• USD/JPY continue to accelerate gains for the third straight session on Wednesday.
  • US dollar at fresh yearly high above 94.50 boosting prospects for USD/JPY.
  • US Inflation, hawkish Fed members, and FOMC minutes steal the spotlight. 

USD/JPY prints fresh daily gains on Wednesday in the early Asian trading session. The pair started higher this Monday and the momentum is still carried on the back of a firmer US dollar At the time of writing, USD/JPY is trading at 113.58, up 0.02% for the day.

The hawkish comments from Fed’s officials strengthen the US Fed’s stance on November tapering although recent economic data tell a different story. St. Louis Fed President James Bullard said he support November tapering along with Atlanta Fed President Raphael Bostic. The greenback remains supported at the higher level, pushing USD/JPY toward fresh 2021 highs.
 
The US Consumer Inflation Expectations came at 5.3% in September, rising for the 11th straight month whereas the number of job openings fell more than expected in August. Furthermore, the International Monetary Fund (IMF) downgraded the growth in the US economy from 7% in July to 6%. The US benchmark T-bond yields trade lower at 1.57% in response to the factors, but the US dollar remained unfazed.

On the other hand, the Japanese yen remained on the backfoot after the recent data revealed a drop in Japan’s Business Mood. The Reuters Tankan sentiment index for manufactures fell to 16 in October from 18 in the previous month. 

As for now, traders are waiting for Japan’s Machine Orders, US Core Inflation Rate, and FOMC Minutes to gauge the market sentiment.

USD/JPY additional levels

 

  • AUD/JPY reaches a fresh three-month high around the 83.80 range.
  • AUD/JPY: A Doji in the daily chart depicts that the pair might correct lower before resuming the uptrend, supported by momentum indicators.

The AUD/JPY is trading unchanged as the Asian session begins and is trading at 83.48, barely down 0.01%, during the day at the time of writing. The market sentiment is mixed, as depicted by Asian equity futures, seesawing between gainers and losers.

AUD/JPY Price Forecast: Technical outlook

Daily chart

On  Tuesday, the AUD/JPY reached 83.80 above the middle of the Andrew Pitchfork channel, but strong seeling pressure capped the move, retreating the cross-currency to 83.50. A breach of the latter could accelerate an upside move towards the July 6 high at 84.19, but oversold levels at the Relative Strength Index (RSI) at 73, suggests the pair could be headed for a correction towards the 200-day moving average (DMA) at 82.37, before resuming a move towards higher prices. Nevertheless, in case of a push below the 200-DMA, the  September 3 high at 82.02 will be the next support before reaching the 100-DMA at 81.83.

Worth notice: the October 12 price action portrayed a Doji in the middle of the Pitchfork channel, meaning the pair could reverse the upward trend.

1-hour chart

The AUD/JPY is trading within a narrow range between 83.50-83.80. A break beyond the upside level could open the way towards 84.00. However, the Relative Strength Index at 53, suggesting that an upside move might be on the cards. Failure to an upside break could signal that consolidation or a correction could lie ahead for the AUD/JPY in the near term.

On the flip side, a break beneath the bottom level will find the daily pivot at 83.41 as the first support level, followed by the 83.00 psychological level. A breach beneath the latter would exert downward pressure on the pair towards the confluence of the 50-simple moving average (SMA) and the S1 pivot level around the 83.12-83.22 area.

US Treasury Secretary Janet Yellen reiterates view high us inflation transitory and said that she sees an ‘isolated’ shortages of goods in coming months.

Last week, Yellen said that the various issues that have colluded to push up prices likely will pass though she’s not sure how long that will take. “Supply bottlenecks have developed that have caused inflation,” she said. ”I believe that they’re transitory, but that doesn’t mean they’ll go away over the next several months.”

Meanwhile,  the carry trade currencies are up where rate hikes are being priced in from the likes of the Bank of England this year and the Federal Reserve next year. The US dollar is third to the CAD and AUD so far this week as investors seek shelter in commodity prices as a hedge against inflation. 

DXY, an index that measures the US dollar vs a basket of major rivals, has been trading through 93.50 and is at the highest level since Sep 2020.

  • The market sentiment is a mixed bag on the back of inflationary pressures.
  • Higher Iron ore prices failed to boost the Australian dollar.
  • Investors remain sidelined, awaiting crucial US CPI data due on Wednesday.
  • AUD/USD: From a technical perspective, the pair is in a downward trend.

The AUD/USD is beginning the Asian session on the wrong foot, is down 0.04%, trading at 0.7347 during the day at the time of writing.

The market sentiment is mixed, as witnessed with US stock indices closed with losses between 0.24% and 0.35%. Meanwhile, Asian equity future indices seesaw between gains and losses. Factors like the energy crunch and inflationary pressures keep investors uncomfortable to open new positions on the AUD/USD pair.

Iron ore prices are up 11.21%, trading at $129.00 per metric tonne, but the Australian dollar has not followed its footprints.

On the macroeconomic front, the Australian docket will feature the Westpac Consumer Confidence for October, expected at 2.4%, more than the September reading at 2%.

Data-wise, the September CPI data is due on Wednesday in the US, and the market is expecting 5.3% YoY and 4.0% YoY, respectively, on headline and core.

AUD/USD Price Forecast: Technical outlook

Daily chart

The AUD/USD pair trades between the 50 and the 100-day moving averages (DMA’s) that lie at 0.7302 and 0.7416, respectively. The 200-DMA is located above the current spot price, meaning that the pair is in a downtrend. 

To resume the downward trend for AUD/USD sellers, they will need a daily close below the October 12 low at 0.7330. in that outcome, sellers could push the price towards the confluence of the 50-DMA and the figure at 0.7300. This level is crucial, as a break underneath could open the door for the September 30 low at 0.7169.

Momentum indicator like the Relative Strength Index (RSI) is at 57, edging lower, indicating that downward pressure is waning, suggesting that the pair might consolidate before resuming the downside bias.