The AUD/JPY currency pair is navigating turbulent waters as it hovers near the 93.10 level during Wednesday’s early European session, displaying marginal strength despite persistent bearish pressure.
Traders and analysts remain cautious as the Australian Dollar (AUD) continues to underperform against the Japanese Yen (JPY), largely influenced by disappointing economic data from Australia and technical resistance levels that show no signs of giving way. The brokers at NordaLueur offer a comprehensive breakdown of this topic in their article.
Weaker Australian GDP Data Weighs on AUD
The latest fundamental blow to the AUD/JPY cross came from the Q1 2025 GDP report released by the Australian Bureau of Statistics (ABS). Australia’s Gross Domestic Product (GDP) rose by just 0.2% quarter-over-quarter (QoQ), significantly lower than the previous 0.6% figure and missing the market consensus of 0.4%.
On a year-over-year (YoY) basis, the GDP grew by 1.3%, matching the fourth quarter’s figure but again falling short of the expected 1.5%.
These numbers indicate a sluggish economic momentum in Australia, increasing the probability that the Reserve Bank of Australia (RBA) might maintain a dovish monetary policy stance in the near term. This contrasts sharply with the Bank of Japan (BoJ), where persistent yen weakness is more likely to trigger intervention concerns than dovish policy shifts. The economic divergence continues to play a key role in shaping the AUD/JPY exchange rate outlook.
Technical Analysis: Downtrend Persists Below Key Resistance
From a technical standpoint, the bearish bias for AUD/JPY remains firmly intact as long as the pair continues to trade below the 100-day Exponential Moving Average (EMA), which currently rests near the 93.90 level. Despite trading slightly higher on the day, the cross has failed to reclaim this key resistance zone, indicating that sellers are still in control.
Adding to the indecision is the 14-day Relative Strength Index (RSI), which is hovering around the neutral 50-level. This midline stance suggests that neither bullish nor bearish momentum is currently dominant, hinting at a possible consolidation phase before a decisive breakout or breakdown.
Key Support and Resistance Levels to Watch
The initial support level lies at 91.68, which is the lower boundary of the Bollinger Band on the daily chart. A decisive break below this zone would likely trigger further selling pressure, exposing the next downside target at 90.70, which marks the April 30 low.
Below this, the psychological 90.00 level becomes the most significant support floor, and any sustained break could prompt a sharp bearish extension.
On the upside, the most immediate resistance to monitor is the 93.90 level, which coincides with the 100-day EMA. A break and close above this resistance could provide bullish traders with breathing room and pave the way for a move toward the 94.78 upper Bollinger Band boundary.
Should this level be breached, the bulls may then set their sights on 95.65, the May 13 swing high, which represents a key medium-term bullish hurdle.
Market Sentiment and Forward Outlook
Although the AUD/JPY is currently trading in positive territory, broader market sentiment suggests the recovery is fragile. The fundamental backdrop, weakened Australian economic data and relatively firmer Japanese fundamentals reinforce a downward bias in the cross.
Moreover, the inability of the pair to breach and sustain above the 100-day EMA supports the notion that rallies are likely to be short-lived unless accompanied by a strong catalyst.
Furthermore, the lack of momentum as indicated by the neutral RSI reading aligns with the possibility of a sideways movement in the short term, as the market awaits clearer signals, either from macroeconomic data releases, central bank communication, or a decisive technical breakout.
Volatility Considerations
Traders should also pay attention to volatility metrics and broader risk sentiment. The Japanese Yen, often seen as a safe-haven asset, tends to attract demand during periods of market turbulence. Any geopolitical escalation, unexpected macroeconomic shocks, or equity market downturns could amplify JPY buying, thereby intensifying the downward pressure on AUD/JPY.
Conversely, any signs of recovery in Australian economic indicators or rising commodity prices, particularly in iron ore and liquefied natural gas (LNG), both vital to Australia’s trade balance, may provide the AUD with temporary support.
Conclusion: Bearish Outlook with Risk of Range-Bound Moves
In conclusion, while the AUD/JPY cross is holding above 93.00 for now, the bearish outlook remains technically valid as long as the pair stays capped below the 100-day EMA at 93.90. The weak Australian GDP figures, paired with cautious risk sentiment and technical resistance zones, favor the downside scenario.
However, with the RSI indicator near neutral levels, a period of consolidation cannot be ruled out. Traders should remain vigilant and monitor the pair’s behavior around 91.68 support and 93.90 resistance, as a breakout in either direction could define the next directional bias.
