Potential AUD/USD and USD/JPY trades

AUD/USD hit a low of 0.9384 yesterday, but has since recovered to re-claim the 94 handle. 

Source: Bloomberg

Following on from my potential trade idea yesterday, I continue to wait for a break of 0.9321 before looking more favourably at short positions.

I actually like buying USD/JPY around current levels (spot now at 101.84), although this is more a reflection of the technical set-up. Looking at the daily chart, we have seen the pair close above the April downtrend, as well as the neckline of the double-bottom printed during July. The technical target of the double-bottom (chart below) is 102.50, so I would look for this as a potential profit target, with a potential stop loss at 101.55 (just below the 38.2% retracement of the recent rally from 101.09).

With a raft of key US data (2Q GDP, FOMC meeting, employee cost index and payrolls) in play this week, it’s interesting to see a slight move higher in short-term treasuries. This is supporting the USD and throwing weight behind the trade.

IG Charts

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