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FxWirePro: AUD/JPY erases early gains, set to extend weakness below 110-EMA, outlook bearish
AUD/JPY chart - Trading View
AUD/JPY consolidates below 110-EMA, slips lower from session highs at 74.61.
The pair has paused 7 straight sessions of downside, but outlook remains bearish.
Price action is below cloud and Chikou span is biased lower suggesting further downside.
Momentum strongly bearish and volatility is rising. MACD shows bearish crossover on signal line and ADX supports downside.
Dovish Reserve Bank of Australia (RBA) which is widely expected to cut the cash rate to 0.1% at its Nov.3 meeting is set to keep pressure on the Aussie.
On the data front Australian retail sales fell again in September. Data released earlier today showed Australian retail sales were down 1.5% m/m, following a 4% decline in August.
Technical outlook for the pair is strongly bearish. Scope for dip till 200-DMA at 72.83. Minor upside on break above 21-EMA. Bearish invalidation only above daily cloud.
Support levels - 74.07 (23.6% Fib), 73.80 (Lower BB), 72.83 (200-DMA)
Resistance levels - 74.81 (110-EMA), 75.24 (21-EMA), 76.22 (Cloud base)
Summary: Aussie continues to underperform after RBA minutes provided the clearest sign yet that the central bank will likely cut rates further. The pair is on track to test 200-DMA at 72.89.