AUD/JPY Pressured as Sellers Challenge Bullish Trendline Ahead of Key Australian Inflation Data
Market Overview
Geopolitical tensions and trade uncertainties continue to cast a shadow over the global risk environment. While President Trump has claimed progress in trade talks with China, Beijing has firmly denied any recent negotiations. Nonetheless, signals of tariff relief from both sides, including exemptions on certain Chinese imports and Washington’s readiness to adjust levies, have moderated market anxiety. Meanwhile, Australia’s domestic focus sharpens as the national election approaches on May 3, with Prime Minister Anthony Albanese maintaining a lead in recent polls, supported by his administration’s fiscal pledges to assist low-income households.
In this context, risk-sensitive assets, including the Australian dollar, have been vulnerable to broader shifts in sentiment. The Australian dollar/yen (AUD/JPY) cross has particularly felt the weight of market caution, as investors digest mixed signals from both geopolitical developments and local economic prospects.
Technical Analysis
AUD/JPY has entered a corrective phase after breaking beneath its ascending trendline on the hourly chart, marking a pause in its recent bullish trajectory. The breakdown of trend support has emboldened sellers, who have successfully pushed the price through the previous swing low at 91.532. At the time of analysis, the pair trades around 91.526, with bears eyeing the next support level at 91.419. A firm breach of this immediate floor would likely accelerate downside momentum toward subsequent targets at 91.276 and 91.118.
Momentum indicators corroborate the bearish tone. The Relative Strength Index (RSI) has slipped below the 50 threshold, signalling growing selling pressure, while the MACD histogram has turned negative, reinforcing the potential for further declines. Moreover, price action remains capped beneath the short-term moving averages, suggesting that buyers lack the momentum needed for a recovery at this stage.
On the upside, any rebound must decisively reclaim resistance at 91.690, with a break above the recent high at 91.946 required to negate the current bearish bias and restore upward momentum.
Key Technical Levels
- Resistances: 91.690, 91.946
- Supports: 91.419, 91.276, 91.118
Fundamental Drivers
Looking ahead, Australia’s quarterly inflation report due Wednesday looms as a pivotal event for the AUD. Consensus forecasts suggest consumer prices rose by 0.8% in Q1, marking a slight cooling in annual inflation from 2.4% to 2.3%. Furthermore, the trimmed mean measure of core inflation is projected to ease to 2.9% year-on-year, returning to the Reserve Bank of Australia’s (RBA) target range of 2-3% for the first time since late 2021.
Such an outcome could reinforce market expectations for the RBA to lower rates in May, with futures markets partially pricing in a 25-basis-point cut. In this context, a softer inflation print would likely weigh further on AUD/JPY, whereas a surprise to the upside could provide temporary relief for the currency.
Conclusion
AUD/JPY risks deeper losses toward 91.276 and 91.118 if sellers sustain pressure below 91.419. A break above 91.690 would invalidate this bearish scenario.
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