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Lucas: Why I'm selling AUDJPY

Two trades have caught Steve Lucas' eye; USDJPY and AUDUSD. When it comes to the USDJPY, Steve explains that interest rate futures have a bullish bias, and as a result he thinks a yield differential should move against the USD, thus putting downward pressure on USDJPY. For this reason, he expects a temporary pullback.

And looking at the AUDUSD, Steve says the rally has now stalled and that in fact it reversed on Tuesday at its 100-day moving average. He says the pullback has ended a sequence of higher daily lows, which means the AUD should move even further to the downside.

Combining those two markets, Steve has decided to trade AUDJPY. He says people have been selling the cross on rallies. Looking at levels, he says that the market is close to this year’s top posting July at 96.53. He is planning to sell the AUDJPY at the open at 95.65 as well as a stop at 95.84 - which was Tuesday’s high. His two targets 94.93 and 94.39.

01:18 minutes
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