The AUD/JPY cross continues its downward trend for the third consecutive day, hitting a fresh multi-month low around the 97.20 region. This decline is attributed to the recent strength of the Japanese Yen (JPY) following the Bank of Japan’s (BoJ) rate hike and China’s economic struggles. The oversold Relative Strength Index (RSI) suggests caution for bearish traders, but further losses may be on the horizon.
The BoJ’s decision to raise rates and Japan’s intervention in the foreign exchange market have bolstered the JPY, putting pressure on the AUD/JPY cross. Additionally, weak economic data from China and disappointing Australian inflation figures have weighed on the Australian Dollar (AUD), further driving down the AUD/JPY pair.
Technically, the breakdown below the 200-day Simple Moving Average (SMA) signals a bearish trend, with resistance levels at 77.75-77.80 and 78.00. A potential rebound could lead to short-covering and a move towards the 98.60 level, but gains may be limited by the 200-day SMA near 100.00. On the downside, support levels lie at 97.20, 97.00, and 96.65, with a break below potentially pushing the pair towards the YTD low in the mid-95.00s.
In summary, the AUD/JPY cross is facing downward pressure due to JPY strength and economic concerns in China. Traders should be cautious of oversold conditions and monitor key support and resistance levels for potential trading opportunities.