AUDJPY price action is catching my eye here. The rejection at the 83.94 level has seen the market reversing lower and breaking down out of the bull channel. Price has recently broken below the 82.02 level and, following a subsequent retest, is turning lower again. Risk currencies have come under heavy pressure this week amidst the uptick in USD and the broader risk-sell off linked to uncertainty around Russia/Ukraine tensions. With JPY deriving safe haven support at the same time, AUDJPY looks vulnerable to further downside here. I’ll be looking for a break of the 80.69 lows, targeting a test of 79.57 initially. The retail market is currently around 65% long, showing plenty of room for a deeper push to develop.

Keep An Eye On

Most likely to be the biggest driver near term are risk flows. With this in mind keep an eye on headlines around the Russia/Ukraine situation. If tensions escalate over the weekend, if there’s any news on an immediate Russian invasion, this will no doubt drive AUDJPY lower into the early part of next week. Beyond that, focus will shift to the RBA meeting. The market is expecting the bank to lay out policy normalisation plans which might help stem the decline in AUD. However, if the bank disappoints hawks, this will weigh on AUD further near term.