It is anticipated that #AUDJPY @ 96.0570 will experience further decline below 96.00 due to the internal demand caused by inflationary pressures in Japan.

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• AUD/JPY is expected to deliver more weakness below 96.00 as inflationary pressures in Japan have contributed to in-house demand.

The pair currently trades last at 96.0570.

The previous day high was 96.77 while the previous day low was 95.78. The daily 38.2% Fib levels comes at 96.39, expected to provide resistance. Similarly, the daily 61.8% fib level is at 96.16, expected to provide resistance.

The AUD/JPY pair has displayed a sheer drop to near 96.00 in the early European session. Considering the strength in the downside momentum, the risk barometer is exposed to more downside despite Japan’s inflation having softened and the Australian preliminary S&P PMI (June) having remained upbeat.

AUD/JPY is following bearish cues from the AUD/USD pair amid the risk-aversion theme. The release of the upbeat Aussie PMI also failed to provide some support to the Australian Dollar. Manufacturing PMI landed at 48.6, higher than the expectations of 48.1 and the former release of 48.4. Also, Services PMI at 50.7 outperformed expectations of 50.1 but remained lower than the former release of 52.1.

Meanwhile, the Japanese Yen is performing better against the Australian Dollar despite softening of Japan’s inflation data (May). Headline inflation has decelerated to 3.2% while the street was estimating a further boost to 4.1%. Also, it remained lower than the former release of 3.5%. Core inflation that excludes volatile oil and food prices landed at 4.3%, marginally lower than the estimates of 4.4% but remained higher than the former release of 4.1%.

Scrutiny of Japan’s inflation report indicates that contribution from higher oil prices is fading and major inflationary pressure is coming from in-house demand, which would support for sustainability above the 2% benchmark.

The Bank of Japan (BoJ) is expected to continue its ultra-dovish stance as the impact of costly import prices is fading swiftly. This week, BoJ policymaker Asahi Noguchi also warned that the effect of costly imported goods could disappear around September. He further added central bank must continue lower interest rates to ensure inflation remains well-supported above 2% through higher wages.

Technical Levels: Supports and Resistances

AUDJPY currently trading at 95.88 at the time of writing. Pair opened at 96.69 and is trading with a change of -0.84 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 93.99, 50 SMA 91.94, 100 SMA @ 91.01 and 200 SMA @ 91.74.

The previous day high was 96.77 while the previous day low was 95.78. The daily 38.2% Fib levels comes at 96.39, expected to provide resistance. Similarly, the daily 61.8% fib level is at 96.16, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 96.06, 95.43, 95.07
• Pivot resistance is noted at 97.04, 97.4, 98.03

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