Key Moments
- AUD/JPY trades lower near 114.00 in early European action on Friday, though the broader bullish trend remains intact.
- Tokyo core CPI stayed below the BoJ’s 2% target for a fourth straight month in May, while analysts still see scope for inflation to re-accelerate.
- Markets assign nearly a 93% probability that the RBA will keep the Official Cash Rate unchanged at its June meeting, according to the ASX RBA Rate Tracker.
Cross Retreats Despite Ongoing Uptrend
AUD/JPY is trading in negative territory around 114.00 during the early European session on Friday. Despite the latest pullback, the cross continues to hold a broadly constructive technical profile, with price action still well supported by key moving averages and momentum indicators pointing to a still-bullish bias.
BoJ Under Pressure as Tokyo Inflation Lags Target
Fresh data showed that annual core Consumer Price Index (CPI) inflation in Tokyo remained below the Bank of Japan’s 2% target for a fourth consecutive month in May. Even so, analysts anticipate that price pressures could pick up again in the coming months as higher oil prices and increased import costs stemming from a weaker JPY keep the BoJ under scrutiny regarding potential interest rate increases.
RBA Hike Expectations Temper After Softer CPI
On the Australian side, traders have pared back expectations for imminent rate hikes by the Reserve Bank of Australia after April CPI inflation came in weaker than anticipated, weighing on the Australian Dollar. Financial markets have priced in nearly a 93% chance that the RBA will leave the Official Cash Rate unchanged at its June policy meeting, according to the ASX RBA Rate Tracker.
Technical Setup: Bullish Structure Intact
On the daily chart, AUD/JPY maintains a constructive bullish tone as it consolidates just below the upper Bollinger Band. The pair is trading comfortably above both the 20-day simple moving average – which coincides with the middle Bollinger Band – and the 100-day moving average, signaling that the broader uptrend remains in place despite the current pause.
The Relative Strength Index (14) is hovering around 55, reflecting neutral-to-positive momentum rather than overbought conditions. This suggests that buyers could still have scope to push prices higher if overhead resistance levels are cleared.
| Level | Type | Approximate Value | Comment |
|---|---|---|---|
| 114.65 | Resistance | Upper Bollinger Band | A daily close above would signal potential continuation of the advance. |
| 113.70 | Support | 20-day SMA | First downside level to watch within the prevailing uptrend. |
| 112.78 | Support | Lower Bollinger Band | Additional cushion below initial support. |
| 110.77 | Support | 100-day EMA | A break here would be required to seriously challenge the bullish structure. |
On the topside, immediate resistance is aligned with the upper Bollinger Band near 114.65. A daily close above that barrier would reinforce bullish control and point to the possibility of a renewed leg higher. On the downside, the first area of support is located at the 20-day simple moving average around 113.70. Below there, the lower Bollinger Band around 112.78 offers further support, followed by the 100-day exponential moving average close to 110.77. A decisive move beneath this latter level would be needed to undermine the prevailing positive technical picture.
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