AUDJPY is closing in on the top of its range visible on the 4-hour time frame. Technical indicators are suggesting that the ceiling would likely hold and might push the pair back to support.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, resistance is more likely to hold than to break.
However, the gap between the two has narrowed enough to signal that a new crossover may be underway. In that case, buyers still have a chance at pushing price past the top and spurring a longer-term climb.
RSI is rising to show that buyers still have some energy left, but the oscillator is nearing overbought levels to reflect exhaustion. Turning lower could bring sellers back in and lead to a drop at least until the middle of the range at 82.00.
Stochastic is also on the move up but is starting to turn upon reaching overbought levels. In that case, bearish pressure could pick up and allow resistance to keep gains in check.
The Aussie is welcoming Trump’s announcement to pursue a trade deal with China, easing fears of a full-blown trade war as they released a list of goods to target with higher tariffs. Note that Australia is China’s largest trade partner so any disruptions in their production and exports could lead to lower demand for the former’s raw materials.
Meanwhile the yen is losing ground as risk appetite returns. Yen weakness seems to have also been exacerbated by dollar strength on the heels of a rebound in the equity markets and stronger rate hike expectations. The upside break in USDJPY consolidation has also carried over to other yen pairs.
Still, a lot could happen in the days ahead that could lead risk appetite to retreat, especially since the trade war troubles are far from over.