AUD/JPY Technical: Minor downtrend remains intact

  • Recent two weeks of price actions in AUD/JPY have evolved into a minor downtrend.
  • Key resistance on the minor downtrend stands at 96.00.
  • Near-term supports are at 94.80 and 94.00.

This is a follow-up on our earlier analysis, “AUD/JPY Technical: At the risk of a minor pull-back” dated 19 June 2023. Click here for a recap.

The AUD/JPY has dropped as expected and almost hit the 94.80 support (printed a current intraday low of 95.15 in today’s Asia session).

Today’s fall in the AUD/JPY has been reinforced by a softer Australia’s monthly CPI data for May, which slowed down to an annualized rate of 5.6% from 6.8% in April and came in below expectations of 6.1%.

The slowdown in monthly inflation growth in Australia has tempered the expectations of another rate hike by the RBA in the upcoming monetary policy decision meeting held next week, 4th July.

As of 28 June, the ASX 30-day interbank cash rate futures has priced in a chance of 16% of a 25 basis points (bps) hike on the cash rate to 4.35%, down from a 23% chance priced yesterday, 27 June.

 Evolving in a short-term descending channel

Fig 1: AUD/JPY minor short-term trend as of 28 Jun 2023 (Source: TradingView, click to enlarge chart)

The price actions of AUD/JPY have continued to evolve in a short-term descending channel in place since its 19 June 2023 high of 97.67 which indicates that its minor downtrend phase remains intact.

The key short-term pivotal resistance stands at 96.00 which is defined by the upper boundary of the short-term descending channel and the former minor swing low of 27 June 2023.

No clear signs of bearish exhaustion

The hourly RSI has remained below a corresponding pull-back resistance at the 44 level and has not displayed any bullish divergence signal at its oversold region.

A break below 94.80 (also the 20-day moving average) exposes the next support at 94.00 (psychological level & the 50% Fibonacci retracement of the minor up move from 1 June 2023 low to 19 June 2023 high).

On the other hand, a clearance above 96.00 negates the bearish tone to see the next resistance coming in at 96.80.

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Kelvin Wong

Kelvin Wong

Senior Market Analyst, OANDA at OANDA
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities. Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets. In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.