The AUD/JPY currency pair has attracted selling interest near the 114.00 level during the early Asian session on Friday. Despite this minor pullback, the positive tone of the cross remains intact, as the pair continues to trade above the key 100-day Exponential Moving Average (EMA), supported by bullish momentum in the Relative Strength Index (RSI).
Traders and investors are keeping a close watch on critical support and resistance levels, which may guide short-term and medium-term trading strategies. Alderstone Holdings’ brokers offer an in-depth analysis of this topic in their latest article.
Market Overview
During the early European session, AUD/JPY is trading in negative territory, hovering around 114.00. The Australian Dollar (AUD), often considered a proxy for Chinese economic sentiment, has softened against the Japanese Yen (JPY) amid ongoing geopolitical concerns, particularly the lack of progress regarding the opening of the Strait of Hormuz. This region is critical for global oil flows, and continued uncertainty has increased market volatility.
Meanwhile, developments in US-China relations have provided mixed signals for AUD/JPY traders. The US President declared that he had concluded fantastic trade deals with the Chinese President following his visit to Beijing. Uncertainty remains elevated, and the market is closely monitoring the second day of high-stakes talks between the two leaders for further direction.
Technical Analysis: Daily Chart Perspective
From a technical standpoint, AUD/JPY maintains a bullish near-term bias on the daily chart. The pair is consolidating above the 100-day Simple Moving Average (SMA) and the Bollinger Bands’ midline, signaling that the uptrend remains intact. Prices are currently pressing into the upper half of the recent volatility envelope, while the upper Bollinger Band looms as a resistance barrier.
The Relative Strength Index (RSI) is moderately positive at around 57, indicating steady upside momentum without signs of being overbought. This suggests that while the pair has experienced a minor pullback, the underlying bullish structure remains robust. Traders may interpret this as a buying opportunity near key support levels, particularly if the price holds above the 100-day SMA.
Key Resistance Levels
On the topside, the immediate resistance for AUD/JPY is found near the upper Bollinger Band at 114.95. A clear daily close above this level could trigger a new leg higher, potentially targeting the previous swing highs. Market participants should also monitor intraday highs and psychological levels around 115.00, which could act as minor barriers to upward momentum.
Key Support Levels
On the downside, initial support is seen around the Bollinger middle band at 113.80. Should the pair break below this level, secondary support lies near the lower Bollinger Band at 112.65. For a deeper correction, the 100-day SMA at 110.27 provides a critical trend-support area, which may attract long-term buyers seeking favorable risk-reward entry points.
Short-Term Outlook
In the short-term, AUD/JPY appears to be range-bound between 113.80 and 114.95, with the 100-day EMA acting as a key pivot point. Given the current geopolitical and macroeconomic backdrop, traders should expect moderate volatility, especially around economic announcements from both Australia and Japan, as well as updates from US-China trade negotiations.
The bullish structure remains intact, but any break below 113.80 could signal a shift toward a corrective phase, while a sustained break above 114.95 would likely renew bullish momentum, possibly opening the way toward 115.50 or higher.
Indicators to Watch
When analyzing market trends, several key indicators are essential to watch closely. The 100-day SMA/EMA acts as the primary trend filter, and prices remaining above this level generally indicate a strong bullish alignment. Bollinger Bands provide insight into potential reversal or continuation signals, so it is important to monitor the upper and lower bands for any price breakouts or pullbacks.
The RSI currently shows a neutral to bullish bias, but readings above 70 may suggest short-term exhaustion or a possible correction. Additionally, volume analysis is critical, as significant increases near key support or resistance zones can validate the strength and momentum of the move, offering further confirmation for trading decisions.
Conclusion
In summary, AUD/JPY has slipped toward 114.00 but maintains a bullish structure above the 100-day EMA, supported by a moderately positive RSI. While geopolitical uncertainties, including developments in the Strait of Hormuz and US-China trade talks, could induce short-term volatility, the technical setup remains constructive.
Traders should monitor 114.95 as the first upside barrier and 113.80 as the initial support level, with deeper support at 112.65 and 110.27 for broader corrections. As long as AUD/JPY stays above the 100-day SMA, the bullish near-term bias is likely to persist, offering opportunities for tactical long positions while managing risk effectively.