AUD/JPY has been quite volatile and indecisive inside the corrective range between 77.50 and 80.00 area for a few weeks. Now it is expected to consolidate further with certain bearish pressure in the coming days.
AUD has been struggling to gain definite momentum over JPY which has been struggling as well with ultra-loose monetary policy and the BOJ's indecision. The Australian consumer and employment data that provided mixed results is expected to influence the interest rate policy of the RBA. As of the recent impacts, certain rate cuts by the central bank can be seen if the situation does not improve. AUD, struggling with the worse economic reports, managed to sustain momentum over USD which indicates certain possibilities of further upward momentum in the coming days. Recently, Australian Home Loans report was published with a decrease to -2.6% from the previous value of -6.0% which failed to meet the expectation of -2.0%. Furthermore, the NAB Business Confidence also decreased to 2 from the previous figure of 4 and the Westpac Consumer Sentiment plunged to -4.8% from the previous value of 4.3%. Today, the MI Inflation Expectations report was published with an increase to 4.1% from the previous value of 3.7% which has not quite helped the Australian dollar to push higher against USD so far. A fall in the Australian stock market and housing market is expected to impact the overall gains of AUD in the process whereas USD is expected to regain momentum in the coming days.
On the other hand, Japan's government is considering a slight downgrade of the economy in its March monthly report as exports and factory output fell drastically due to a decrease in demand from China. Previously, the government was quite optimistic, believing that the economy was recovering. However, the weak data on corporate sentiment, capital expenditure and exports lead to a change of view on the economy. The Japanese government is currently looking for ways to reach the peak in the long-run perspective.
As of the current scenario, AUD/JPY is expected to consolidate further in the process as both currencies in the pair has been struggling with worse economic conditions. Japan has ultra-loose monetary policy while Australia is at the verge or rate cuts. It may lead to further weakness which might result in certain gains on the JPY side in the process.
Now let us look at the technical view. The price is currently residing above 78.50 area while forming a Bearish Hidden Divergence along the way. The price is currently indecisive and volatile. A break below 78.50 is expected to push the price lower towards 77.50 and later towards 75.00-50 support area in the coming days.
