CFD Trading Rate Australian Dollar vs Japanese Yen (AUDJPY)

• The AUD/JPY is experiencing a downward shift at 96.18, seeing a 0.23% loss.
• Indicators on the daily chart show a negative outlook as the cross now trades below the 20 and 100-day SMA.
• Four-hour chart indicators are consolidating after hitting oversold conditions.

On Thursday's session, the AUD/JPY experienced a downturn, hovering at 96.18 after hitting a its lowest level since mid December near 95.50. The daily chart conveys a bearish hue with the sellers gaining substantial ground. Meanwhile, the four-hour chart indicators seem to have enter in a consolidation phase, following a dip into oversold territories.

In the daily chart perspective, the leading indicators signal an inclined selling momentum. The Relative Strength Index (RSI) is charting a downward trajectory indicating bearish strength, especially within a negative zone. This is echoed by the Moving Average Convergence Divergence (MACD) which prints a surge in red bars, indicating increasing bearish pressure. Furthermore, the cross fell below the 100-day Simple Moving Average (SMA), a strong resistance which strengthens the case for the sellers .

Inspecting the shorter-term dynamics from the four-hour chart, it appears the bearish tendency seems to be leveling off. Indicators have moved to a stable phase after previously registering oversold conditions. The RSI in particular, maintains a flat formation in a negative territory, indicating a momentary pause in downward momentum. Additionally, the MACD also show flat red bars indicating growth in short-term selling pressure, though at a decreasing rate.

AUD/JPY daily chart

AUD/JPY levels to watch

• AUD/JPY drifts lower for the third straight day and seems vulnerable to sliding further.
• Softer domestic inflation lifts August RBA rate cut bets and undermines the Aussie.
• The BoJ’s hawkish tilt, along with geopolitics, benefits the JPY and exerts pressure.

The AUD/JPY cross remains under some selling pressure for the third straight day on Thursday and drops to a nearly one-month low, during the Asian session. Spot prices currently trade around the 96.20-96.15 area, with bears now looking to extend the downward trajectory further below the 100-day Simple Moving Average (SMA).

The Australian Dollar (AUD) continues to be undermined by softer domestic consumer inflation figures released on Wednesday, which reaffirmed expectations that the Reserve Bank of Australia's (RBA) tightening cycle is over. In contrast, the Bank of Japan (BoJ) last week signalled that conditions for phasing out huge stimulus and pulling short-term rates out of negative territory were falling into place. This, along with the risk of a major escalation of geopolitical tensions in the Middle East, turns out to be a key factor behind the safe-haven Japanese Yen's (JPY) relative outperformance and exerts downward pressure on the AUD/JPY cross.

Bulls, meanwhile, seem rather unimpressed by a private-sector survey, which showed that China's factory activity expanded at a steady pace for the third straight month in January. In fact, China's Caixin Manufacturing PMI remains unchanged at 50.8 in January as compared to market expectations for a downtick to 50.6. This, however, does little to benefit the China-proxy Aussie. Apart from this, weakness below the 100-day SMA suggests that the path of least resistance for the AUD/JPY cross is to the downside. Hence, a subsequent decline back towards retesting the YTD trough, around the 95.85 region, now looks like a distinct possibility.

Technical levels to watch