The AUD/JPY currency pair has recently shown signs of a rebound after hitting a near two-month low, finding support close to the 99.00 level. Despite this bounce, the prevailing technical indicators lean towards a bearish outlook, suggesting that further depreciation remains a possibility. A decisive break above the 101.00 level could change this near-term sentiment and revive bullish prospects.
During the Asian trading session on Tuesday, the AUD/JPY cross dropped to its lowest point since early October. However, it managed to recover approximately 75 – 80 pips from the 99.00 area, indicating some buying interest. Nonetheless, the currency pair continues to trade below the significant psychological marker of 100.00 amid ongoing concerns from US-China trade tensions. The implications of potential tariffs announced by the US administration have heightened market anxieties, with proposals for substantial levies on imports from Mexico, Canada, and China contributing to this unease.
These geopolitical tensions, exacerbated by the war in Ukraine and conflicts in the Middle East, have dampened the appeal of riskier assets, favoring the Japanese Yen as a safe-haven investment. Consequently, this has put added downward pressure on the Australian Dollar, negatively impacting the AUD/JPY pair.
Technically, daily chart oscillators are showing signs of negative momentum, reinforcing expectations for further downside movement. Traders should be cautious, noting that the resilience near the 100-day Simple Moving Average calls for a thorough assessment before committing to bearish positions. A sustained move below the 99.00 level could lead to further declines, potentially targeting the 98.70 – 98.65 support range and testing the 98.00 milestone.
Conversely, if the AUD/JPY crosses above the 100.00 level, it will encounter resistance near the 100.25 – 100.30 area before reaching the 100.55 – 100.60 barrier. Clearing these levels and breaking through the key 101.00 zone could provide upside momentum, possibly sending the pair towards the 101.55 resistance and, eventually, the 102.00 region.
