The pair is back below $0.9300 and will continue to face some key tests this week, starting today when we get NAB business confidence and conditions, along with home loans data. Remember the RBA recently said it is beginning to see some positive signs in business conditions and household sentiment.
Yesterday’s ANZ job ads were also fairly strong on top of Westpac consumer sentiment. On Thursday we have jobs numbers, where the market is hoping to see a bit of an improvement after the dismal performance we saw the previous month (July).
As a result, we might see traders looking to buy the dips in the pair. However, the key factor here will be what happens with the USD, given it has been on a tear recently.
USD/JPY at September 2008 highs
Meanwhile, the USD rally has been completely supportive of USD/JPY, which has now nudged through the ¥106 barrier and traded to a high of ¥106.17. The pair is at its highest level since September 2008 and the pair certainly looks like it still has a long way to run. USD/JPY is on the verge of clearing the 61.8% retracement of the June 2007 high to October 2011 low at ¥105.56 on the weekly chart. This is likely to see the pair trade towards ¥108.00 in the medium term.