AUD/JPY Breaks Below Uptrend Line and Signals Weakness Amid Imporving Japanese Trade Balance

AUD/JPY  Forecast & Technical Analysis for Australian binary options

Japan – Trade Balance

On Tuesday, at GMT 11:50 p.m., the Japanese Ministry of Finance will release the month-over-month national trade balance figure. It measures the difference in value between the total imported and exported goods over the last month. This data usually comes as a seasonally adjusted figure to gauge the true changes in the trade balance situation of Japan.

The demand for a nation’s currency has a direct correlation to the export it makes, minus the net imports. Because foreigners must convert their currency to Yen in order to pay Japanese exporters. Hence, HighLow.com traders consider the trade balance to be a leading indicator of a currency’s strength.

Last month, the Japanese trade balance figure came out at -0.0.3 trillion (yen). The trade balance has gradually improved since May 2020 when it reached – 1.0 trillion. If the improvements continue, it will have a bullish effect on the Japanese Yen.

Australia – MI Leading Index

On Wednesday, at GMT 12:30 a.m., the Melbourne Institute will release the month-over-month MI Leading Index figure. It measures the level of a composite index based on 9 economic indicators.

The MI Leading Index is primarily designed to predict the direction of the economy and institutional investors pay attention to this index. Also, key policymakers in Australia follow the index as it is derived from a combination of a total of nine economic indicators. Hence, it is considered by HighLow.net investors to be a leading indicator of the Australian economy.

Last quarter, the MI Leading Index increased by 0.1%. If the trend continues and it increases again, it will have a bullish effect on the Australian Dollar.

AUD/JPY Forecast

AUD/JPY Forecast - 15th September 2020

The AUDJPY reached a low of 59.87 on March 19, 2020, and formed a bullish outside bar (BUOB). Since then, it remained in a strong uptrend. Over the last several months, the AUD/JPY has climbed up by around 1,870 pips. Last week, it broke below the long-term uptrend line. It also closed below the support near the 76.75 level. However, the bulls quickly pushed it back towards the trend line. Currently, it is trading just above the support of around 76.75.

The Japanese trade balance has been improving over the last few months. With the current trend, it will likely come near breakeven or positive this month. On the other hand, the Australian MI Leading Index has gone down last month and likely remain bearish. We believe it would set a bearish fundamental outlook for the AUD/JPY this week. Therefore, if the AUD/JPY closes below the support near 76.75, it would likely attract additional bearish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities below this major support level around 76.75.

 

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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