AUD/JPY Price Forecast: Uptrend Holds Near 103.00 Despite Softer China Data
GlobePRwire
The AUD/JPY currency pair has experienced a modest slump, trading around 103.15 during Monday’s early European session. The Australian Dollar (AUD) came under pressure against the Japanese Yen (JPY) following disappointing Chinese economic data, yet the broader technical outlook for the pair remains bullish.
Market participants are now closely monitoring the upcoming Bank of Japan (BoJ) interest rate decision, expected on Friday, which could further influence the cross. The LFtrade team of brokers offers readers a clear and informative explanation of the topic.
Weak Chinese Data Pressures the Aussie
The recent decline in AUD/JPY can be attributed to weaker-than-expected Chinese economic indicators, particularly Retail Sales and Industrial Production. According to the National Bureau of Statistics (NBS), China’s Retail Sales grew 1.3% year-over-year (YoY) in November, a significant slowdown from 2.9% in October and below market expectations of 2.9%.
Meanwhile, Industrial Production expanded 4.8% YoY, slightly underperforming the previous 4.9% and below the consensus forecast of 5.0%.
Given that China is Australia’s largest trading partner, weaker Chinese consumption and factory output exert direct pressure on the Australian Dollar, often referred to as the China-proxy currency. This dynamic underlines the sensitivity of AUD/JPY to China-driven risk sentiment, particularly in commodity markets.
BoJ Rate Hike in Focus
Despite the short-term pressure from Chinese data, market attention is now turning to the Bank of Japan’s (BoJ) monetary policy. The Japanese central bank is widely anticipated to announce an interest rate hike to 0.75% during its December policy meeting. A potential rate increase could strengthen the JPY, possibly adding volatility to AUD/JPY.
However, from a technical perspective, the pair has remained resilient above key support levels, suggesting that the broader bullish trend remains intact. Traders should watch how the market reacts to BoJ policy news, as it could either reinforce the uptrend or trigger short-term retracements.
Technical Analysis: Bullish Momentum Persists
On the daily chart, AUD/JPY is trading at 103.15, maintaining its position above the rising 100-day EMA at 99.38. The 100-day EMA has been steadily ascending, highlighting persistent medium-term demand and supporting the bullish bias.
The pair also trades above the Bollinger midline at 102.42, with the upper Bollinger band at 104.42 acting as the next resistance level. This setup indicates that while the pair is under some pressure from weak external data, upside momentum remains intact without signs of overextension.
The Relative Strength Index (RSI) is currently at 60.04, comfortably above the neutral 50 mark. Although the RSI has eased from recent highs, it still reflects positive momentum, suggesting that any dips could attract buying interest.
Market Sentiment and Risk Factors
AUD/JPY is also sensitive to broader risk sentiment and global market trends. The pair tends to weaken during periods of risk aversion, as traders flock to safe-haven currencies like the JPY.
Conversely, periods of risk appetite support the AUD due to its commodity-linked nature. Upcoming economic data releases from Australia, including Consumer Price Index (CPI) and employment figures, could further influence short-term price action.
Key Support and Resistance Levels
Immediate resistance stands at 104.42, aligning with the upper Bollinger band; a decisive move above this level would signal a continuation of the uptrend. Initial support is at 102.42, coinciding with the Bollinger midline, acting as a near-term floor for the pair. Deeper support is provided by the 100-day EMA at 99.38, a significant medium-term support level; any breach here could indicate a trend reversal.
The Bollinger Bands remain sloped higher, reinforcing the upward bias, while RSI above 60 favors dip-buying strategies. Technical traders may target pullbacks toward 102.42 or even the 100-day EMA as buying opportunities, maintaining alignment with the medium-term bullish outlook.
Conclusion: Bullish Outlook Holds
Despite recent weakness stemming from soft Chinese Retail Sales and Industrial Production, the AUD/JPY remains technically bullish, trading comfortably above the 100-day EMA and Bollinger midline. With the RSI still signaling positive momentum, the cross is likely to find support on dips and could resume its upward trajectory toward 104.42 if buying pressure persists.
Traders should continue to monitor the BoJ interest rate announcement, as it may introduce short-term volatility. Nevertheless, technical indicators suggest that the bullish trend remains intact, and support levels at 102.42 and 99.38 provide solid risk management points.
In summary, while external factors such as China’s economic slowdown are impacting the AUD, the combination of rising EMA, Bollinger Bands, and RSI momentum maintains a positive medium-term outlook for AUD/JPY. A sustained break above 104.42 would reinforce the uptrend, while corrective dips toward 102.42 offer strategic entry points for bullish traders.