FX traders are bracing for a busy day ahead with a full event calendar and the potential for more moves on the back of fresh updates from the new US government. Yen traders are likely to have the busiest day of all the currencies with the Bank of Japan rate call due out midway through the Asian trading session. The market is pricing in an 80% chance that the Bank will hike rates by 25 basis points, which will be its biggest move in 18 years, and traders are expecting to see plenty of moves around the event. As always, a shock in the rate decision will probably get the most out of the market but more realistically it will be the forward guidance that we get from the statement and press conference that will provide the best trading opportunities.
Many traders will be looking at the crosses to take advantage of the opportunity with the dollar likely to remain volatile later in the day from political updates out of the states. AUDJPY is sitting near good technical levels on the Daily chart and could provide one of the better opportunities especially if we have some strong guidance on where the BOJ are heading in the months ahead. With the RBA’s next move expected to be a cut and the BOJ in a hiking cycle, the AUDJPY could provide a solid interest rate differential trade that longer-term traders tend to prefer. The pair is sitting just below good trendline resistance on the Daily chart and any hawkish tone from the Bank or Governor Ueda could see sellers enter the market ahead of that level, whilst anything that could sound less hawkish could see that level challenged and open up the possibility for a break into a fresh topside range.
Resistance 2: 99.15 – January High
Resistance 1: 98.39 – Trendline Resistance and Jan 22 High
Support 1: 96.07 – 2025 Low
Support 2: 93.69 – Trendline Support
