AUDJPY Daily Outlook AUD/JPY reflects the complex interplay of Australia's and Japan's differing monetary policies and economic trends. The Reserve Bank of Australia (RBA) maintains a cautious stance, but persistent inflation and rising service sector wages have led it to keep interest rates high for extended periods. Meanwhile, the Bank of Japan (BOJ) has only recently begun to take cautious steps toward normalizing its overly accommodative monetary policy. Despite a slight change in BOJ policy, the yen remains relatively weak due to Japan's low inflation and weak economic momentum. Meanwhile, the Australian economy is benefiting from robust trade, with China's gradual recovery supporting resource exports. As such, we expect the AUD to continue to maintain a moderate bull run unless there is significant risk aversion in global markets, where the yen is typically considered a safe haven. Technical analysis shows that the daily chart of AUD/JPY is showing a recovery from a significant decline that peaked near 107.60 in late 2024. The correction from this peak has created a descending trendline that has been a strong resistance for several months. Looking at the recent price action, AUD/JPY broke out of this trend line but is currently trading sideways just above it, suggesting a possible reversal. This breakout attempt suggests bearish momentum and a possible reversal of the uptrend. However, the recent high of 95.70 would provide confirmation of this trend. The trend is gradually transitioning from a downtrend to a reversal or continuation of the uptrend. After a sharp drop to around 85.92 in March 2025 (which coincided with the 100.0% extension of the previous downtrend Fib line), AUD/JPY has made a strong recovery and broken through a series of lower highs. Since this recovery, the downtrend has been following the Fib lines and the price is currently above the 38.2% retracement level of 93.00 which acts as the immediate support line. This suggests a healthy correction in the bullish recovery phase. The breakout of the lower lows and the main downtrend strengthens the uptrend. However, AUD/JPY is currently facing short-term resistance at 94.80-95.70, which corresponds to both the 0.0% Fib retracement level of the previous high and the current structure. A strong close above this resistance level would see a test of 96.50 and then 97.10. These levels have been major reaction points since late 2024 and could trigger significant selling pressure if reached. A breakout and sustain above 97.10 would see AUD/JPY officially enter an uptrend. A breakout above 93.00 could lead to a significant downside. The next major support level is near 92.00, which coincides with the 50.0% Fib retracement level. A break below this level could lead to a drop towards 90.85-91.00, where the 61.8% retracement level and the April 2025 horizontal support line converge. A close below this support line could break the current bull run and resume the previous downtrend. The moving averages on the chart support a cautious bull scenario. The price is trading above the short-term moving averages (EMAs), which are starting to break out. This suggests that trend momentum is shifting upwards. However, the slope of the long-term EMAs is relatively flat, reflecting the recent volatility and sideways movement. Momentum indicators are moderately supportive of the continuation of the uptrend. The RSI is currently at 58.97, just below the overbought threshold, but well above the midline. This suggests that overbuying is ongoing, but not overly so. The Stochastic Oscillator is hovering around 70, suggesting a short-term pullback, but a clear bearish crossover has not yet formed. Hence, the pullback may be limited to a short-term consolidation phase. The MACD is in bullish territory and the histogram is trending upwards, indicating gradual bullish momentum. Overall, the AUD/JPY chart is giving positive signals of a trend reversal with the support of the downtrend line and higher lows. The price structure has turned bullish, but it is facing resistance that needs to be overcome for the uptrend to continue. If the price manages to hold above 93.00 and gain momentum above 95.70, a move towards 97.00 and possibly 98.50 would be more realistic. Conversely, a break below 92.00 would weaken the bullish outlook and could lead to a retest of lower support. Traders should watch the next daily closes where key Fibonacci levels and the trend line intersect. These indicators will determine whether the AUD/JPY pair will continue its bullish reversal or enter a broader correction.
