AUD/JPY slips to six-week low as odds increase for the US-Iran war

• AUD/JPY drops 50+ pips after the news of Iran attacks over the US facilities in Iraq.
• Pentagon stays ready to protect and defend US personnel, partners and allies in the region.
• Markets ignored upbeat Aussie housing data amid the rush to risk-safety.

AUD/JPY remains on the slippery ground near 73.82 during early Wednesday. The pair has recently been damaged by the increasing odds of the US-Iran war after Iran began operation “Martyr Soleimani”.

Iran is all in the headlines…

After a few days of mourning, Iran begins taking the revenge of the US killing of the key Quad force personnel Qasem Soleimani. In doing so, the Middle East forces strike multiple locations in Iraq including Ayn al-Asad base that hosts the US forces.

In a reaction, the US Defense update says, "we will take all necessary measures to protect and defend US personnel, partners, and allies in the region".

Read: US Pentagon: We will take all necessary measures to protect and defend US personnel, partners, and allies in the region“

With this, the market’s flight to risk-safety got a boost and hence the US 10-year treasury yields drop more than 10 pips to 1.71% whereas the S&P 500 Futures lose 1.5% to 3,187 by the press time.

In doing so, traders ignored Australia’s November month Building Permits that crossed a 2% forecast with a good print to 11.8%.

Traders now have all eyes stick to the geopolitical headlines as fears of the full-fledged US-Iran war are rising. Should this happen, oil, gold and Japanese yen (JPY) will be the key beneficiaries.

Technical Analysis

Unless bouncing back beyond a 200-day SMA level of 74.90, prices can keep declining towards November 14 low near 73.35.