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Not much on the docket for London session traders, which means risk sentiment will likely drive price action in the next few hours.

Feel like trading AUD/JPY today?

Before we talk charts, check out the top headlines that influenced Asian session traders:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • EU’s Economic Summit begins today
  • Switzerland’s PPI at 6:30 am GMT
  • Canada’s ADP non-farm employment change at 12:30 pm GMT
  • Philly Fed manufacturing index at 12:30 pm GMT
  • Initial jobless claims at 12:30 pm GMT
  • NY manufacturing index at 12:30 pm GMT

What to Watch: AUD/JPY

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

The biggest story during the Asian session was Reserve Bank of Australia (RBA) Governor Philip Lowe hinting that he and his gang are considering another rate cut AND maybe purchasing long-term bonds in the foreseeable future.

The dovish remarks fueled the already bearish momentum from a lack of stimulus deal and election uncertainty in the U.S.

AUD/JPY is now trading at the 75.00 major psychological handle, which lines up with range support that had been solid in the three other times that it was tested since late September.

Will the bulls step up for another day? Take note that Stochastic is hinting at a bullish divergence around the 75.00 MaPs (“Major Psychologically Significant”) levels.

A long trade at the first signs of a bounce would provide the best reward-to-risk ratio in a scenario where AUD/JPY jumps back to its 76.00 range resistance.

If the bearish momentum keeps up during the London session, however, or if Brexit and EU Summit updates cause another round of risk aversion in the markets, then we could see AUD/JPY finally break below the range and maybe retest areas of interest closer to 74.50.

AUD/JPY has already dropped by half of its daily average volatility, so remember to keep your stops and targets realistic when placing them trading orders!