There has been particular momentum behind the AUD/JPY currency pair, thanks largely to stronger-than-expected Australian consumer inflation figures published on Wednesday. This recent development has created excitement and optimism. Expectations that the Reserve Bank of Australia (RBA) will be forced to pause the next rate cuts have helped strengthen the Australian dollar. The high-yielding AUD/JPY cross is now trading comfortably above the all-important 100-day Simple Moving Average (SMA). This movement is further solidifying a bullish sentiment among traders.
That makes the recent high Australian consumer inflation data a games changer on the short-term market dynamics front. With inflationary pressures continuing to rise, traders are adjusting their views on what’s to come with future RBA monetary policy. The prospect of any additional rate cuts has evaporated. Consequently, the Australian dollar is doing incredibly well against Japan’s yen.
As things stand now the AUD/JPY cross trades near the 101.40 level, an important technical barrier that traders are watching intently. If you don’t maintain levels above this floor, you are headed for a fall. Support should be seen closer to the psychological barrier near 101.00. If the duo breaks underneath this threshold, it may revisit the buying and selling vary help positioned between 100.40 and 100.35.
As shown on the above chart, the 100-day SMA continues to increase sharply, reflecting the general long-term bullish strength of the market. The MACD (Moving Average Convergence Divergence) technical indicator remains around the zero line. This indicates that there is a very little separation between the MACD and Signal lines. This shows that even with bullish momentum, the bullish momentum still appears muted and needs more confirmation to spark a potential rally.
During the early European session, the AUD/JPY cross was able to push through, hitting a new weekly high and sending spot prices up towards the 101.70 mark. Bulls are currently positioned for a breakout from a three-week-old, tight trading range. A clear break above this area could create fresh bullish entries. Traders are looking at targets in the 102.45 to 102.50 area, levels we haven’t traded at since July of 2024.
Should the market decisively break below the trading range that we’ve built, that would bring on technical selling pressure. Such a step would drive the spot rates below the psychological tipping point of 100.00. In that case, traders would subsequently target the next relevant support region around 99.65 to 99.60.