November 19, 2021 15:54:12
It’s been a topsy-turvy day with risk on and off and mildly returning. Rising cases of Covid and more European lockdowns are concerning investors. This has seen a bid in safe haven currencies like JPY. The yen is the top performing major on the month.
AUD/JPY has often been known as an FX “bellwether”. It is a gauge of measuring the broader trend in risk appetite. The aussie, a “riskier” currency, is paired with the classic haven. However, there has been a clear structural break between the pair and stock markets over the last few months. The latter have regained their highs, but FX investors have been more defensive.
After bottoming out at 77.89 in August, more extended upside was stopped by the 200-day SMA around 82. Another fall below 79 held, before a strong advance to new year-to-date highs at 86.25. Since then, prices have fallen back to the 200-day SMA just below 83. This acted as support for a couple of days though today’s move fell through here and the 50-day SMA.
A weak weekly close should see more downside. Targets include the 100-day SMA at 81.85 and 80.85/92. We need to get above 84 to see momentum turn more bullish.
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