AUD/JPY is setting up as a high-conviction risk-proxy trade into the London open, where price action is typically driven by shifts in broader sentiment rather than idiosyncratic domestic headlines. With volatility still elevated and cross-asset signals pointing to a fragile risk backdrop, AUD/JPY remains one of the cleanest expressions of “risk-off” positioning: the Australian dollar tends to underperform when equities and growth expectations soften, while the Japanese yen often attracts defensive demand when markets de-risk. From a technical perspective, the pair has rebounded into a well-defined supply/mean-reversion zone, creating an attractive sell-the-rally framework with clear invalidation. This structure offers an asymmetric profile for short exposure: if momentum fades at resistance, downside can accelerate quickly as late longs are forced out and stops below the range begin to trigger. As always, execution matters, this setup is best approached with disciplined entries around the key level, tight risk controls, and an awareness of scheduled catalysts that can amplify volatility. AUDJPY Trade Setup: Pair Bias & Entries Stop / Invalidation Targets Why A+ (Fundamentals, Technicals, Sentiment) Price Action Driver Near-term catalysts (UK time) AUDJPY SHORT – (ACTIVE at time of writing) at entry zone). Sell 109.45 – 109.65 (scale) OR sell breakdown <109.10 after a failed retest Above 110.05 (kills the “risk-off / lower-high” structure) T1: 109.05 T2: 108.45 T3: 107.90 Fundamentals: risk tone still fragile (VIX elevated) and Nikkei is weak, supports “short AUD / long JPY” risk-off expression. Technicals: the 5m chart shows a bounce into the mean/supply band, classic sell-the-bounce structure; entry is now being tested. Sentiment: safest is to short where late longs are tempted (mean reversion up into supply) with clear invalidation above 110.05. Global risk / equities (esp. US tech), JPY bid, plus “Asia-open continuation” risk Thurs 5th Feb: 08:00 – 10:00: London risk pulse 12:00: BoE rate decision & MPR (risk/FX spillover), 13:30: US unit labor costs/productivity (USD/yields impulse), then US close mega-cap earnings tone (notably Amazon after close). (Reuters) Chart by TradingView – AUDJPY Trade Setup – 5th Feb Conclusion Our AUD/JPY setup qualifies as A+ (3/3) because it aligns fundamentals, technicals, and sentiment: a risk-sensitive cross in a fragile macro tape, a clean technical rejection/structure level that defines risk precisely, and a positioning profile that can produce fast follow-through if the rally fails. The priority is to remain process-driven, let price confirm the rejection at resistance (or a breakdown on retest) before committing size, and treat the invalidation level as non-negotiable. If AUD/JPY holds above the invalidation zone and begins to accept higher prices, the setup is no longer A+ and should be shelved rather than “re-argued.” Conversely, a clean failure from the entry area opens the door for a measured move toward first support and potentially deeper downside as liquidity pockets are targeted. In short: defined level, defined risk, catalyst-supported follow-through—exactly the type of trade structure we look for when publishing premium setups. This analysis is for informational purposes only and does not constitute investment advice. Trading involves risk; manage exposure accordingly. For similar FX Trade Setups please visit our FX Trade Ideas page. Please visit our Disclaimer page. Disclaimer Information on these pages contains forward-looking statements that involve risks and uncertainties. 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