FxWirePro: AUD/JPY snaps 2-day downside, upbeat Australia data and improving risk sentiment support

Chart - Courtesy Trading View 

Australian business investment rose to a 7-year high in Q4, pointing to a still healthy expansion in the economy late last year despite aggressive tightening.

Australia private capital expenditure data showed growth of 2.2% q/q over 4Q 2022 beating the 1.0% forecasts. The prior quarter was also revised up to 0.6% from -0.6%

Australian government bonds edges lower, with the yield on three-year and the 10-year bonds rising 5 bps to 3.606% and 3.903% respectively.

Also, a modest recovery in the global risk sentiment, tends to undermine the safe-haven Japanese Yen (JPY). Caution seen ahead of BoJ Governor candidate Ueda's testimony on Friday.

Technical Analysis:

- AUD/JPY was trading 0.24% higher on the day at 91.98 at around 10:30 GMT

- The pair has snapped at 2-day downside and has bounced off 21-EMA support

- Momentum is still with the bulls and volatility is high and rising

- Price action has shown a decisive break above cloud and is currently capped below 200-DMA

- GMMA indicator shows major and minor trend are neutral on the daily charts

Support levels:

S1: 91.76 (21-EMA)

S2: 90.65 (55-week EMA)

Resistance levels:

R1: 92.29 (200H MA)

R2: 93.07 (200-DMA)

Summary: AUD/JPY finds series of strong supports till 91.60 level. Decisive break above cloud keeps scope for more gains. Bullish invalidation below 55-EMA. On the flip side, break out above 200-DMA will propel the pair higher.