AUD/JPY appears to be on track to test the 50-Day SMA (90.60) after clearing last week’s high (89.69), but the positive relationship with the S&P 500 index continues to unravel despite the recovery in investor confidence.
The correlation coefficient has fallen to an insignificant reading of +0.16 as AUD/JPY trades less than 1% higher from the start of the year, while the S&P 500 has gained more than 7% during the same period. Swings in carry trade interest may continue to influence AUD/JPY as major central banks appear to be at or nearing the end of their hiking cycle, while a further improvement in risk appetite may keep the S&P 500 afloat.
AUD/JPY Rate Outlook
AUD/JPY appears to be carving a bullish outside day candle even though it struggles to extend the series of higher highs and lows from last week, with a break/close above 90.30 (23.6% Fibonacci extension) raising the scope for a run at the 50-Day SMA (90.60).
A move above the moving average opens up the 91.70 (38.2% Fibonacci retracement) region, but failure to clear 90.30 (23.6% Fibonacci extension) may push AUD/JPY back below 89.60 (50% Fibonacci retracement) as the indicator continues to reflect a negative slope.
Next area of interest comes in around 88.60 (38.2% Fibonacci extension) followed by the 87.20 (50% Fibonacci extension) to 87.40 (61.8% Fibonacci retracement) region.
--- Written by David Song, Strategist
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@DavidJSong
The correlation coefficient has fallen to an insignificant reading of +0.16 as AUD/JPY trades less than 1% higher from the start of the year, while the S&P 500 has gained more than 7% during the same period. Swings in carry trade interest may continue to influence AUD/JPY as major central banks appear to be at or nearing the end of their hiking cycle, while a further improvement in risk appetite may keep the S&P 500 afloat.
AUD/JPY Rate Outlook
AUD/JPY appears to be carving a bullish outside day candle even though it struggles to extend the series of higher highs and lows from last week, with a break/close above 90.30 (23.6% Fibonacci extension) raising the scope for a run at the 50-Day SMA (90.60).
A move above the moving average opens up the 91.70 (38.2% Fibonacci retracement) region, but failure to clear 90.30 (23.6% Fibonacci extension) may push AUD/JPY back below 89.60 (50% Fibonacci retracement) as the indicator continues to reflect a negative slope.
Next area of interest comes in around 88.60 (38.2% Fibonacci extension) followed by the 87.20 (50% Fibonacci extension) to 87.40 (61.8% Fibonacci retracement) region.
--- Written by David Song, Strategist
Follow on DavidJSong
@DavidJSong