The Australian Dollar is today’s worst-performing currency among the FX majors, falling across the board against the US Dollar, Japanese Yen and Euro. What is responsible for this drop despite slightly better than expected employment data?
A few minutes before the release of the Australian Employment data, I was able to pick up a Tweet from LiveSquawk, which quoted the Governor of the Reserve Bank of Australia (RBA) as saying that the bank had room for a further 10 basis points rate cut. With the next RBA meeting scheduled for 3 November, markets have raised the bets of this AUD-negative move, putting the Australian Dollar under immediate pressure.
Such a direct declaration by a central bank chief on interest rates is bound to cause a massive move on the currency in question. This is what has happened to the Australian Dollar this Thursday. Presently, the AUDJPY is down 1.22% on the day.
Technical Outlook for AUDJPY
The pair is now testing support at 74.306. If bearish pressure continues, we could see a breakdown of this support level, which then targets the73.215 price level, where previous lows of 23-29 June form support. Below this level, the lows of 12/15 June as well as 22 June 2020 form another price target at 72.625.
On the flip side, recovery of risky sentiment in the market may prop the Aussie Dollar, targeting a bounce from 74.39 to take the pair towards the 76.178 price level. However, the bias for the Australian Dollar is bearish, so any recovery may be an opportunity to sell on the rally.