AUD/JPY slides and hovers around weekly lows ahead of RBA’s decision
- AUD/JPY begins Tuesday’s session with a negative tone, ahead of the RBA’s policy decision.
- Unless the RBA struck the markets with a hawkish reaction, the AUD/JPY could resume its downtrend, toward 96.80 and below.
- Otherwise, buyers reclaim the 98.00, and the AUD/JPY could test the YTD high.
AUD/JPY begins Tuesday’s Asian session slightly weak after registering losses of 0.53% on Monday due to a deterioration in risk appetite. Even though market participants have begun to price in rate cuts by the US Federal Reserve (Fed), US bond yields rose, underpinning the Greenback and the safe-haven status of the Japanese Yen (JPY). Hence, the cross pair is trading at 97.32, registering minuscule losses of 0.06%, at the time of writing.
Cross-pair traders anticipate additional weakness in the AUD/JPY, as key data points to JPY strength
Investors are eyeing the release of important data from the United States (US) mainly linked to the labor market. Meanwhile, AUD/JPY traders get ready for the Reserve Bank of Australia (RBA) monetary policy meeting, in which the central bank is expected to hold rates unchanged at 4.35% after the latest inflation figures were lower than expected, drifting below the 5% threshold. That eased pressures on the central bank, which, according to RBA’s Governor Michele Bullock, said monetary policy is restrictive, though service sector inflation remains stickier than hopped.
On the Japanese front, the Tokyo Core Consumer Price Index (CPI) is expected to slow down to 2.4% YoY in November, below October’s 2.7% reading. Headline inflation came at 3.3% in the twelve months to October. If both readings exceed the previous month’s forecasts, that could open the door for the Bank of Japan (BoJ) to normalize its monetary policy, even though data justified the need for maintaining its ultra-loose policy.
AUD/JPY Price Analysis: Technical outlook
The AUD/JPY daily chart portrays the pair as neutral to upward biased, but unless the RBA posts a hawkish surprise, an ‘evening star’ chart pattern, suggests further downside is expected. That along with a risk-off impulse, could pave the way for further losses. Hence, the pair first support would be the December 3 daily low of 97.20, ahead of the 97.00 figure. A breach of the latter will expose the November 21 swing low of 96.82, ahead of slumping to the Kijun-Sen at 96.71.