AUDJPY: Traders YE(ar)N for a Safe Haven

<p>Greece’s debt drama stretched further into its third act today, with optimists still holding out hope that a last-second bailout deal could be cobbled together. […]</p>

Greece’s debt drama stretched further into its third act today, with optimists still holding out hope that a last-second bailout deal could be cobbled together. Greek Finance Minister Yanis Varoufakis has already categorically confirmed that Greece won’t make its payment today, but there were some hopeful signs from the Mediterranean nation. Despite harsh rhetoric over the weekend, Eurogroup President Jean-Claude Juncker has apparently offered a last-minute solution to Greek Prime Minister Alexis Tsipras in exchange for the government endorsing a “yes” vote (to the bailout offer) in Sunday’s referendum. The Syriza party is already on record supporting a “no” vote, but hope springs eternal for a last-second pivot.

One way or another, more uncertainty and hand-wringing is almost certain heading into this weekend’s election, and the safe-haven Japanese yen has been in demand as a result. The widely-watched USDJPY pair dropped down to test previous-resistance-turned-support at 122.00 in today’s early European session, but has yet to fill this weekend’s big bearish gap. For that reason, a pair like AUDJPY could present one of the better ways to play any Greece-induced risk aversion over the course of this week.

Technical View: AUDJPY

Looking to the chart, AUDJPY’s big weekend gap took the pair below key previous support at 94.50, but rates have now retraced back up to test that level and fill the gap. The pair’s 50-day MA comes in at 95.00 and could also provide resistance in the same general zone. At the same time, the MACD is trending lower and has crossed below the “0” level for the first time in over two months, suggesting that the momentum has now shifted in favor of the bears. Meanwhile, the 14-day RSI indicator has dropped to a new 2-month low of its own after a clear bearish divergence.

As we go to press, AUDJPY sits at a very precarious position: the big technical breakdown and bearish secondary indicators hint at the potential for more weakness, but a break back above the 50-day MA around 95.00 would shift the outlook back to neutral. If we do see the unit roll over off 94.50 – 95.00 resistance, bears may watch for a move back down to yesterday’s panic low and the 61.8% Fibonacci retracement near 92.50.

AUDJPY6-30-2015 9-06-03 AMSource: City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.