AUD/JPY braces around 80.80 ahead of Australian Retail Sales

On Monday, the AUD/JPY began the week on the right foot, finishing the day recording a gain of 0.74%. As the Asian session begins, the pair is trading at 80.84 steady.

The market sentiment is mixed as the Asian session kicks in. Equity futures in Asia post gains except for the Nikkei 225 and the Topix, losing 0.03% and 0.14%, respectively. In the meantime, the US 10-year Treasury yield rose to 1.50% amid inflationary fears and economic optimism. 

Australian Retail Sales in the spotlight

Later during the day, In the Australian economic docket, AUD/JPY traders’ focus turns to the Preelimnary Retail Sales for August, expected to contract 2.5%, versus a 2.7% decrease in the previous month. 

Meanwhile, in Japan, the state of emergency is expected to expire on Thursday. It will be the first time since early April that no prefectures will be under emergency. Japan’s Prime Minister Yoshihide Suga will announce the decision on Tuesday evening, following discussions with disease experts from the government’s coronavirus subcommittee.

On Monday, Bank of Japan (BoJ) Governor Haruhiko Kuroda said that the recovery would become more evident as the impact of the pandemic subsides.  Further, he said that the “timing of consumption recovery will depend largely on developments regarding the pandemic.” 

AUD/JPY Price Forecast: Technical outlook

1-hour chart

The AUD/JPY broke the 80.77 resistance that now acts as support. The simple moving averages (SMA’s) are located below the spot price, supporting the upside bias. However, the last three candles have been bearish, suggesting a possible re-test of an upslope trendline, around 80.77, is in the cards. In the case of that outcome, a bounce at that level could push the AUD/JPY towards the first resistance level at 81.14. A break above the latter would expose 82.00; however, there would be some hurdles on the way up. The first supply level would be September 10 swing highs around 81.40, followed by September 8 highs around 81.64.

On the flip side, a break beneath 80.77 could exert downward pressure on the AUD/JPY, exposing the 50-SMA as the first support level at 80.54. Nevertheless, if the bears would like to reclaim the bearish bias, they would need to break below the 100-SMA at 80.10

The Relative Strenght Index is at 62, heading slightly down. But as it is above the 50-midline, the upside bias remains.