The AUD/JPY cross fell to its lowest point since early October during Tuesday’s Asian session, finding support around the 99.00 mark before bouncing back by 75-80 pips. However, the pair remains under pressure, trading below the key 100.00 psychological level. Concerns over the US-China trade war, combined with ongoing geopolitical tensions, are weighing on the Australian Dollar (AUD) and boosting demand for the Japanese Yen (JPY), a traditional safe-haven currency.
US-China Trade Tensions Weigh on AUD/JPY
The Australian Dollar has been negatively impacted by US President-elect Donald Trump’s announcement of a 25% tariff on products from Mexico and Canada and an additional 10% tariff on Chinese imports. These trade-related threats are escalating tensions between the US and its major trading partners, undermining investor sentiment. Additionally, geopolitical risks, particularly the ongoing Russia-Ukraine war and conflicts in the Middle East, have led investors to seek refuge in the Japanese Yen, further pressuring the AUD/JPY cross.
Technical Outlook for AUD/JPY
From a technical perspective, the AUD/JPY pair has shown signs of negative momentum, with oscillators on the daily chart gaining negative traction. The pair remains vulnerable, particularly with prices holding below the 100-day Simple Moving Average (SMA) and the 100.00 psychological level. Traders may look for a sustained break below 99.00 before considering further downside, with the next support levels seen at 98.70-98.65 and 98.00.
Potential for a Rebound
On the upside, a recovery above the 100.00 mark could face resistance around the Asian session high of 100.25-100.30, followed by the 100.55-100.60 region. A move past the 101.00 level could signal a more substantial rebound, with the AUD/JPY pair potentially targeting the 101.55 resistance and even the 102.00 mark. The momentum could push the pair back toward the 102.30-102.40 range, marking a return to levels not seen since July 24.
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