, recovering most of Monday’s losses

U.S. housing starts rise in June, while building permits fall sharply

Germany Producer prices in June 2021: +8.5% on June 2020

Euro area current account recorded €12B surplus in May 2021, down from €22B in previous month

Bitcoin drops back below $30,000, heads toward new low for the year

EU proposes ban on anonymous cryptocurrency transactions

Corporate bond credit spreads widen as investors shun risk

Delta now 83% of New U.S. Cases

Upcoming Potential Catalysts on the Economic Calendar

Japan Trade Balance at 11:50 pm GMT
BOJ Monetary Policy Meeting Minutes at 11:50 pm GMT
Australia Leading Index at 1:00 am GMT (July 21)
Australia Retail Sales at 1:30 am GMT (July 21)
UK Public Sector Borrowing at 6:00 am GMT (July 21)
Italy Industrial Sales at 8:00 am GMT (July 21)
Italy Construction Output at 9:00 am GMT (July 21)

What to Watch: AUD/JPY

AUD/JPY 1-Hour Forex Chart
AUD/JPY 1-Hour Forex Chart

AUD/JPY bears have been on a solid run this past week, but the market seems to have stabilized over the past session as the pair sits in a 50 pip range just above the 80.00 major psychological level. Is this just a breather before another run lower, or is the pair poised to pop higher?

Check out our new FX Market Snapshot tool to quickly see what’s happening in the forex market today.

Given that the market is being driven by covid-19 news and developments, and that is likely a situation that cannot be quickly turned around, it’s possible that this is just a pause in AUD/JPY’s downtrend.

On thing to keep in mind though is that  we do have data from Australia and Japan to potentially shift short-term sentiment.  So we have to pay attention to those updates (most notably BOJ meeting minutes and Australia retail sales data), but in case we don’t see a major surprise from expectations or previous reads, it’s highly likely covid-19 stories will still be the dominant catalyst on the pair.

With that said, if the upcoming economic data doesn’t materially shift short-term sentiment on either currency, then we’ll be on the look out for a bounce and resistance around the broken previous swing low area, which also lines up with the Fibonacci levels and falling ‘highs’ pattern.

A retest and bearish candle formations there would likely draw in technical and fundamental sellers if the broad risk aversion themes continue and pick up steam in the next session.