- AUD/JPY drifts lower on Tuesday as BoJ rate hike bets and intervention risks boost the JPY.
- The AUD benefits from a broadly weaker USD, helping limit additional losses for spot prices.
- The bearish technical setup backs the case for an extension of the intraday depreciating move.
The AUD/JPY cross comes under some renewed selling pressure on Tuesday and retreats further from the 110.65 resistance zone, retesting the previous day. Spot prices slide to a fresh daily low during the early European session, with bears now awaiting a break below the 110.00 mark before positioning for further losses.
Traders remain on high alert amid speculation that Japanese authorities will step in to prop up the domestic currency. Adding to this, firming expectations for further policy tightening by the Bank of Japan (BoJ) provide a modest lift to the Japanese Yen (JPY), which, in turn, is seen as a key factor exerting pressure on the AUD/JPY cross. Meanwhile, the Australian Dollar (AUD) benefits from a modest US Dollar (USD) pullback from an 18-month peak and might help limit the downside for the currency pair.
From a technical perspective, spot prices keep a bearish intraday bias following the overnight rejection around the 100-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, Moving Average Convergence Divergence (MACD) remains below zero with a negative reading of -0.03, and the Relative Strength Index (RSI) at 48.48 stays neutral, hinting that downside pressure is present but not yet overstretched. This, in turn, validates the near-term negative outlook for the AUD/JPY cross.
That said, some follow-through selling and acceptance back below the 23.6% Fibo. level and the 110.00 psychological mark is needed to back the case for deeper losses to the structural floor at 108.73. On the topside, initial resistance is seen at the 100-period SMA at 110.58, followed by the 38.2% Fibo. level at 111.12 and the 200-period SMA at 111.42, before the 50.0% retracement at 111.85 and the 61.8% level at 112.59 come into play. Higher up, the 78.6% retracement at 113.64 and the cycle high at 114.98 mark a broader cap.
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