AUD/USD, USD/JPY: Mild Rebound for Australian Dollar and Yen Faces Resistance

The Australian dollar was the strongest FX major on Monday as it retraced around half of Friday’s sell-off alongside other risk assets. Although the Aussie’s 0.7% gain was above its typical daily range, it remains dwarfed by the Trump-tariff-induced sell-off heading into the weekend.

Chart analysis by Matt Simpson, Source: TradingView, CME Futures

View related analysis:

Trump softened his rhetoric on China – a move traders know well from previous rounds of TACO (“Trump Always Chickens Out”). However, these moves pale in comparison to the V-bottom reversals seen in April, meaning traders should remain on guard for choppy trade ahead.

The Japanese yen was the weakest currency in what was ostensibly a risk-on session, though I suspect we’re approaching another bout of strength for yen traders — one that could see USD/JPY move lower once its post-weekend correction plays out.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar

I noted yesterday that Friday saw AUD/USD close beyond its lower Keltner band – a technical level it rarely trades beyond – while the daily RSI (2) also entered oversold territory. In classic mean-reversion style, AUD/USD opened at the low of the day on Monday and recovered around half of Friday’s sell-off, in line with my near-term bias.

I suspect AUD/USD will see another cycle low on the daily chart, and I’ve pencilled in a move towards 64c or the August low, near the 0.6412 high-volume node (HVN). Also note the 200-day SMA at 0.6420, which could provide support, and the 50-day SMA that could act as resistance. However, the intraday timeframe also shows the potential for another leg higher before a swing high materialises.

Chart analysis by Matt Simpson - data source: TradingView AUD/USD

AUD/USD Technical Analysis: 4-Hour Chart

A mini V-shaped bottom has formed on the intraday chart, though it hardly calls for a momentous rally at this stage. However, it has allowed a small bull flag to develop, which indicates the potential for another leg higher. Bulls could target the 10–20 bar EMAs around 0.6554–0.6567, the weekly R1 pivot at 0.6572, or the upper trendline over the near term. Bears, meanwhile, may look for evidence of a swing high around these levels in anticipation of the next leg lower.

USD/JPY Technical Analysis: US Dollar vs Japanese Yen

Last week I warned that the Japanese yen sell-off was losing steam. While I didn’t foresee the sharp reversal in favour of the yen that followed, I did note that USD/JPY bulls may have been pushing their luck. Like all yen pairs, USD/JPY formed a prominent bearish engulfing candle on Friday. A small bullish inside day formed on Monday, which is far from a convincing recovery for bulls. But with traders dealing with a shock to the system after such an extended move, they should remain nimble. However, a potential short setup may be surfacing on the 4-hour chart.

Chart analysis by Matt Simpson - data source: TradingView USD/JPY

USD/JPY Technical Analysis: 4-Hour Chart

Prices have retraced higher but stalled around a high-volume node (HVN) at 152.19, forming a small double top. We should allow for some wriggle room around today’s open, but I’m now looking for a swing high to form on the 4-hour chart. Also note the October VPOC at 152.67, which could cap price action as resistance.

Ultimately, my bias remains bearish on USD/JPY while prices hold beneath Friday’s high, with scope for a move down to at least Friday’s low — near the weekly pivot point and March high. Also note that the HVN at 150.34 and the 150 handle could provide support or serve as a target for bears.

Key Economic Events for Traders (AEST / GMT+10)

08:45 NZD Electronic Card Retail Sales (Sep) (NZD/USD, AUD/NZD, NZD/JPY)
10:01 GBP BRC Retail Sales Monitor (Sep) (GBP/USD, EUR/GBP, FTSE 100)
10:50 JPY M2 Money Stock, M3 Money Supply (Sep) (USD/JPY, EUR/JPY, Nikkei 225)
11:00 SGD GDP (Q3) (USD/SGD, EUR/SGD, STI Index)
11:30 AUD RBA Meeting Minutes, NAB Business Confidence, NAB Business Survey (Sep) (AUD/USD, AUD/JPY, ASX 200)
16:00 EUR CPI (Sep), Finnish CPI (Sep) (EUR/USD, EUR/GBP, DAX)
17:00 GBP Employment Report: Average Earnings, Claimant Count, Employment Change, Unemployment Rate (Aug/Sep) (GBP/USD, EUR/GBP, FTSE 100)
17:00 EUR German CPI, HICP (Sep) (EUR/USD, EUR/GBP, DAX)
17:30 CHF PPI (Sep) (USD/CHF, EUR/CHF, SMI Index)
19:00 USD IEA Monthly Report (WTI Crude, Brent Crude, USD/CAD)
20:00 EUR German ZEW Current Conditions, Economic Sentiment; ZEW Economic Sentiment (Oct) (EUR/USD, EUR/GBP, DAX)
20:00 CNY M2 Money Stock, New Loans, Outstanding Loan Growth, Total Social Financing (Sep) (USD/CNH, AUD/CNH, CN50 Index)
20:30 EUR German 2-Year Schatz Auction (EUR/USD, EUR/GBP, DAX)
20:30 ZAR Business Confidence, Gold & Mining Production (Aug/Sep) (USD/ZAR, EUR/ZAR, Gold futures)
21:00 USD IMF Meetings, NFIB Small Business Optimism (Sep) (S&P 500, Nasdaq 100, USD/JPY)
22:00 USD CB Employment Trends Index, Construction Spending, Wholesale Trade Sales (Aug/Sep) (S&P 500, Nasdaq 100, USD/JPY)
23:30 CAD Building Permits (Aug) (USD/CAD, EUR/CAD, CAD/JPY)
23:45 USD FOMC Member Bowman Speaks (S&P 500, Nasdaq 100, USD/JPY)

02:15 CAD BoC Senior Deputy Governor Rogers Speaks (USD/CAD, EUR/CAD, CAD/JPY)
03:20 USD Fed Chair Powell Speaks (S&P 500, Nasdaq 100, USD/JPY)
04:00 GBP BoE Governor Bailey Speaks (GBP/USD, EUR/GBP, FTSE 100)
06:25 USD Fed Waller Speaks (S&P 500, Nasdaq 100, USD/JPY)
06:30 USD Fed Collins Speaks (S&P 500, Nasdaq 100, USD/JPY)

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.