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AUD/JPY – Double Bottom?
Both Aussie and USD/JPY may have bottomed out for the time being which could set up for a rally in AUD/JPY off its recent test of support at 79.00 level. In Australia the RBA appears to be content with staying stationary after cutting rates 25bp at the last meeting. Most market participants do not anticipate any further rate cuts until August at earliest which should provide support for the pair until then. If tomorrow’s AU employment data proves positive that will only add to the AUD bullish view and should keep the pair well anchored at these levels.
Meanwhile USD/JPY has found clear support at the 108.00 level and with both spending and inflation data in US beating forecasts the buck should get some love in the next few days. Add to that the fact that most of the FOMC members continues to suggest that June will be a live meeting and the prospect of USD/JPY above 110 could be very real.
All of this creates the foundation for a rally in AUD/JPY over the next several days that cpuld take the pair towards 81-82.00 region before finding fresh resistance.