FxWirePro: AUD/JPY off multi-week lows after BoJ keeps monetary policy unchanged, bias still bearish

Chart - Courtesy Trading View 

AUD/JPY bounced off from multi-week lows at 89.26 and was trading at 90.04, up 0.37% on the day at around 05:25 GMT.

The pair is hovering around strong trendline support at 89.75, break below will see more downside.

The yen weakened after the Bank of Japan’s (BoJ) inaction during early Friday. Short-term interest rate target was held at -0.1% while directing 10-year JGB yields within the band of +/-0.50%. 

However, the statement that followed stated that inflationary expectations are rising, which in turn raises doubts about the future of the bank’s ultra-easy monetary policy.

Comments from incoming BoJ Governor Ueda will be watched for further cues about further policy path.

On the other side, Australian dollar under pressure as optimism linked with China’s economic recovery fades. 

Geopolitical fears surrounding China and the US, as well as fears emanating from Russia, exert downside pressure.

Dovish rhetoric from Reserve Bank of Australia (RBA) Governor Philip Lowe adds to the downside bias, keeping upside limited. 

Support levels:

S1: 89.75 (Trendline)

S2: 87.74 (110-week EMA)

Resistance levels:

R1: 90.38 (5-DMA)

R2: 91.30 (200H MA)

Technical Summary: AUD/JPY upside lacks traction, follow through gains unlikely. Trendline at 89.75 offers minor support. Watch out for decisive break below for more weakness.