AUDJPY Reversing Heavily

AUDJPY has undergone a sharp shift in sentiment over recent weeks. Following the breakout to fresh 2022 highs in mid-September, the pair has now collapsed and traded down from around 98.80s to 92.20s currently. The reversal comes amidst a heavy wave of risk aversion sweeping across markets which is fuelling safe-haven demand for JPY and seeing risk-linked FX recoil quickly. The pair hjas now broken below the local rising trend line and latest structural support at the 92.66 level. While below here, bears can stay short for 90.52 initially and 88.02 thereafter. The retail market is heavily buying the pair, suggesting plenty of room for a further drop.

Keep an Eye On

The current market backdrop of risk off trading is what is driving this sell off. With USD breaking fresh highs, bond yields soaring and JPY soaking up safe-haven demand, the stage is set for further losses. Consequently, traders should look to stay short while the dynamic continues, managing risk if we see any shift in this narrative. Another round of Fed speakers today (including Powell) likely to drive USD further higher.