AUD/JPY – Continuation Of Uptrend? Watch Out For The 85 Handle

#OPINIONLEADER#

 MAY 3, 2021

• BoJ’s upward revision of growth forecast fails to take down AUD/JPY
• RBA monetary policy meeting coming up
• Ascending Triangle pattern in AUD/JPY (D1)

Chart 1: AUD/JPY D1 chart

Despite the recent spike in COVID-19 cases in Japan, the Bank of Japan (BoJ) revised its projected GDP for 2021 from 3.9% to 4.0% in the outlook report released during their monetary policy meeting last Tuesday. However, the central bank also mentioned that the outlook is highly unclear and is subjected to change. This led to a brief strengthening of yen against the Australian dollar before losing ground.

AUD/JPY’s uptrend since late last year has started to stagnate in March. Several attempts have been made to break above the 85 handle but to no avail. As a result, an Ascending Triangle pattern is formed. The Reserve Bank of Australia will be announcing their monetary policy decision tomorrow at 1200 (SGT). The central bank is expected to hold its monetary policy unchanged. However, recent economic indicators have shown that the Australian economy is making progress in its recovery. Therefore, focus should be placed on the economic projections included in the monetary policy report that will be released this Friday at 0930 (SGT). Also, take note of any changes that may be made to the third round of Government bond purchase programme that is expected to be carried out in August. Any positive revision in forecasts may strengthen the Australian dollar, presenting buying opportunities.

Ascending Triangle Pattern for AUD/JPY (D1)

Buy Stop Order at 85.500