AUDJPY - a key barometer of risk - is holding above key support
Despite the turbulence across global assets these past two weeks, AUD/JPY is opting to hold above key support and resistance levels including the 2022 low and 2021 high.
Investors remain on edge as they cannot be sure that the worst is behind us, and there is a risk that another bank will 'break' under the pressure of higher rates, bad management and / or face another bank run. But what if none of this materialises? Or the Fed is not as dovish as market pricing currently implies. Perhaps the real risk is that it's not that risky, and that could leave room for an upside surprise.
Even if AUD/JPY does break below 87.00, we'd prefer to see a break beneath the 2021 high of 86.26 before calling a major top on the weekly charts.
The fly in the ointment is the FOMC meeting, because if they're not as dovish as hoped it could pressure risk assets such as indices and AUD/JPY. Yet a dovish meeting could support sentiment and send it higher.
Either way, it is worth watching AUD/JPY around current levels as it could help signal the next likely directional move for risk assets in general.
Investors remain on edge as they cannot be sure that the worst is behind us, and there is a risk that another bank will 'break' under the pressure of higher rates, bad management and / or face another bank run. But what if none of this materialises? Or the Fed is not as dovish as market pricing currently implies. Perhaps the real risk is that it's not that risky, and that could leave room for an upside surprise.
Even if AUD/JPY does break below 87.00, we'd prefer to see a break beneath the 2021 high of 86.26 before calling a major top on the weekly charts.
The fly in the ointment is the FOMC meeting, because if they're not as dovish as hoped it could pressure risk assets such as indices and AUD/JPY. Yet a dovish meeting could support sentiment and send it higher.
Either way, it is worth watching AUD/JPY around current levels as it could help signal the next likely directional move for risk assets in general.
