The AUD/JPY currency pair drifted lower during Monday's early European session, sliding closer to the 114.50 threshold. Despite this mild downward movement, the underlying positive outlook of the cross remains firmly intact, supported by its position above the 100-day simple moving average and ongoing bullish momentum in the relative strength index.
Technical Indicators and Resistance Levels
On the daily chart, AUD/JPY preserves a bullish near-term bias as spot prices continue to hold above the 100-day simple moving average and the Bollinger middle band. Price action is currently pressing into the upper half of the Bollinger envelope, where the upper band serves as an immediate overhead supply level. Furthermore, the 14-day Relative Strength Index sits at 63.27 in positive territory, pointing toward sustained buying pressure rather than an outright overbought market condition.
Downside Support and Key Targets
On the downside, initial demand and the first notable support level are identified at the August 26 low of 113.66. The subsequent contention level rests at the 100-day SMA near 113.25, which is closely followed by the Bollinger middle band positioned at 113.00. These thresholds are expected to offer strong technical backing should the downward correction extend further.
Upside Hurdles and Breakout Potential
On the topside, any sustained follow-through buying above the August 26 high of 114.96 would pave the way for a move toward the Bollinger upper band at 115.20. Following that, the next major hurdle for market participants to monitor is the key psychological level situated at 116.00.
Broader Market Factors and Central Bank Policy
External factors such as upbeat Manufacturing Purchasing Managers Index data from China could offer foundational support to the China-proxy Australian Dollar, given that China remains a primary trading partner for Australia. Meanwhile, analysts at Societe Generale note that recent inflation dynamics, comprising softer non-fresh food prices alongside firmer services costs, continue to validate the Bank of Japan's hawkish policy path, reinforcing expectations of continued monetary tightening.
Broader Foreign Exchange and Commodity Movements
In other currency markets, the GBP/USD pair extended its weekly correction toward the 1.3530 zone on Friday, facing increased selling pressure due to a resurgent Greenback following notable commentary at the Jackson Hole Symposium and US nonfarm payroll revisions. Similarly, the EUR/USD pair accelerated its retreat toward seven-day troughs below the 1.1600 region. Gold resumed its steep downward trajectory early Monday as NFP week commenced, while Bitcoin maintained trading above $77,000, sustaining monthly gains exceeding 20%. In energy markets, the US diesel crack spread recently surged past $100 per barrel for the first time, notching an intraday record just above $102.00.
