Tensions between US and China over tariffs are in full swing and AUD/JPY is feeling the heat of it. The pair had been trading within a rising channel from around the 23rd of March. Now we are seeing a break through the lower bound of that channel, which means that the bears are sitting comfortably in the driver’s seat and trying to take the pair lower. Certainly, the day has just started, and we have a long way to go before the close. There still could be a possibility for AUD/JPY to move back inside the channel today.
For now, judging by the current picture, we will remain somewhat bearish and target lower levels. If AUD/JPY continues to slide lower and breaks below the 80.75 area, then the pair could continue sliding towards the 80.50 zone, marked by the lowest point in March. Of course, we could see a bit of retracement back up to the 81.00 level, which lies near the lowest point in May, and then a reversal to the downside again, towards the previously mentioned levels.
Alternatively, if the pair rebounds and makes a comeback into the channel, this could mean that the bulls are not willing to let go of the pair that easily. A good move back up and a close of today’s daily candle above the 81.30 level could bring hope to AUD/JPY buyers. The bulls could be interested in driving the pair back to the 81.90 zone, a break of which opens the path towards the 82.35 mark.
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