Audjpy Loses Steam After Falling Below

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Audjpy Loses Steam After Falling Below

AUD/JPY Loses Steam Below 94.00, Upside On The Cards

The AUD/JPY pair lost traction after approaching the 94.00 level during Thursday's trading session. The reason behind this is the lower-than-expected S&P Global PMI, along with the market's cautious mood.

All of this is putting pressure on the AUD. and causing the funds to flow into the JPY (Japanese Yen). The recent PMI data from Australia shows a reading of 47.1, which is lower than July's 48.2. At the same time, the manufacturing PMI also turned lower from 49.6 to around 49.4, along with the service PMI touching a low of 46.7 from an earlier value of 47.9.

If we put all of this aside for a moment, there's also the growing divergence between the RBA and the BoJ monetary policy.

Hawkish RBA And Dovish BoJ

By taking all of this into account, it appears that any further downside in the AUD/JPY cross is highly unlikely as the RBA is bullish while the BoJ continues with its old policy of low interest rates.

The 4-hour chart of the AUD/JPY shows that the price action is contained in a bearish trend channel starting from June. Despite this, the most obvious path for the AUD/JPY is towards the upside since it continues to hover above the 100 and the 50 EMAs.

The nearest resistance on the AUD/JPY chart is located near 94.40 which is also the top line of the trend channel. Another important level to watch towards the upside is the 94.90 which is the 15th August's high.

On the other hand, the nearest support for the AUD will be 93.70, where the 50 EMA is also present. After that, the next stop will be 93.50, followed by the 93.00 support level.

So, the bigger picture favors the AUD when compared with the Japanese Yuan. That's why we believe that the short-term trend for the AUD/JPY is towards the upside as the pair will try to show some bullish momentum. But if the BoJ makes a surprise U-turn over its policy, that could change everything for the AUD/JPY.

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