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Jul 19 - 01:55 PM

AUD/JPY - COMMENT-FX Risk Gauge AUD/JPY Collapses Near Crucial Support

By Randolph Donney  —  Jul 19 - 11:50 AM

The top FX risk gauge, AUD/JPY, tumbled 1.33% Monday, along with global stocks, to more than 5-month lows and toward critical long-term support, which, if broken, could signal another 4% fall and erase 2021 gains that were premised on the pandemic being tamed by now.

Monday's 80.02 low in AUD/JPY, a currency pair that pits the main risk proxy currency among the majors against the top haven currency, neared the pivotal 55-week moving average, the 23.6% Fibo of the entire March 2020 to May 2021 recovery from the pandemic collapse and 50% Fibo of the October to May rise at 79.78/69/46.

For nearly three-and-half years, the 55-WMA has played a crucial role.
AUD/JPY's pandemic recovery uptrend began its reversal in May, breaking the up trendline from 2021's lows.
June brought an overbought top signal from weekly charts.
July's drop and close below June's lows and the weekly kijun leaves the 79.78/69/46 supports noted above as the last line of defense.

Prices have gotten oversold on daily RSIs, but falling weeklies have room to retreat, suggesting rebounds will be selling opportunities, particularly for specs still long from higher then current levels.

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Source:
Refinitiv IFR Research/Market Commentary

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