AUD/JPY Price Forecast: Struggles to continue winning streak

AUD/JPY turns sideways near 97.00 after a three-day winning spree.
The Australian Dollar rises on improved market sentiment and RBA Bullock’s hawkish interest rate guidance.
Growing concerns over BoJ further policy tightening.

Sagar Dua FXStreet

The AUD/JPY pair exhibits indecisiveness among market participants near 97.00 in Friday’s European session. The cross struggles to extend its winning spree for the fourth trading session on Friday. However, the near-term trend is bullish as the strong appeal of the Japanese Yen (JPY) as a safe haven amid market mayhem has diminished.

Lower-than-expected United States (US) Initial Jobless Claims for the week ending August 2 and higher-than-expected China’s Consumer Price Index (CPI) data for July have improved risk-appetite of market participants.

Meanwhile, easing expectations of more rate hikes by the Bank of Japan (BoJ) has also limited the upside in Yen. On Wednesday, BoJ Deputy Governor Shinichi Uchida said, “We won’t raise rates when markets are unstable.”

On the Aussie front, hawkish guidance from Reserve Bank of Australia (RBA) Governor Michelle Bullock on interest rates has boosted the Australian Dollar’s (AUD) appeal. Bullock said the central bank is vigilant to inflation risks and interest rates would be hiked further if needed.

Going forward, the next move in the Australian Dollar will be influenced by the Q2 Wage Price Index data, which will be published on Tuesday. Investors will keenly focus on the wage data as it influences consumer spending, which eventually impacts inflationary pressures.

AUD/JPY oscillates in an Ascending Triangle chart pattern on an hourly timeframe, which exhibits a sharp volatility contraction. The 50-hour Exponential Moving Average (EMA) near 96.40 continues to provide support to the Australian Dollar bulls. Earlier, the asset delivered a V-shape recovery after posting a fresh annual low near 90.00.

The 14-period Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting a sideways trend.

The formation of a volatility contraction pattern after a strong recovery leads to a decisive break on the upside. The occurrence of the same would drive the asset towards 98.00 and August 1 high of 98.74.

On the contrary, a breakdown below the round-level support of 95.00 will expose the cross to August 6 low at 93.42, followed by August 5 average price of 92.46.

AUD/JPY hourly chart

Economic Indicator

RBA Governor Bullock speech

Michele Bullock is the the ninth Governor of the Reserve Bank of Australia. She commenced her current position in September 2023, replacing Philip Lowe. Bullock was the Assistant Governor (Financial System) at the Reserve Bank of Australia, a position she held since October 2016.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.