AUD/JPY is carving out a trading range. It sits at the top of the range just as oil prices, and potentially industrial metals, could be turning lower. The combination of technical and fundamental factors may see traders selling AUD/JPY.

Recent strength in crude oil, copper and iron ore supported the AUD. Over the last two weeks the economic outlook improved. Data that suggests the US continues to expand and growth rates in China are stable saw most industrial commodities gain ground over the last week (at least). AUD/USD fluctuations were complicated by several sentiment reversals in USD, but AUD/JPY better reflected the underlying AUD strength:

Note how the recent rally failed around the 79.00 level five days in a row. 

A rising USD usually weighs on commodity prices. Additionally, oil prices look vulnerable to a collapse of the very loose OPEC/Russia accord(s). These two factors may herald a fall in industrial sentiment, and with it the AUD. This would be consistent with the chart, which is pointing to potential for a move back to 76.00


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