FxWirePro: AUD/JPY spikes over 1%, on track to test 200-DMA

Chart - Courtesy Trading View 

Spot Analysis:

AUD/JPY was trading 1.06% higher on the day at 92.60 at around 06:00 GMT.

Previous Week's High/ Low: 91.91/ 88.11

Previous Session's High/ Low: 91.92/ 91.25

Fundamental Overview:

Australia CPI inflation rises more than expected in Q4, stoking expectations of hawkish RBA.

Data from the Australian Bureau of Statistics (ABS) earlier on Wednesday showed CPI inflation grew 1.9% in the three months to December, beating forecasts at 1.6%, as well as the prior quarter’s reading of 1.8%.

On an annualized basis, CPI inflation was up 7.8%, more than estimates for a rise of 7.5% and the prior quarter’s reading of 7.3%. 

Upbeat inflation data adds more pressure on the Reserve Bank of Australia (RBA) to keep raising interest rates.

It is to be noted that Australia's inflation has remained hot even after the central bank hiked rates by a cumulative 300 basis points (bps) in 2022, from a record low of 0.1%. 

Markets now expect the RBA to hike its Official Cash Rate (OCR) by 25 basis points (bps) in February and June policy meetings.

Markets also await Bank of Japan's (BOJ) Summary of Opinions amid hawkish bias surrounding the central bank.

Technical Analysis:

- AUD/JPY has broken above 110-EMA and daily cloud

- Momentum is bullish and volatility is high and rising

- GMMA indicator shows minor trend has turned bullish

- MACD and ADX support upside in the pair

Major Support and Resistance Levels:

Support - 91.99 (110-EMA), 91.28 (55-EMA)

Resistance - 93.02 (200-DMA), 93.78 (Previous month high)

Summary: AUD/JPY trades with a bullish technical bias. Scope for test of 200-DMA at 93.02. Decisive break above will propel the pair higher.