As the New York session winds down, the risk-sensitive Australian dollar falls, against the Japanese yen, trading at 81.65 at the time of writing. Market mood is risk-off, as witnessed by US stock indices recording losses between 0.04% and 2.37%.
On Thursday during the overnight session, the AUD/JPY rallied strongly amid a risk-on environment triggered by the Fed, which, as expected, will taper faster than previously thought, while most of their members expect at least three rate hikes in 2022. Despite the fact of being a “hawkish” monetary policy statement, the event was a “buy the rumor, sell the fact.” Why? Because equities rallied, while risk-sensitive currencies like the AUD, the NZD, and the CAD, followed their footsteps, to the detriment of safe-haven peers.
That said, the pair peaked around mid 82.00s, to then as the American session progressed, the market mood dampened, as market participants reshuffle their portfolios as the year-end looms.
The AUD/JPY daily chart depicts the pair is in consolidation, trapped around the 77.88-86.25 range, sideways, without threatening to break the prevailing market structure since November 2020. Furthermore, Thursday’s upward move capped at the 200-day simple moving average (SMA) showed that AUD bulls do not have the strength of breaking to the upside so that we could be eyeing a downward move ahead of the year-end.
On the downside, the first support would be December 14 pivot low at 80.47. A breach of the latter would extend AUD/JPY losses. The next support would be the December 1 cycle low at 78.78, followed by the August 20 low at 77.89.
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