The AUD has been remarkably resilient in the face of declining terms of trade, most notably the fall in iron ore prices from US $140 to around $90 per tonne. This is Australia’s most valuable export at the moment, and while the decline in prices and terms is widely expected, recent events have not had the expected negative effect on the AUD.
In a world of competitive currency devaluation, picking the “right” currency to exploit potential AUD weakness is not easy. (Also see this morning's Sell AUD/USD Double Top) Luckily, the AUD/JPY chart nominates itself:
The repeated failure just above 96 yen gives a good “line in the sand” for traders to lean on. The MACD is approaching a crossover, above the zero line, putting traders on alert for a sell signal.
Shorting at current levels, with stop loss orders above 96.25 offers multiple downside targets. Persistent action around 94.00 makes this a possible aim, although the spike low at 93.00 also offers itself. Of course, any failure at that level would not only confirm a new down trend, but bring the possibility of falls to 90.00 into view.