Audjpy Recovers From Weekly Lows

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Audjpy Recovers From Weekly Lows

Aud/Jpy Recovers From 2-Week Lows, Trades Above 107.00

AUD/JPY has attracted buyers near the 2-week lows and is now showing a little bit of upward momentum. The uptrend in the AUD/JPY started at 106.55 and has now pushed the spot back above the 107.00 handle.

In the process of recovery, the AUD/JPY has ended its 3-day losing streak and has put the spot in the green. In the last few days, a wave of fresh selling was seen in the Japanese Yen (JPY), which allowed the AUD to rise.

The overall mood in the market is 'risk-on' as evident from the rally seen in the share markets around the world. In other words, the funds are now moving away from safe-haven assets such as the JPY.

Japan Warns About Fx Intervention

However, the downside seen in the JPY isn't based on the fundamentals, and the Bank of Japan continues to warn about intervention. So, we believe that the JPY weakness will be short-lived, and the AUD/JPY might go back to its bearish trend.

Recently, a senior Japanese official has once again tried to support the JPY through verbal intervention. He made it clear that the officials stand ready to take all possible measures to support the FX rate. Additionally, there is speculation that the BoJ is thinking about raising the policy rate to support the domestic currency.

Meanwhile, the Chinese economy continues to show signs of slowdown, which isn't good news for the AUD. So, that's yet another reason why the advance in the AUD/JPY will be capped.

Overall, the AUD/JPY will likely return back to its original trend unless we see some strong bullish momentum that sends it higher toward 109.35. In that case, the AUD/JPY trend will turn in favor of the bulls & will send it toward the next target at 110.00.

Later today, the Australian employment data will be released which will also provide key insights into the AU's labor market.

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