In early trading across Europe on Thursday, the AUD/JPY exchange rate was hovering around 111.50, showing a decline. The Japanese yen (JPY) has been strengthening against the Australian dollar (AUD) due to worries about possible currency interventions by Japanese authorities. Traders are now looking forward to the upcoming Tokyo Consumer Price Index (CPI) inflation report for June, which is set to be released later this Friday.
On Tuesday, Japan’s Chief Cabinet Secretary Minoru Kihara indicated that appropriate measures would be taken regarding currency fluctuations if needed. Then on Thursday, Bank of Japan board member Naoki Tamura noted that Japan had already reached the 2% inflation target set by the Bank of Japan; he suggested there might be a need to gradually increase interest rates to prevent a rise in underlying inflation beyond that target.
Australia’s unemployment rate dropped to 4.4% in May from April’s 4.5%, according to the Australian Bureau of Statistics (ABS) on Thursday. This figure was as anticipated by the market. In addition, the employment change for May was reported at 43,000, which was a positive shift from an earlier forecast of -40,700 (revised from -18,600), indicating an increase of around 25,000 jobs.
In light of Thursday’s job figures, financial markets are now estimating roughly an 80% probability that the Reserve Bank of Australia (RBA) will maintain interest rates in August.
Technical analysis:
Looking at the daily chart, AUD/JPY is positioned below both the 100-day simple moving average (SMA) and the 20-day Bollinger Middle Band, with a bearish short-term outlook prevailing. The price rests slightly above the lower Bollinger Band, while the Relative Strength Index (14) has dipped to approximately 35. This suggests a continued downside pressure in an oversold context, rather than indicating a solid support level.
For immediate downside support, levels are found below the Bollinger Bands, around 111.30. A clear break below this could lead to a further decline toward the psychological mark of 111.00. Conversely, initial resistance appears at the 100-day SMA around 112.25, followed by the 20-day Bollinger middle band near 113.10. A daily close above these resistance levels may signal a shift in the current bearish trend and set a potential target at the upper Bollinger Band near 114.90.
