AUD/JPY, ASX 200 forecast: Asian Open – April 3, 2024

AUD/JPY and the ASX 200 look set to diverge with the former strongly hinting at a swing low and the latter failing to hold above 7900 on Tuesday.

By :Matt Simpson, Market Analyst

Market Summary:

  • Odds of a June Fed cut have fallen below 50% following Monday’s strong ISM manufacturing report, although Fed fund futures still favour a June cut with a 61.6% probability.
  • US bond yields rallied for a second day, the Dow Jones fell around -1% and led the Nasdaq 100 and S&P 500 lower and the VIX rose to a 2-week high as markets repriced in the ‘higher for longer’ narrative
  • Regardless, the US dollar retraced after traders presumably booked profits when the US dollar index tapped 105 on Monday, resulting in a mild pullback from its 6-week high
  • AUD/USD bounced from the March 5th low and closed back above 65c in line with yesterday’s bias, to further underscore we’re not witnessing a head and shoulders top.
  • The RBA said it plans to change how it provides liquidity to the banking system, through regular money market operations to provide ample liquidity
  • The BOE are considering mimicking the Fed’s ‘dot plot’, to show where members think interest rates could be in the future whilst remaining anonymous
  • The relentless rally on gold continued higher for a seventh day, with spot prices rising above $2080 and closing just off the daily high
  • The equally-weighted gold basket was also at a record high to show the rally is based on gold strength, not on US dollar weakness
  • Crude oil prices continued higher, above my prior $84 target and closing comfortably above $85 on supply concerns ahead of today’s OPEC meeting, with Ukraine continuing to attack Russian oil facilities

Click the website link below to get our exclusive Guide to index trading in 2024.

Events in focus (AEDT):

  • 09:00 – Australian manufacturing, construction index (AIG)
  • 11:30 – Japan Services PMI
  • 12:45 – China services PMI (Caixin)
  • 20:00 – Eurozone inflation, unemployment
  • 20:15 – OPEC meeting
  • 23:15 – ADP employment change
  • 00:45 – FOMC member Bowman speaks, US services and composite PMIs (Final – S&P Global)
  • 01:00 – ISM services PMI
  • 03:00 – Fed Goolsbee speaks
  • 03:10 – Fed Powell speaks

ASX 200 technical analysis:

  • The ASX 200 cash market reached a fresh record high on Tuesday with a intraday break above 7900, although it closed back beneath that key level to form a narrow-ranged doji at the highs to hint at trend exhaustion (see the daily chart here)
  • The ASX 200 futures chart formed a 3-day bearish reversal pattern at the highs (evening star formation) which also hints at a pullback.
  • The 1-hour chart of the ASX 200 futures chart shows momentum turned swiftly lower before consolidating around 7880.
  • We saw a bounce in the final hour of NY trade, but the bias is to fade into rallies up to the 7920-7935 level for a move towards support zones around 7860, 7835 or 7800 / lower trendline

AUD/JPY technical analysis:

The daily chart shows an established uptrend for AUD/JPY, which entered a corrective phase after its failed ‘bid’ to close above 100. After a 7-day correction, a bullish engulfing day formed above the 61.8% Fibonacci retracement level to hint at a swing low. It also closed above the 2022/2023 highs. What is also interesting is that the potential ow landed right in the 40-47 day cycle estimate which I highlighted back in February. RSI (14) is curling higher above 50 and RSI 2 is above 50 after touching the oversold zone on Monday.

The bias remains bullish above this week’s low, and bulls could seek to enter dips within Tuesday’s range in anticipation of a break above 99. The upside target is open, although 99.50 and 100 make obvious resistance levels to expect some sort of profit taking along the way.

– Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.