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The RBA kept rates unchanged as expected while Australia’s retail sales report for June beat expectations.

Are these enough to keep AUD/JPY afloat?

Before we talk about the setup, check out the major headlines that moved the markets during the Asian session:

Major FX Pairs Price Performance from MarketMilk
Major FX Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • Swiss SECO consumer climate index at 5:45 am GMT
  • Australian commodity prices at 6:30 am GMT
  • Spanish unemployment change at 7:00 am GMT
  • Eurozone PPI at 9:00 am GMT

What to Watch: AUD/JPY

AUD/JPY 1-hour Forex Chart
AUD/JPY 1-hour Forex Chart

AUD/JPY is keeping its head above the rising trend line support connecting the lows since June.

A bounce might follow as the pair found support at the 61.8% Fib, which coincides with an area of interest. However, technical indicators are suggesting that bearish momentum may be in the works.

For one, Stochastic is indicating overbought conditions or exhaustion among buyers, and turning lower could show that sellers are taking over. The 100 SMA is also below the 200 SMA for now, so support is more likely to break than to hold.

Economic updates from the Land Down Under have been mostly upbeat in the earlier session, though, so the Aussie might have a fighting chance.

To top it off, the RBA maintained its somewhat cheery tone in citing that there are signs of a recovery in most parts of the country.

If risk-taking keeps up for the rest of the day, the lower-yielding yen could give up more ground, especially since there have been some currency jawboning remarks from Japanese officials recently.

If you’re counting on a continuation of the climb, it might not be too late to hop in at the market and aim for the swing high. Just make sure you incorporate the average AUD/JPY volatility when setting stops and targets!