AUD/JPY has been quite impulsive with the bullish gains recently, after bouncing off the 80.50-81.50 support area with a daily close. After being in a volatile and corrective structure with bearish squeeze along the way, certain bullish engulfing pattern does indicate the upcoming strong bullish pressure in the market.
Despite the worse economic reports on AUD Building Approvals published recently, certain bullish pressure has been quite significant and surprising for the market participants. Today, AUD Private Capital Expenditure report was published with an increase to 0.4% from the previous value of 0.2%, but failed to meet the expectation of 0.8% and Private Sector Credit was published with a decrease to 0.4%, as expected, from the previous value of 0.5%.
On the other hand, today, JPY Prelim Industrial Production report was published with a decrease to 0.3% from the previous value of 1.4% which was expected to increase to 1.5% and Housing Starts report showed a significant increase to 0.3% from the previous negative value of -8.3% which was expected to increase in deficit to -8.8%.
As of the current scenario, AUD has been quite positive with the economic reports in comparison to JPY today which is expected to lead to further bullish gains in the coming days. Though JPY still has the market sentiment on its favor, but recent bullish pressure is expected to sustain the price pushing higher in the coming days.
Now let us look at the technical view. The price is currently residing above the 81.50 area with dynamic level of 20 EMA holding the price as resistance. After the bearish divergence formed recently which pushed the price lower in an impulsive manner, current bullish bias is expected to push the price higher towards the 83.50-84.00 area in the coming days. As the price remains above the 80.50 area, further bullish pressure is expected in this pair.
