The Australian dollar has been noisy against the Japanese yen yet again during the trading session here on Monday, as we are hanging around the 200-day EMA. The 200-day EMA sits right around the ¥110 level, and this is an area that's been important more than once.
This is a large, round, psychologically significant figure, and this is a market that is obviously based on the overall interest rate differential.
The Australians do have an interest rate decision overnight
The Australians do have an interest rate decision overnight, which could be a major problem, and that could give us a statement that could send this market flying. With this being the case, it's likely that traders will continue to see a lot of questions to ask about whether or not the AUD/JPY pair can stay in this range or if we break down the ¥109 level.
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Breaking down could be a significant move just waiting to happen, but quite frankly, I don't see that happening without the Bank of Japan getting involved. The Bank of Japan only has the ability to intervene every once in a while, and unless that's the case, it's likely that we will see a lot of noise and chop.
I think all things being equal, as long as the Australian central bank sounds even remotely hawkish, we could make a move towards the 50-day EMA closer to the ¥112 level. If we were to break above the ¥112 level, then it's possible that we could see this market go looking to ¥115.
Honestly, this is a market that I still favor to the upside, but the central-bank noise could make it difficult in the short term.
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