- AUD/JPY extends its weekly gain, rising 3.71%.
- Sentiment improved on the session, despite the economic backdrop, with investors fearing a potential global economic downturn and food crisis.
- AUD/JPY Price Forecast: Consolidating in 94.00-40 range before pushing year high above 95.00.
The AUD/JPY It is advancing strongly after hitting a daily low below 93.00, rising to fresh six-week highs above 94.00, a level last seen on April 22, setting up for a retest of year highs. At 94.33, the AUD/JPY reflects an upbeat sentiment, with US stocks ending Thursday’s session with gains of 0.81% and 2.75%.
During the day, investors cast aside the current market narrative. Fears of a possible recession in the US, triggered by the US Federal Reserve’s tightening of conditions, the coronavirus outbreak in China and the shutdown of factories, slowing supply chains and the war between Ukraine and Russia remain the backdrop to the global economic landscape.
On the other hand, the Japanese yen continued to be under strong selling pressure, posting significant losses against its peers. AUD/JPY is refreshing two-month highs, and with the Relative Strength Index (RSI) in bullish territory and accelerating higher, AUD/JPY threatens to break above the previous high at 95.74.
AUD/JPY Price Forecast: Technical Outlook
Therefore, the AUD/JPY bulls regained control following a currency correction to 87.30 and, at the time of writing, they are headed for a daily close near the 94.50 area. This is from the perspective of the daily chart.
On the 4 hour chart, the AUD/JPY appears to be losing steam. Relative Strength Index (RSI) is inside overbought territory at 83.35, so the currency cross could consolidate in the 94.00-40 area as AUD/JPY takes a breather.
To the upside, the maximum level of the AUD/JPY would be 95.00. A break above would expose the year’s high at 95.74, followed by the psychological mark at 96.00. To the downside, AUD/JPY’s first support would be the May 4 high at 94.02. If the latter is broken, AUD/JPY will correct towards 93.56, followed by 92.84.
Technical levels
Source: Fx Street
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