The Australian dollar was recently crushed against a number of currencies, including the US dollar and the Japanese yen. However, it looks like that the downside is overextended in the Australian dollar. So, there is a chance that the AUDJPY pair might correct higher from the current levels, but we are not looking to buy as of now instead would be looking to sell rallies.
There is a chance that the AUDJPY pair might correct higher as highlighted in the chart above. There is a monster resistance around the 97.00 area, which is just below the 200 hourly moving average. So, if the pair corrects higher from the current levels, and trades closer to the mentioned area and forms a bearish divergence, then we can enter into a sell trade.
Initial target should be around the 96.20 level, and final target could be around the 95.80 levels. Stop should be placed above the 200 hourly moving average.
Reviewing recent events and trades
Yesterday, the US existing home sales data was published during the NY session. The outcome was not as expected, as the US existing home sales dropped by 1.8% according to the report published. However, there was no major impact on the US dollar. The EURUSD pair was seen trading lower, as comments from the ECB President ignited a move lower in the pair. Moreover, the Chinese HSBC manufacturing PMI was released during the Asian session, which came better than expected and jumped from 50.2 to 50.5 instead of a decline. The risk sentiment got a little help after the release.
Fundamental Outlook for the day
Today, the US manufacturing PMI and the Richmond Manufacturing Index will be released during the NY session. However, the market moving event might be the Canadian retail sales data. The market is not expecting anything big this time, but if there is a major deviation from the expectation, then the Canadian dollar might act sharply after the release. Moreover, the New Zealand trade balance data will be released during the upcoming Asian session. Let’s see whether it can help the NZDUSD pair in the short term or not, as it is trading a lot of lower in the past few days.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, GBPCHF, AUDCAD, USDCAD, USDJPY, CADJPY, AUDJPY and NZDUSD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
