AUD/JPY Price Analysis: Bulls regain control and lift the pair above the 50-DMA
- The AUD/JPY rallies, albeit in a risk-off mood, as global equities are trading with losses.
- The sentiment is downbeat on investors’ worries about the US entering a recession and the Ukraine-Russia conflict escalation.
- AUD/JPY Price Forecast: The cross-currency is upward biased and will face solid resistance around 94.00.
The Australian dollar rallies against the Japanese yen, despite a risk-off market sentiment, reflected by global equities falling on Wednesday, courtesy of fears that the US Federal Reserve might cause a recession in the US and Russia’s advancement in Ukraine. At the time of writing, the AUD/JPY is trading at 93.37, a level last seen on May 5.
Since the beginning of Wednesday’s Asian session, positive data boosted the Aussie. Australia’s Q1 GDP rose by 0.75% QoQ and 3.3% YoY, beating the market expectations of 0.6% and 2.9%, respectively. Also, the China Caixin PMI for May rose by 48.1, vs. 48.0 expected, showing the resilience of the second-largest economy.
The AUD/JPY Wednesday’s open was 92.28, and the cross-currency rallied sharply, almost non-stop, though it dipped briefly towards 92.40 but kept upswing until reaching a daily high at 93.61.
AUD/JPY Price Forecast: Technical outlook
From a daily chart perspective, the AUD/JPY is upward biased after reclaiming the 50-day moving average (DMA) around 91.89. Also, the Relative Strength Index (RSI) in bullish territory aims higher, with enough room before entering the overbought zone.
In the meantime, the AUD/JPY 4-hour chart shows the pair with the same bias as the daily chart, but it’s worth noting that the AUD/JPY will face a solid resistance area around May 4 high at 94.02. Why is that level so important? Because it’s the pivot high of the downtrend that began in early May, towards May 12 swing low at 87.30, for a 670 pip fall.
If AUD/JPY bulls break above the May 4 high, that will open the door for further gains. The AUD/JPY first resistance would be 94.50, followed by the 95.00 figure. A breach of the latter would expose the YTD high at 95.74.
Key Technical Levels