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, 4^th 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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