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AUD/JPY hits the top of the watchlist as the pair forms a classic consolidation setup on the one hour chart.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/CAD on oil’s possible rebound, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

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Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • U.S. Monthly budget statement at 6:00 pm GMT
  • Japan PPI, Foreign investments at 11:50 pm GMT
  • Australia Consumer inflation expectations at 12:00 am GMT (Mar. 12)

What to Watch: AUD/JPY

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

Not much on the calendar ahead as far as big potential volatility catalysts, but we do have mid-tier reports from both Japan and Australia that may get AUD/JPY moving. The pair has actually been tightening up price action over the past few sessions, consolidating around the 68.00 handle, which is a setup for a potential breakout play ahead. So, it’s being kept simple for traders ahead as we don’t really need to have a short-term directional bias, we just need to get ready to move if the pair breaks.

For the bears, a break below the rising ‘lows’ in combination with weak Aussie consumer inflation expectations and better-than-expected Japanese PPI data is the signal for traders to get interest in a short position, especially if global risk sentiment is still in risk-off mode. With a daily ATR of around 130 pips, the Tuesday lows around 67.00 is a reasonable target and decent short-term R:R if using the ATR as a stop guide.

And vice versa for the bulls, a break above the falling ‘highs’ combined with positive Aussie inflation data and weak Japanese PPI data is a signal to work on a long position, especially if we see positive updates in the coronavirus story and/or more government stimulus news to combat the coronavirus. That’s such a low probability right now that if it did play out, the move higher should be pretty strong in the short-term. Targeting the major psychological handle of 70.00 is a reasonable target in this scenario for a better than 1:1 potential short-term return-on-risk.