AUDJPY Target 90The Yen has been pretty much toast for quite some time. That was until the 11th of July 2024.
Technicals
1. Candlestick - Evening Star for the start of this corrective move away form 109.50.
2. 200 MAV - price crossed on the 17th July.
3. MAV Alignment - 20/50/200 lined up to the downside.
4. Momentum - from OB zone, a Bearish Divergence as a prelude to the corrective move. RSI staying in the sell zone & pretty much occupying the OS zone.
5. Volume - nearly all high volume bars align with the sellers, showing clearly they are in control.
6. Order Flow - price is trending down progressively and steadily , suggesting it will continue.
There is no blow off shown as yet. We are in the 3rd leg down.
Target - the unmitigated Demand Zone from June 2023.
Fundamentals
Value of AI -
The strengthening of the Japanese Yen since early July 2024 can be attributed to several key factors:
Bank of Japan’s Monetary Policy : The Bank of Japan (BoJ) raised interest rates to their highest level since 2008 and announced an aggressive quantitative tightening plan. This included reducing government bond purchases, which signaled a shift towards a tighter monetary policy12.
Speculation and Market Reactions : There was increased speculation about further interest rate hikes by the BoJ, which led to the unwinding of carry trades. These trades typically involve borrowing in a low-interest-rate currency (like the Yen) to invest in higher-yielding assets elsewhere. As expectations of higher rates grew, investors started unwinding these positions, leading to increased demand for the Yen13.
Global Economic Conditions: The Federal Reserve’s signaling of potential interest rate cuts in the US also played a role. This narrowed the interest rate differential between the US and Japan, making the Yen more attractive to investors13.
Risk Aversion : During times of global economic uncertainty, the Yen is often seen as a safe-haven currency. Recent global market volatility and concerns about economic stability have driven investors towards the Yen
So , from both perspectives a target of 90 is very compelling.
