FxWirePro: AUD/ JPY weakens as soft CPI boosts rate cut expectations from the RBA

• AUD/ JPY dipped on Wednesday   as weaker-than-expected inflation data heightened expectations of a February rate cut by the Reserve Bank of Australia.

• Australian consumer prices grew at the slowest pace in four years in Q4, with lower housing costs easing inflation and raising hopes for a rate cut next month.

•The Australian Bureau of Statistics reported a 0.2% rise in the consumer price index (CPI) for the fourth quarter, below the expected 0.3% increase..

• Today's inflation report led markets to price in an 80% chance that the Reserve Bank of Australia will cut its 4.35% cash rate by 0.25% at its Feb. 18 meeting.

•The technical outlook remains bearish and points to eventual bigger gains, fourteen-day momentum is negative, reinforcing the scope for a bigger drop.  

• Immediate resistance is located at 97.32 ( Daily high), any close above will push the pair towards 97.83 (50% fib).

• Immediate support is seen at 96.58 (38.2% fib) and break below could take the pair towards 96.13 (Lower BB).

 Recommendation: Good to sell around 96.80, with stop loss of 97.50 and target price of 96.00