AUD/JPY: Pullback From Multi-Year Highs, But Downside Potential Appears Limited

The AUD/JPY cross moved lower in Asian trading on Tuesday, retreating from the highest level since 2007 near 107.80-107.85 reached the previous day. AUD/JPY is currently trading around 107.25, but it seems difficult to achieve a significant correction down at present.

The less hawkish RBA minutes, which pointed out the risk of a sharp slowdown in the labor market, weighed on the Australian dollar (AUD). In addition, China’s economic difficulties further weakened the AUD, the currency of China’s proxy, and weighed on the AUD/JPY cross. Meanwhile, the Bank of Japan (BoJ) has so far failed to provide any clues on the timing of the next rate hike, which continues to weigh on the Japanese yen (JPY) and should provide some support for AUD/JPY.

From a technical perspective, the intraday decline may be entirely due to the extremely overbought daily chart oscillators, which triggered some profit-taking. However, any subsequent decline in AUD/JPY may find appropriate support around the 107.00 round mark and attract new buyers. This in turn would limit the downside of the AUD/JPY cross around the 106.60 support level, which currently appears to be a key pivot level. A clear break below this support level could trigger long liquidation trades and push the pair down towards the 106.00 round number.

On the other hand, the $107.80-107.85 area, the multi-year high hit on Monday, now appears to be acting as immediate resistance, followed by the $108.00 mark. Follow-through buying would serve as a new trigger for bullish traders and pave the way for a continuation of the strong rally seen over the past two-plus months. That said, from a technical standpoint, it would be prudent to wait for some short-term consolidation or some clear sideways declines before positioning for any further short-term upside moves.

AUD latest articles

Popular exchange rates

foreign exchange

fxcurrencyconverter is a forex portal. The main columns are exchange rate, knowledge, news, currency and so on.

© 2023 Copyright