AUDJPY is looking for a way between extra dovish BOJ and rising Australia cases like never seen before. BOJ decide to stay extra dovish because of lower inflation relative to other developed economies and years of failing to create any inflation for years. But the inflation shows signs of increasing only just a little for now but it is still a good sign. BOJ may have to pull its foot off the gas in the coming months if the trend continues.
On the other hand, Australia is facing its biggest Covid wave yet. For many countries, Australia’s numbers are low but for Australia, this is uncharted territory. If shutdowns decisions increase, the economy might slow down and with it, loose monetary policy will extend. Japan is unaffected from the omicron so far but that can change quickly too.
AUDJPY is in an uptrend channel and the price is nearing the key resistance area. The upper line of the channel (except the massive run to 0.86 in October), key horizontal support of 82.50 and 50-200 day moving averages are within 0,8250-0,8297 zone. If there will be a correction, it is likely to start there. Trend channel’s lower line will be a good target for down moves. But a clear break to upside may change the outlook altogether and may ignite a new bullish wave just like in October.
So, the decision time might be close for AUDJPY.
