FxWirePro: AUD/JPY erases part of hawkish RBA-led gains, hovers around 5-DMA

AUD/JPY chart - Trading View 

Spot Analysis:

AUD/JPY was trading 0.37% higher on the day at 80.71 at around 07:15 GMT

Previous Week's High/ Low: 81.51/ 80.45

Previous Session's High/ Low: 80.76/ 80.33

Fundamental Overview:

The Reserve Bank of Australia’s (RBA) left the official cash rate (OCR) at a record low of 0.10% at their August monetary policy meeting.

The central bank said that it will continue with tapering of bond-buying program after early September.

Risk appetite improves of late amid receding covid infections from Australia, however, growing tensions between Australia and China remain a negative factor, limiting run-away gains in the pair. 

In the recent development, China has accused Australia of vaccine shortage in Asia-pacific worsening the ties between the two largest trade partners.

On the data front, Job advertisements in Australia fell by 0.5% to 206,819 in July, the first drop in the last 14 months. While the Building Permits declined by 6.7% in June, a third straight month of fall.

Benchmark iron ore futures in China bounced back to rise more than 3% on Tuesday after five straight sessions of declines, fueled by speculations of relax in steel output controls.

Technical Analysis:

- Price action is below 200-DMA and other major moving averages

- MACD and ADX on the daily charts support downside in the pair

- GMMA indicator shows major and minor trend are bearish

- The pair is holding support at 50-week MA at 80.43, break below to drag the pair lower

Major Support and Resistance Levels:

Support - 80.43 (50-week MA), Resistance - 81.40 (200-DMA)

Summary: AUD/JPY fades hawkish RBA-led gains, recovery lacks traction. Technical indicators are biased lower. Retrace above 200-DMA required to see upside continuation. 

On the flip side, breach at 50-week MA support at 80.43 will plummet prices. Next major bear target lies at 200-week MA at 78.69.