This week, the AUD/JPY pair has added to the bullish gains it started on Thursday last week. The pair has added 1.3 points.

The bullish moves by the Australian dollar came after several bullish calls by top banks. On Friday, analysts at ANZ released a note calling AUD ‘grossly undervalued’. The same sentiments were issued by Rabobank which raised its targets among GIO currencies.

Another reason why AUD has rallied is perhaps M&A. This week, the largest commercial real estate firm in Europe – Unibail-Rodamco –agreed to pay $32 billion for Australia’s Westfield.

Today, we will get employment change from Australia. Investors expect the economy to add about 19K new jobs compared to the 3K that were added in October.

Japan, – in terms of economic data – is expected to have a slow week. The only data we expect is the manufacturers and non-manufacturers index which investors expect to potentially improve marginally. This data will likely be overshadowed by the central bank activities in the United States and Europe.

The key determiner of price movements for this pair today will be the single data from Australia. It could determine whether the upward momentum continues or a reversal.

Using the hourly chart below, the RSI is currently at 52 heading downwards. At the same time, the pair is trading slightly above the 50-period EMA level and at a similar level to the 20-day EMA (in pink).

(Click on image to enlarge)

Today we will see if the pair will fall to the 85.60 level – i.e. 38.2%  Fibonacci retracement level –if initiating a long position with a take profit target at the 86.19 level.

An alternative scenario is to short the pair when it reaches the 85.59 level with a take profit at the 85.24 level.