Why Is AUD/JPY Extending Its Downtrend? | Key Factors Behind the Currency Pair's Decline

The Dogecoin mining calculatorAUD/JPY cross has been under sustained selling pressure, marking its fourth consecutive day of declines in Thursday's Asian trading session. Currently hovering around 97.37, the pair reflects a 0.05% drop as market participants digest recent economic developments from Australia and anticipate upcoming data from Japan.

Australian Inflation Surprise Weighs on AUD

Wednesday's inflation report from the Australian Bureau of Statistics delivered a significant market surprise, showing the monthly Consumer Price Index (CPI) rising just 4.9% year-over-year in October. This figure came in below both September's 5.6% reading and consensus forecasts of 5.2%, with monthly CPI actually declining 0.3% primarily due to falling petrol prices.

The softer inflation data has prompted market participants to reassess expectations for further monetary tightening from the Reserve Bank of Australia (RBA). While the central bank recently raised rates to 4.35% in response to persistent price pressures, money market futures now suggest a 50% probability of additional hikes in the first half of 2024 rather than more immediate action.

Japanese Economic Data in Focus

Attention now turns to Japan's economic calendar, which features several potentially market-moving events. Market participants are particularly focused on:

  • Industrial Production figures
  • Retail Sales data
  • Consumer Confidence metrics
  • A scheduled speech from Bank of Japan official Nakamura

These releases could provide fresh catalysts for JPY movements, potentially extending or reversing the current AUD/JPY trend.

Technical Perspective: Double Top Formation

From a chart perspective, AUD/JPY has formed a concerning double top pattern after peaking at 98.49 earlier in the week. The pair has since shed over 100 pips, breaking below the Tenkan-Sen line at 97.68. This technical breakdown suggests potential for further downside toward support levels at 97.04 (Senkou Span A) and 96.82 (November 21 swing low), with the Kijun-Sen at 96.41 representing the next major support zone.

The combination of fundamental and technical factors currently paints a bearish picture for AUD/JPY, though upcoming Japanese data could introduce fresh volatility. Traders will be watching both economic releases and technical levels closely for signs of either continuation or reversal in the current trend.