Australian dollar falls against multiples currencies
During the trading session on Tuesday, the Australian dollar has been hit rather hard. It has fallen against multiple currencies, but most notably against the Japanese yen. The Japanese yen has seen a lot of action around the ¥91 level before, so it should not be a surprise that buyers stepped in and push this market a little bit higher from that level.
It’s also worth noting that the 50-Day EMA sits at roughly ¥91.30, while the 200-Day EMA sits above there by about 30 pips. The market sees a lot of confluence in this area, and you can see clearly on the chart that the ¥91 level has been important multiple times, serving as both support and resistance. It is through this prism that we will have to watch this pair, because it could be firing off its next signal.
On a decisive bounce, the market could very well go to the ¥92.75 level, and then to the ¥95 level. On the other hand, if the market were to close under daily candlestick significantly below the ¥91 level, it opens up the possibility of dropping all the way down to the ¥89 handle rather quickly, which would be a retesting of the triple bottom that was formed previously.
The Australian dollar itself was selling off, but at the same time you must keep an eye on the Japanese yen. The Japanese yen is being highly influenced by the Bank of Japan and its desire to keep the 10 year Japanese Government Bond yield it down to 50 basis points or less. In other words, they will buy bonds in order to keep those rates down. How did they buy bonds? They print more yen to buy those bonds with. This is what caused such devastation to the Japanese yen value last year. If you’ll start to threaten the Bank of Japan level, then the Japanese yen will lose strength against other currencies. On the other hand, they can keep those yields down without printing, it continues to favor a breakdown. At this point, the ¥91 level is a level for the next intermediate term move.
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