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Since carving a floor at 72.45 in June 2016, the AUDJPY is up more than 1,500 pips. From trough to peak, it’s a gain of nearly 1,800 pips.
I use the term “peak” loosely as there’s no sign that the September 2017 high at 90.30 will hold as an intermediate (one year or longer) high.
However, if the other yen crosses we’ve discussed recently capitulate, the AUDJPY will follow. In other words, a strong yen will begin to drag the AUDJPY lower.
Right now the pair is a bit of a holdout in the sense that it hasn’t succumbed to selling pressure like that of the EURJPY. Even the AUDJPY’s counterpart, the NZDJPY, has started to break lower.
So will the AUDJPY be next?
I think it will. But from a technical standpoint, the pair hasn’t given us a reason to go short just yet. It’s likely going to take a daily close (New York 5 pm EST) below the 87.20 handle to trigger further weakness here.
That would pave the way for a move toward the 85.40 area. It would also help solidify the idea that the 2017 high at 90.30 is a significant one.
Key resistance at the moment comes in just above the 89.00 handle. A daily close above that would expose 90.30.
As for events to keep an eye on, Australia reports CPI on January 30 at 7:30 pm EST. Later that evening, President Trump gives his “The State of the Union Address” at 9 pm EST.
The speech isn’t usually a big market mover, but “usual” isn’t in Present Trump’s vocabulary, so anything is possible.
Then on Wednesday, January 31 we have a Fed rate decision and statement at 2 pm EST. The week concludes with non-farm payroll on Friday at 8:30 am EST.
There are a few other potential market movers this week, but those are the significant ones.
As you can see, it’s a jam-packed week. I’ll be keeping a close eye on what effects these events have on the Japanese yen in particular, which is where I believe the real opportunity lies.
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