The AUD/JPY currency pair experienced significant selling pressure after the release of disappointing Australian GDP growth figures. During the Asian session, the pair dropped to its lowest point since mid-September, leading to increased speculation about an earlier-than-expected interest rate cut by the Reserve Bank of Australia (RBA). Meanwhile, positive forecasts regarding an impending rate hike by the Bank of Japan (BoJ) in December contributed to the relative strength of the Japanese Yen, further weighing on the AUD/JPY pair.
Despite the downward trend, the AUD/JPY managed to recover more than 70 pips after briefly dipping below the 96.00 level, currently trading around 96.70 and showing a decline of 0.20 percent for the day. The Relative Strength Index (RSI) indicating slightly oversold conditions on the daily chart has prompted some traders to cover short positions, providing a temporary boost to the pair. Nonetheless, caution is warranted, as the technical indicators suggest that any upward movement may offer a selling opportunity rather than a sustained recovery.
The recent decline below the significant support level of 98.00 has been pivotal for bearish market sentiment. Various oscillators remain entrenched in negative territory, indicating a bearish outlook that is likely to continue unless a dramatic reversal occurs. The zone around 97.50 could serve as a critical resistance point for traders looking to initiate short positions ahead of further downward momentum.
In terms of support, the 96.00 level is expected to act as a buffer, but a decisive break below this level could reinforce the bearish outlook. Such a scenario could lead the AUD/JPY pair to decline towards the next support levels around 95.30 and possibly the psychological 95.00 level, as market sentiment continues to reflect significant challenges for the Australian economy influenced by recent GDP data.
