AUD/JPY Downtrend Line Likely to Hold the Bulls As Declining Japanese Household Spending Slowed Down

Japan – Household Spending

On Monday, at GMT 11:30 p.m., the Japanese Statistics Bureau released the year-over-year Household Spending figure. It measures the inflation-adjusted value of all expenses by Japanese consumers. 

Binary options traders consider household consumer spending to be a leading indicator of a country’s economic health. This is because the amounts spent by consumers have a ripple effect on the overall economic activity in the country.

Last month, the year over year Japanese Household Spending figure decreased by -1.9%. The forecast for this month was that it will decrease by -0.6%. The actual reading came out at -0.6% as well.

Australia – Cash Rate

On Tuesday, at GMT 3:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate. It is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies. So, Forex traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 0.10% in their last meeting. The forecast for this month was that the RBA will keep the cash rate unchanged to 0.10% and the forecast turned out to be right.

AUD/JPY Forecast

AUDJPY 2021 12 07 17 18 42

The AUD/JPY remained in a strong downtrend since the end of October 2021. Over the last several weeks, it fell by around 8.4% or 720 pips. During this time, the AUD/JPY also formed a well-respected downtrend line. Since the beginning of this week, the AUD/JPY started a bullish retracement. Currently, it is approaching the confluence zone of the downtrend line, and the resistance near the 81.65 level.

The Reserve Bank of Australia (RBA) has decided to keep the overnight cash rate unchanged at 0.10%. By contrast, the Japanese household spending remained negative but improved a bit to -0.6% compared to -1.9% last month. We believe it would set a bearish fundamental outlook for the AUD/JPY this week. Therefore, if the AUD/JPY remains below the downtrend line and the resistance near 81.65, it would likely attract additional bearish momentum in the market.

Hence, binary options traders should look out for trading opportunities below this major resistance level around 81.65.

Avatar of Asif Imtiaz

Leave a Reply

Please rate

Your email address will not be published. Required fields are marked *

six + 15 =

I accept the Privacy Policy

Ad Disclosure

Partner Advertisement