AUD/JPY erodes 50-pips rapidly on softer Aus CPI

The cross in AUD/JPY surrendered the bids and fell sharply to test 5-DMA located 88.32 levels, in an immediate reaction to worse–than expected Australian CPI numbers.

AUD/JPY eyes on 88.00?

The cross witnessed aggressive selling after the Australian inflation data disappointed markets and raised doubts whether the RBA would remain on track to rates sooner (than later). The RBA target band is 2 -3%.

However, the bulls find some respite from in-line with expectations core CPI figures, which hold more significance for the RBA, Hence, the cross managed to move-off lows to now trade just ahead of the mid-point of 88 handle.

Also, the downside remains capped amid a weaker Yen against its American counterpart, as markets continue to cheer the p US: Senate votes 'yes' (51-50) on motion to proceed with healthcare debate.

Next of note for the cross remains the FOMC policy deicison due later in the NA session, which will have a major impact on both the AUD and JPY.

Technical Levels

Omkar Godbole, Analyst at FXStreet noted: “An immediate resistance is seen at 89.03 (July 21 high) ahead of 89.32 (July 20 high). An end of the day close above the same would revive the June - July rally and shall open doors for 90.00 levels. The 14-day RSI is yet again flirting with the overbought territory. On the downside, a break below 88.76 (session low) would open up downside towards 88.52 (5-DMA) and 88.38 (10-DMA).”