Aussie Dollar Sell-off Could Continue Ahead of RBA Decision

Key Highlights
· Aussie Dollar/Japanese Yen exchange rate is trading around a crucial support area.
· Australian Building Permits released by the Australian Bureau of Statistics registered an increase of 2.8% in March 2015, compared to the preceding month.
· A sharp decline in AUD/JPY stalled around an important support trend line that might act as a catalyst moving ahead.

Technical Analysis
The Australian Dollar finished the week notably lower versus the Japanese Yen, and looks set for more declines this week. There are many critical releases lined up this week in Australia, including the RBA interest rate decision. These events might be enough to finally force a break in the AUD/JPY pair.



There is a bullish trend line formed on the 4-hour chart, which recently stalled the downside and protecting further losses. The pair is struggling to find direction today, holding well above the highlighted trend line but remains at risk of a break lower. AUD/JPY is also under pressure due to the softer-than-expected results from the HSBC PMI in China.

On the downside, the most important support lies around 100 and 200 simple moving averages confluence area. It is aligned with the 76.4% fib retracement of the last wave from the 91.74 low to 95.93 high.

At the moment the pair is at 94.00 and a drop below 93.90 (trend line support) would expose a test of 100 SMA (4H) and finally 91.74 (last swing low). On the upside, the immediate resistance aligns at 94.40 (pivot) followed by the 95.00 handle.

US Factory Orders
Today, the US Factory Orders report will be released by the US Census Bureau. The forecast is lined up for a 2% increase in March 2015, compared to the previous month. It would be interesting to see whether the US dollar manages to recover ground moving ahead or not.