Trade Idea: Short AUD/JPY


It is well known that the BoJ is pursuing a really aggressive expansionary monetary policy that clearly is pushing down the Yen compared to other currencies. However, we see a possible reverse in the short term trend of the pair AUD/JPY. From a technical point view we saw that the price reached the upper band of the Bollinger bands so this a signal of an overbought situation, moreover, the RSI is close to the level of 70 so investors may take profits from their trades. On the macroeconomic point of view we believe that the Bank of Japan can not pursue a too aggressive policy on the exchange rate as the other economies are too weak to sustain a strong currency (the so called “currency war”) so we believe that the JPY cannot depreciate too much. So combining this two points we suggest to short the pair. With regard to risk management we suggest to take profit quickly from this trade around the 93,0-93,5 level within the following week. The stop-loss should be set at 96,0.


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