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AUD/JPY: Sellers in control amid pick up in volatility

FXStreet (Bali) - AUD/JPY had another volatile session on Monday, displaying a trading range of over 140 pips, ending NY with marginal gains, presently at 93.68, after recovering from an Asian sell-off that reached 92.88 lows.

The Australian Dollar ended Monday as one the best performing currency - closely followed by Yens -, amid conflicting signals, favoured by USD borad-based weakness (DXY at key monthly supply after an overstretched up move), but also by a significant rise in metals futures and a better-than-expected Chinese trade report.

On the contrary, the pick up in volatility/'risk off' sentiment, is not an ideal background to see sustained AUD gains, as carry trades tend to perform poorly when volatility increases. AUD/JPY's 21 ATR - Average True Range - is currently at 91 pips/day, highest it's been since early April this year.

Technically, sellers are the force in control, with last Friday's sell-off reinforcing the bearish dynamics after a break and close below the 100-day MA, first time it occurs since early March.

Any correction to the upside is likely to meet grateful sellers, although by drilling down to the hourly, the abrupt bounce from Monday, provides an improved technical landscape on the hourly, which suggests additional corrective runs to the upside may occur should price manage to levitate above the 20-hourly MA, level regained but lost again in the last few hours.

Today in Asia, Tokyo markets are back to business as usual after a long weekend, with the NAB business confidence report the main event to keep an eye on to inject liquidity in AUD.

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