The AUD/JPY currency pair has experienced a decline, dropping to approximately 97.75 during early trading in Europe on Friday, resulting in a 0.73% decrease for the day. This negative trend still prevails, although a period of consolidation could be anticipated given the oversold conditions indicated by the Relative Strength Index (RSI). Traders are particularly focused on a key support level at 97.45, while the immediate resistance is found at 98.76.
The selling pressure on AUD/JPY appears to have intensified following the release of new data that highlighted an acceleration in Japan’s Tokyo Consumer Price Index (CPI) for the first time in three months. This development has bolstered expectations for a potential interest rate hike by the Bank of Japan (BoJ) in December, providing the Japanese Yen with a boost in strength.
A closer analysis of the 4-hour chart reveals that the bearish trend for AUD/JPY remains strong, as the price is currently situated below the 100-period Exponential Moving Average (EMA). The sustained downward sentiment is reinforced by the RSI, which remains below the neutral threshold. However, the current oversold conditions suggest that there may be opportunities for brief consolidation before any further depreciation of the AUD/JPY pair occurs.
In terms of potential support levels, the immediate area to watch is at 97.45, aligning with the lower range of the Bollinger Band. Should the decline continue, the next support is identified at 96.60, corresponding to a low observed on September 4, followed by a psychological barrier at 96.00, which is also a low reached on September 19.
Conversely, if there is a rebound, the first resistance to monitor is around 98.76, the high from late November. A sustained move above this level could lead to the pair testing the 99.00 level, with further challenges anticipated at 99.49, the low from November 19. The psychological barrier of 100.00 is expected to present a significant hurdle for those looking to drive prices higher.
