The AUD/JPY pair declined to around 99.55 in early European trading on Tuesday, as the Japanese Yen (JPY) gained ground against the Australian Dollar (AUD). The move followed an agreement between US President Donald Trump and Japan’s Prime Minister Sanae Takaichi on a framework to secure critical minerals and rare earth supplies, boosting demand for the safe-haven Yen.
Focus shifts to Australian CPI and BoJ rate decision
Market participants are now turning their attention to the upcoming Australian Consumer Price Index (CPI) data, due Wednesday, which could offer clues about the Reserve Bank of Australia’s (RBA) policy outlook.
Meanwhile, the Bank of Japan (BoJ) will announce its interest rate decision on Thursday. The central bank is widely expected to keep rates unchanged at 0.5%, with traders awaiting Governor Kazuo Ueda’s post-meeting remarks for hints on future policy direction.
Technical outlook: bullish bias remains above 100-day EMA
From a technical standpoint, AUD/JPY maintains a constructive tone as long as it trades above the 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) stands above the neutral 50 mark near 57.50, suggesting that bullish momentum remains intact in the short term.
On the upside, the pair faces a significant resistance level near the psychological 100.00 handle. A sustained break above this barrier could open the path toward the upper Bollinger Band at 100.90, with further gains potentially retesting the November 8, 2024 high at 102.30.
Conversely, initial support lies at 98.54, the October 23 low. A drop below this level may accelerate selling pressure toward 97.25, the October 16 low. The 100-day EMA at 96.90 serves as a key downside level that could determine the broader trend direction for the cross.
