AUD/JPY Reaches a Stacked Level of Resistance
The Dow is rallying after Draghi told the market what it was braced to hear. That’s the risk barometer aspect of this pair. The Australian dollar is rallying on the solid Employment Change and Unemployment Rate numbers. Finally the Japanese yen is losing ground rapidly against the majors as the risk appetite on Wall Street is triggering yen selling.
The euro had been steadily gaining on the anticipation of details of a bond buying program and today was the day that profits were initially taken on that large move. The market – despite the move higher in U.S. equities – is hesitant and that makes this move on the AUD/JPY interesting.
Past performance is not indicative of future results
The daily AUD/JPY has corrected sharply higher in the midst of what is a “fresh” downtrend on the daily. This will be the first significant test of AUD/JPY bears and pessimistic equities traders.
The Dow Jones (futures) are up sharply but have yet to break higher through previous levels of resistance telling that despite the near-term optimism, there is are lingering doubts and fears. Without momentum north of 13,000 the move is likely to have a sharp retracement and this could set up the follow-through needed for the AUD/JPY to move lower from the 38.2% Fibonacci Retracment and the 34 period EMA low. Oh but there is a little thing called the Non-Farm Payroll tomorrow that could have a significant impact on whether enough what we got from Draghi is enough to establish a base from which U.S. data could add the next wave of equities buying. One drag on all this euro-optimism is the skeptical eye of traders that is focusing on disappointing growth prospects in Europe.
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