AUD/JPY has been rejected off the 80.50 resistance area with a daily close which is expected to lead to further bearish momentum in the coming days.
Yesterday Australia released an employment change report which showed an increase to 25.7k jobs in March from the previous figure of 10.7k which was expected to be at 15.2k. On the minus side, an unemployment rate edged up to 5.0% as expected from of 4.9% in the previous month. The global slowdown in the economy is affecting the international trade of Australia. The long-term bond yields have fallen. Besides, the short-term bank funding costs have weakened further. Today due to observance of Good Friday, the economic calendat lacks any data from Australia. However, next week Australian CPI and PPI reports are due which will play a vital role on further AUD gains.
On the JPY side, today National Core CPI report was published with an increase to 0.8% which was expected to be unchanged at 0.7% while BOJ is predicting inflation to fall. The Bank of Japan is due to post an inflation outlook next week, so the regulator is assumed to predict that inflation will remain below the 2% target. The central bank is likely to downgrade its growth and price forecast for the fiscal year due to headwinds from a slowdown in the global economci growth. Moreover, Japan's government is considering a sales tax hike in October. This measures could impact the consumer spending and money flow in the economy. A tax hike is sure to influence JPY in the medium term. Next week, the Bank of Japan is holding a policy meeting and a press conference to follow. Besides, traders are anticipating an economic outlook report and a monetary policy statement. Thus, JPY is responsible for higher volatility in the pair next week.
To sum it up, market sentiment on AUD is confused due to the mixed employment data from Australia. On the other hand, JPY is supported by positive economic reports along with the inflation target chase. So, JPY will gain ground versus AUD in the short term.
Now let us look at the technical view. The price moved lower from 80.50 area under strong impulsive bearish pressure which engulfed the previous 3 days of bullish indecision daily candles in one go. The price is currently trading above the dynamic level of 20 EMA. However, MACD with a Continuous Bearish Divergence in the making is expected to push the price lower towards 78.50 support area in the coming days. As the price remains below 80.50 area with a daily close, the pair is set to trade with the bearish momentum.
