The AUDJPY sinks violently after the Australian labor data shows that unemployment has reached 10-year highs and falling to add any jobs in January. The Australian dollar seen a 3.6 percent increase against the Japanese yen to mark a one-month high, but the price reversal is signaling for more downside action.
The Australian dollar is considered a risk currency due to the country’s exposure to commodities and China, and it has recently see a boost with the rally in equities. However, “there’s more risk of downside than upside in Aussie-yen over the year if asset markets prove nervous,” said John Hardy, head of FX strategy at Saxo Bank.
The 200 EMA was broken by price action, and the 50 EMA is currently acting as support along with some price action on the 4H chart. Nevertheless, the massive break from the middle-through-the-bottom of the trending channel is likely to continue its ride down South. If support holds, a pullback to 91.60 is likely place to see resistance as the move is digested. Additional resistance can be seen at 91.88.
However, if the 50 EMA breaks, price action is likely to hit probable areas of 91 and 90.50. The RSI dropped quickly from over 60 to 44, and there is a bearish +/-DMI crossover, which can add to the momentum.
Traders who have not played this pair should wait until price begins to consolidate. It is still in early trade, and there is likely to be bottom feeders buying the low prior to London’s open.