With markets taking cues from risk sentiment these days, I’m thinking a breakout on this pair is bound to happen sooner or later.
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/JPY testing an area of interest while waiting for headlines on Russia. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Risk-on flows pickup on potential Putin-Biden meeting
OPEC ministers agree to stick to current output deal to prevent shocks
Japanese flash manufacturing PMI down from 55.4 to 52.9
German producer prices rose 2.2% vs. projected 1.6% gain
French flash services PMI advance from 53.1 to 57.9 vs. 54.0 forecast
French flash manufacturing PMI up from 55.5 to 57.6 vs. 55.5 forecast
German flash manufacturing PMI fell from 59.8 to 58.5 vs. 59.6 consensus
German flash services PMI up from 52.2 to 56.6 vs. 53.2 consensus
Upcoming Potential Catalysts on the Forex Economic Calendar:
U.K. flash manufacturing and services PMIs at 9:30 am GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: AUD/JPY
With no major catalysts on deck early this week, market watchers are still paying close attention to headlines on the standoff between Russia and Ukraine.
Word through the grapevine is that Biden will be meeting with Putin to discuss a list of sanctions if Russia invades Ukraine. The Kremlin denies any plans for a summit, though.
Still, the prospect of Captain America – I mean, Uncle Sam – stepping in to try and save the day was enough to revive risk-off flows so far.
AUD/JPY popped back up to the top of its symmetrical triangle visible on the hourly chart and might attempt a bullish breakout. If that happens, the pair could be in for a rally that’s the same height as the formation or roughly 225 pips.
I’m seeing hints of a bullish moving average crossover, supporting the possibility of a break higher and uptrend. However, Stochastic looks ready to turn south from the overbought zone to indicate that sellers are returning.
In that case, AUD/JPY could slump back to the triangle bottom around the 82.50 minor psychological mark to find more buyers or perhaps attempt a break lower.
Better keep tabs on headlines to be ready for any changes in risk sentiment!
