Fundamental Analysis of AUD/JPY for October 4, 2018

AUD/JPY has been impulsive with the bearish pressure recently after rejecting the 82.00 area with a daily close. AUD has been the dominant currency in the pair earlier before JPY started the gain momentum despite AUD having positive economic results throughout this week.

AUD has been performing quite well in light of the economic reports released this week that did not help the currency to sustain its bullish momentum in the pair. This week AIG Manufacturing Index report was published with an increase to 59.0 from the previous figure of 56.7, MI Inflation Gauge increased to 0.3% from the previous value of 0.1%, and Cash Rate remaining unchanged as expected at 1.50%. Today Australia's Trade Balance report was also published with a wider trade surplus of 1.60B from the previous figure of 1.55B which was expected to decrease to 1.43B. Moreover, tomorrow Australia's Retail Sales report is going to be published which is expected to increase to 0.3% from the previous value of 0.0%.

On the JPY side, the economic figures were not quite satisfactory. Thus, it is quite a surprise how market sentiment is in favor of JPY compared to AUD. Japan's economic reports this week did not meet the expectations and revealed worse data. Today there are no reports from Japan to impact the market. But the pair managed to sustain the bearish pressure of AUD quite inevitably. Tomorrow, Japan's Household Spending report is due which is expected to decrease to 0.0% from the previous value of 0.1% and Average Cash Earnings is also expected to decrease to 1.3% from the previous value of 1.6%.

Meanhwile, AUD is fundamentally stronger than JPY, but the market sentiment is biased towards JPY. Any positive data from Japan may lead to a deeper decline. On the other hand, macroeconomic reports from Australia yet to be published may play a vital role to counter the bearish pressure and push higher with the bullish trend in the process. As per long-term trend pressure, AUD is expected to assert its strength.

Now let us look at the technical view. After the Bullish Divergence proving to be a success earlier in this pair, the price has pushed lower quite impulsively after being rejected off the 82.00 area with a daily close. The price is currently heading towards 80.50 area from where the price is expected to push higher towards 82.00 area with trend. If the price manages to break above the area with a daily close, further bullish momentum is expected which could lead the price higher towards 83.50 onwards in the future.

SUPPORT: 80.50

RESISTANCE: 82.00, 83.50, 85.00

BIAS: BULLISH

MOMENTUM: VOLATILE