In a week where both individual currencies made headway in strengthening against the greenback, the AUDJPY currency pair has been engaging in a back-and-forth battle, which looks set to close the week relatively flat. With crucial events to look forward to next week, could there be a kink in the armour in the late session, or will traders simply ride out the wave?
The Australian dollar has made significant gains against the US dollar, with a 2.7% surge on the back of softer US inflation, as the risk-sensitive currency rode the wave of commodity rallies in the late-week sessions. However, with traders treading cautiously on the potential of a Bank of Japan monetary policy tweak on top of possible government intervention, the Japanese Yen has also found its footing. As things stand, the currency pair is down -0.08% for the week, shortly after the RBA announced Michelle Bullock as the replacing governor for Phillip Lowe. Bullock will take over in September, in a move seen as “stable” by the market.
Technical
A symmetrical triangle remains in play on the 1D chart, where the daily pivot point at 94.746 offers support to the bullish cause. However, the bears have taken control from the mid-June peak, enforcing a retracement from the prior rally.
If the pivot point holds, the bearish steam could run out, enticing the bulls to break through resistance at 95.781 to put the dynamic triangle resistance at risk. A breakout at the upper end of the triangle could see a continuation of the prior uptrend, with resistance at 96.760 and 97.598 firmly within sight.
However, a breakdown at the pivot could leave the triangle support vulnerable to a retracement continuation. A breakdown of the triangle could see the bears meet immediate support at 93.423, the 38.2% Fibonacci retracement, before reaching the midpoint and golden ratio at 92.151 and 90.879, respectively.
Summary
As the AUDJPY tug-of-war continues, the price action around the daily pivot point could be instrumental in advancing the directional trend. If support holds, the bulls could push toward 95.781.
Sources: Koyfin, Tradingview