Stays on the way to two-month-old support despite bouncing off 95.00

  • AUD/JPY picks up bids from intraday low after China’s mixed inflation data.
  • Overbought RSI, failure to rebound from April’s top favor sellers.
  • Ascending trend line from late March, 92.20-10 support confluence act as extra filters.

AUD/JPY licks its wounds around 95.25 after posting the biggest daily fall in three weeks. The cross-currency pair’s latest rebound from the 95.00 threshold could be linked to China’s mixed inflation data, as well as the market’s anxiety ahead of the key US inflation figures. However, the bears remain hopeful.

China’s Consumer Price Index (CPI) reprints 2.1% YoY figures to ease below the 2.2% market consensus. Further, the factory-gate inflation gauge, namely the Producer Price Index (PPI), matches the 6.4% forecasts for May. Earlier in the day, Australia’s HIA New Home Sales dropped to -5.5% MoM in May versus -1.2% prior.

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Technically, RSI’s (14) retreat from the overbought territory and the quote’s failure to bounce off April’s top favor the AUD/JPY sellers.

That said, a broad horizontal area between 93.77 and 94.13, stretched from early April, appears a tough nut to crack for the pair sellers. Should the quote break the 93.77 support, a convergence of the 21-DMA and monthly support line, near 92.20-10, could challenge the AUD/JPY’s further downside.

Meanwhile, recovery moves need to offer a daily closing beyond April’s top surrounding 95.75 to recall the AUD/JPY buyers.

Following that, the recent highs close to 96.90 and an upward sloping trend line from late March, near 95.50 at the latest, will be in focus.

AUD/JPY: Daily chart

Trend: Further weakness expected

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