AUD/JPY is the top performer today, gaining 103 pips, but it comes after three days of deeper declines.
My first impression is that it’s a standard bounce on a quiet day in a broader downtrend — the pair has fallen 1200 pips in the past two months. Ultimately, the risk of a further slowdown in China and overbought signs in stocks point to further declines but there are some reasons to be constructive.
AUDJPY daily
The first is the series of higher lows since June. The highs have also been trending higher. Second is the lack of a signicant retracement. A rally to 93.95 would shake out momentum shorts and clear the way for more downside. Until that happens, or the pair breaks below 88.94 and signals fresh declines, the bias is neutral.
