AUD/JPY Climbs Back to 102.20, Halting Losses

AUD/JPY Climbs Back to 102.20, Halting Losses

Key Points:

  • AUD/JPY broke below a rising wedge, signalling possible bearish momentum, with immediate resistance at 103.00 and support at 102.00.
  • High inflation and retail sales figures may impact RBA’s interest rate decisions, currently at 4.35%.

The AUD/JPY is trading at 102.20 after snapping a two-day losing streak. The pair fluctuated around the significant psychological level of 102.00 and stood at 102.10 on Wednesday. Therefore, this movement indicates the traders’ response to various technical patterns and economic events influencing both currencies.

AUD/JPY Faces Resistance at 103 and Support at 102

The AUD/JPY pair recently broke below the lower boundary of a rising wedge on the daily chart, a pattern typically indicative of a bearish reversal. This technical development suggests potential downward pressure in the near term. Furthermore, the immediate resistance levels to watch are at 103.00, which marks the lower boundary of the former wedge, and a more substantial psychological resistance at 105.00. However, the psychological level of 102.00 and the nine-day Exponential Moving Average (EMA) at 101.56 provide support. The 14-day Relative Strength Index (RSI) hovers above 50, indicating a moderately bullish sentiment amidst the bearish patterns.

RBA: Rates Hold at 4.35% Amid Economic Signals

From an economic perspective, several recent releases are impacting the Australian Dollar. The AiG Industry Index, which measures private business activity in Australia, continued to decline in March. The authorities released retail sales data, critical for gauging consumer spending, on Tuesday, and it is expected to influence the Reserve Bank of Australia’s (RBA) interest rate decisions. Furthermore, the unexpectedly high inflation data last week might delay the anticipated interest rate cuts by the RBA. Next week’s meeting is expected to maintain the rates at 4.35%.

BoJ’s Interventions and Policy Impact JPY Outlook

Tokyo’s recent currency market interventions on Monday in Japan have temporarily boosted the Yen. The release of the Bank of Japan’s (BoJ) monetary policy meeting minutes on Thursday is a key event, offering insights into the central bank’s view on economic developments and influencing the volatility of the JPY. The interest rate outlook in Japan remains significantly lower than other nations, contributing to a trajectory biased toward further depreciation of the JPY, as expectations suggest a sustained interest rate differential.

AUD/JPY: Balancing Technical Patterns and Economics

The AUD/JPY currency pair presents a complex interplay of technical and economic factors. The bearish technical signals are juxtaposed with mixed economic indicators from Australia and Japan. Therefore, investors should closely monitor upcoming economic events and policy announcements. These factors will likely be crucial in determining the near-term trajectory of the AUD and JPY. The pair may see increased volatility as Australian interest rates stabilize and Japan continues its monetary easing. Consequently, this could guide strategic currency trades.